Context: In the context of the Pradhan Mantri Ujjwala Yojana (PMUY), a program aimed at providing LPG gas cylinders to rural and underprivileged households, it has been observed that one in four beneficiaries either did not take any cylinders during the 2022-2023 period or only obtained one refill.
About Pradhan Mantri Ujjwala Yojana
- Launched in 2016, PMUY is a government initiative under the Ministry of Petroleum and Natural Gas to offer LPG connections to women from below the poverty line (BPL) households.
- It was later expanded in 2018 to include seven more categories, such as Scheduled Castes (SC), Scheduled Tribes (ST), beneficiaries of Pradhan Mantri Awas Yojana (PMAY), Antyodaya Anna Yojana (AAY), Most Backward Classes, tea garden workers, forest dwellers, and those residing in islands.
- Beneficiaries of PMUY 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.
PMUY 2.0
- The new version of PMUY aims to simplify procedures and reduce paperwork. Migrants are no longer required to submit ration cards or address proof; a self-declaration for both “family declaration” and “proof of address” is now sufficient.
- Eligibility for Ujjwala 2.0 includes adult women from poor households without an existing LPG connection. Beneficiaries should fall into one of the following categories: eligible as per the SECC 2011 list, beneficiaries of PMAY, AAY, forest dwellers, Most Backward Classes (MBC), tea garden workers, or people residing in river islands. If they do not belong to these categories, they can claim to be beneficiaries of a poor household by submitting a 14-point declaration.
- Ujjwala 2.0 is launched as the initial target of providing 8 crore LPG connections under PMUY has already been achieved.
However, several studies indicate that PMUY has not ensured sustained usage of LPG by impoverished families, as many of them have turned to cheaper solid fuels.
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
