Chandigarh: More than six years since its launch, there appears to be a significant gap between the annual consumption of LPG by Pradhan Mantri Ujjwala Yojana (PMUY) beneficiaries and non-PMUY consumers, government data show.
According to data obtained under the Right To Information (RTI) Act from three oil marketing companies (OMCs) – Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited – a total number of 179 crore cylinders were sold to 30.5 crore active LPG subscribers in India in the financial year 2021-22.
Of this, nine crore PMUY beneficiaries refilled 31 crore cylinders at an average of 3.5 cylinders a year per consumer. On the other hand, 21.5 crore non-PMUY consumers refilled 148 crore cylinders at an average of seven cylinders a year per consumer.
Overall, the average consumption of total active LPG consumers in India in FY22 was approximately six cylinders a year per consumer, the RTI data showed.
Though the PMUY website says 99% of households in India now have access to LPG connections, the ground reality appears to be different.
The PMUY scheme was launched in May 2016 to make clean cooking fuel available to rural and below poverty line households to replace traditional cooking fuels such as firewood, coal and cow-dung.
Ashok Sreenivas, senior fellow at Pune-based think tank Prayas, who has done extensive research on energy policy, told The Wire that a rough calculation of the RTI data suggests that for a household of four people, about seven to eight cylinders a year may be required if all the cooking is done using LPG.
“But the RTI data essentially indicates that Ujjwala [PMUY] beneficiaries are not able or willing to purchase as many cylinders as non-Ujjwala consumers,” he said, adding that there may be many people who have not refilled even a single cylinder despite enrolling for the LPG connection.
Ever since the scheme was launched, LPG consumption among PMUY beneficiaries has remained low, except for the financial year 2020-21, when the Union government offered free refills to the beneficiaries as part of its COVID-19 relief package.
Source: RTI reply
The factors influencing low LPG consumption among PMUY beneficiaries
There could be multiple reasons for the low LPG consumption among PMUY beneficiaries such as high prices making refills unaffordable, high transportation costs as distributors are far away, a lack of awareness about the benefits of LPG, or insufficient decision-making power of the women in a household, Srinivas said.
Last year, a survey by the Delhi-based Council on Energy, Environment and Water (CEEW) too found that despite increased LPG access, 38% of the Indian households, mainly in rural areas, relied upon freely available solid fuels, primarily due to high refill price of LPG cylinders.
An LPG refill in March 2014 was priced at Rs 410, which has now increased to Rs 1,060. The chances of its further increase can’t be ruled out in the wake of the global energy upheaval due to the Russian invasion of Ukraine.
This means that a four-member household, which needs at least seven cylinders to meet its annual cooking energy needs, must incur at least Rs 7,000 a year.
This appears to be a daunting task for the millions of poor households, especially when they were massively hit by the economic slowdown due to the COVID-19 pandemic.
Over the last year, LPG refilling cost has jumped by Rs 218 per cylinder, which, apart from pinching the middle class, appears to have mitigated the subsidy impact on poor families, too.
Prime Minister Narendra Modi distributes the free LPG connections to the beneficiaries, under PM Ujjwala Yojana in Ballia on May 1, 2016. Union Minister for Micro, Small and Medium Enterprises Kalraj Mishra is also seen. Photo: PTI
“Combined with a drop in household incomes due to the pandemic-induced economic crisis, high LPG prices pose a risk to its sustained use, particularly among low-income households,” CEEW observed in its survey, which covered 14,850 urban and rural households in 21 most populous states in 2020.
Added to that, experts say that under the direct benefit transfer, PMUY beneficiaries have to pay the entire refill cost first and then the subsidy amount is credited into their bank account. Moreover, it’s a big challenge for poor families to refill the LPG cylinder at full cost.
Besides, many have raised concerns over not receiving their fuel subsidies on time. The survey mentioned that 13% of the households did not receive the subsidy for their last LPG refill and 23% did not know if they had received it or not.
“Absence of home delivery of LPG refills or delayed delivery is another deterrent to regular LPG use. Only half of the rural LPG consumers get their refills home delivered,” the survey added.
Watch: How Effective Is the Prime Minister’s Ujjwala Yojana on the Ground?
The solutions
Sreenivas told The Wire that providing more subsidies can be one way of dealing with the challenge to increase LPG consumption.
He added that government needs to adopt an advance subsidy module. Currently, PMUY beneficiaries need to pay the entire cylinder cost and wait for their subsidy reimbursement, which takes a few days and can be unreliable too. This has a major impact on the cash flow of poor consumers and discourages them from purchasing LPG refills.
To address this issue, the government can make advance subsidy payments to the OMCs based on their sales estimates, which can be reconciled on, say, a quarterly basis. This will enable the OMCs to transfer subsidies immediately to the beneficiaries’ accounts as soon as a purchase is recorded on a point-of-sale machine. This process is similar to how the public distribution system for food grains works, he said.
According to him, there is also a need to improve the distribution network and enhance the accountability of public sector oil marketing companies and distributors.
Distributors in rural areas may be permitted to undertake some other businesses from the same premises to increase their incomes, he added.
In 2020, Prayas, in one of its research papers, called for an independent regulator for the LPG sector, which could help in ensuring service quality, fair pricing and distribution.
Sreenivas added that it is important for the LPG subsidy scheme to work because indoor or household air pollution is one of the biggest causes of mortality and morbidity in the country.
