Abstract Bio fuels are still a major source for cooking by many households in developing countries such as India causing significant disease burden due to indoor air pollution. While household income influences the choice of fuel the policies that affect accessibility and price of fuels also have an important role in determining the fuel choice. This study analyzes the pollution–income relationship for the period 1983–2000, separately across rural and urban households in India based on unit record data on fuel consumption obtained through National Sample Surveys. While a non-monotonic relationship is observed in rural India in both the decades, in urban India a similar relationship is observed only for the initial period indicating faster transition towards ‘cleaner’ fuels mainly enabled by policies that have been pro-urban. The study also finds that the impact of household size and composition on bio fuels is more negative than for clean fuels and is increasingly negative over time possibly due to greater awareness about the ill effects of such fuels.