Context: The government has raised the subsidy amount for Pradhan Mantri Ujjwala Yojana beneficiaries from ₹200 to ₹300 per LPG cylinder.
About Pradhan Mantri Ujjwala Yojana
- Launched in: 2016
- Nodal Ministry: Ministry of Petroleum and Natural Gas
- Objective: To make clean cooking fuel such as LPG available to the rural and deprived households (BPL) that were otherwise using traditional cooking fuels such as firewood, coal, cow-dung cakes, etc. Also, providing a healthy cooking fuel and prevents hazards health-related issues among the millions of rural populations due to the use of fossil fuel.
- Target: 8 Crore LPG Connections to the deprived households by March 2020.
PMUY 2.0
- Launched in: PMUY was replaced by PMUY 2.0 in 2021
- Objective: To simplify procedures and reduce paperwork. Migrants are no longer required to submit ration cards or address proof; a self-declaration is now sufficient.
- Target: Additional 75 lakh LPG connections over three years from the financial year 2023-24 to 2025-26.
- Eligibility: An adult woman belonging to a poor household and not having an LPG connection in her household will be eligible under it. Eligible as per SECC 2011 list:
- Belongs to SC/ST households, be a beneficiary of Pradhan Mantri Awas Yojana (PMAY), Antyodaya Anna Yojana (AAY), Forest dwellers, Most Backward Classes (MBC), Tea and Ex-Tea Garden Tribes, People residing in river islands.
- Benefits: Beneficiaries receive cash assistance of Rs.1600, which covers the security deposit for the gas cylinder, pressure regulator, LPG hose, domestic gas consumer card, inspection, installation, and demonstration charges.
- Additionally, they are provided with their first LPG refill and a stove free of charge, along with their deposit-free connection by the Oil Marketing Companies (OMCs).
- Consumers have the option to purchase gas stoves and refills on EMI with zero interest, which is recovered through LPG subsidies.
- Exclusions: Male members from a household cannot apply for the scheme.
- Achievements: As of 1st March 2023, there are 9.59 crore PMUY beneficiaries.
Scheme Performance
The Comptroller and Auditor General (CAG) of India conducted a performance audit of PMUY in December 2019, revealing the following key findings:
- Affordability Challenge: Between January 2018 and March 2023, the cost of subsidised LPG cylinders saw an 82% increase. This price hike has made LPG less affordable for PMUY households, and alternative solid fuels have become more cost-effective in many regions.
- Leakage: The identification of BPL households is based on the Socio-Economic Caste Census (SECC) data, but there were discrepancies in beneficiary names between the PMUY consumer database and the SECC data. Moreover, some connections were issued to men, contrary to the program's objective.
- Lack of Sustained Usage: Many PMUY beneficiaries did not purchase refill cylinders. Approximately 1.18 crore households did not buy any refill cylinders, and 1.51 crore beneficiaries bought only one refill cylinder in the previous year. The average annual refill consumption for PMUY beneficiaries remained low compared to non-PMUY consumers.
- Reliable Access Challenge: Distributors face financial disincentives in areas with low demand and sporadic refills, leading to poor service quality in rural areas with significant PMUY beneficiaries. Additionally, India's bottling capacity is insufficient to cater to the sustained use of new PMUY consumers.
- Behavior Change Challenge: Various factors, including traditional cooking preferences, gender roles, low valuation of women's labour, intra-household decision-making practices, and current cooking habits, hinder the adoption of LPG.
- Other factors, such as using solid fuels for tasks like cattle feed preparation and water heating, also deter LPG use. Community-level factors also influence LPG uptake in different parts of the country.
Way Forward
To address these challenges and promote sustained LPG usage, several recommendations are proposed:
- Phase out the loan scheme and provide double bottle connections with an increased subsidy to cover stove and first refill costs.
- The government can clear pending dues against existing loans of PMUY consumers to encourage refill purchases.
- Provide free double bottle connections at a subsidised price to PMUY consumers to ensure continued usage.
- Implement a subsidy structure that starts at high levels to promote LPG adoption and gradually tapers off over time, as demonstrated successfully in Maharashtra.
- Improve the efficiency of LPG stoves by introducing mandatory standards and labelling, which can reduce subsidy costs and benefit the environment.
- Leverage digital technology to address cash flow challenges by making advance subsidy payments to Oil Marketing Companies based on sales estimates, enabling immediate transfer of subsidies to consumer accounts.
- Encourage distributors with performance-based incentives for selling refills to poor and PMUY consumers in rural areas.
- Define clear performance standards for distributors and oil marketing companies, with public access to data on their performance, penalties, and escalation mechanisms.
- Refine subsidy targeting to reduce costs and redirect savings to support poor beneficiaries.
- Conduct further research to understand behavioural barriers and develop context-specific strategies for promoting sustained LPG use.
Conclusion
While PMUY has made LPG accessible to poor households, there is a need to focus on sustaining its usage. This can be achieved by addressing affordability, leakage, sustained usage, reliable access, behaviour change, and other challenges through a combination of policy measures and targeted interventions.
See: Targeted subsidy to Pradhan Mantri Ujjwala Yojana Consumers