Welfare scheme

Modi’s pet Ujjawala scheme wobbles as many beneficiaries drop out after their first LPG cylinder

The number of LPG connections extended under this scheme may be rising rapidly, but LPG usage is not.

The aim was to free poor women from smoke-filled kitchens by giving them cooking gas connections. But one year after it was launched, the Pradhan Mantri Ujjawala Yojana seems to have run into rough weather.

On paper, the central government scheme which provides free liquefied petroleum gas, or LPG, connections to below the poverty line families, seems to be doing well. It has covered 2.2 crore households in the year since its launch on May 1, 2016, exceeding its target of 1.5 crore connections. Last month, Petroleum Minister Dharmendra Pradhan said that by 2019, the scheme would be rolled out to 5 crore more families who live below the poverty line.

However, gas agency dealers in several parts of the country, especially those in rural areas, have reported that an extremely low number of Ujjawala beneficiaries are returning for refills of their cylinders. Thus, the number of LPG connections may be rising rapidly, but LPG usage is not.

Low number of refills

“My agency caters to over 4,000 customers. Nearly half of them are Ujjawala beneficiaries,” said Anand Kumar of Jai Ma Gayatri Gas Service in Gosainganj block of Faizabad in Uttar Pradesh. “More than 60% of these beneficiaries have either taken no refill or have not done so more than twice in the last year.”

The upfront payment required for an LPG connection is waived for those signing up for the Ujjawala scheme. However, the oil marketing companies that supply gas cylinders through LPG dealers extend a loan to Ujjawala beneficiaries towards the cost of the gas stove and the first gas cylinder that they receive. The oil companies – Indian Oil, Bharat Petroleum and Hindustan Petroleum – recover this loan, which generally amounts to between Rs 1,500 to Rs 1,600 from the subsidy amount payable to the consumer for each refill.

Since the great majority of below poverty line households have taken Ujjawala connections using the loan on offer, they have to pay for refills at the market rate – they cannot avail of the LPG subsidy (which the oil firms now pocket) until they have paid the loan back via the subsidies. Since the subsidy per cylinder amounts to around one-fourth of its cost, Ujjawala beneficiaries must refill their cylinders around seven to eight times at the market rate for the subsidy to accumulate to be enough to write off the loan.

(Photo credit: PTI).
(Photo credit: PTI).

Unaffordable gas

But the catch is that below poverty line families – according to the Rangarajan committee, those who live on less than Rs 32 a day in rural areas and Rs 47 a day in urban areas are considered as poor – simply cannot afford the market rate of LPG.

“The LPG’s market rate has gone up sharply in last one year,” said Anand Kumar. “It was growing until last month when it came down a bit, but the rate is still close to Rs 650 [a cylinder]. This is not the kind of amount you can expect a BPL [below poverty line] household to keep aside for cooking fuel every month.”

Thus, though Ujjawala beneficiaries avail of the first gas cylinder enthusiastically as they do not have to make an upfront payment for it, the refills tend to be out of their reach.

Sona Devi, an Ujjawala beneficiary and a resident of Shekhpura village in Gosainganj block of Faizabad district, got her first gas cylinder last July. After it ran out of gas, she slipped back to using firewood for cooking.

“When the connection was given, it was promised that gas would be provided at cheap rate,” said Sona Devi. “Now we are asked to buy gas at the rate at which it is sold to rich people. It is impossible. We cannot do this.”

Her husband, Raja Ram, is a landless labourer.

“It takes three to four days for my husband to earn Rs 650,” she said. “What will we eat if we use this amount to purchase gas?”

Other Ujjawala beneficiaries in Shekpura village – Tarawati Devi, Usha Devi, Sarvar Jahan, to name a few – have also switched over to firewood after having used clean cooking fuel as long as their first supply of gas lasted.

“You will find the same story wherever you go,” said Vikas Singh, the proprietor of Kashi Vishwanath Gas Agency in Varanasi, the Lok Sabha constituency of the prime minister. “Most of the Ujjawala beneficiaries are non-functional customers of gas agencies.”

Singh added: “We organise transportation of cylinders at our own expenses and offer discounts to attract these new customers. But it has not helped. The BPL [below poverty line] households still find gas unaffordable.”

Sona Devi cooks on her wood stove. (Photo credit: Dhirendra K Jha).
Sona Devi cooks on her wood stove. (Photo credit: Dhirendra K Jha).

The loan trap

The problem is not confined to Uttar Pradesh alone. Gas agency dealers across Gujarat, Madhya Pradesh, Bihar, Jharkhand and Uttarakhand confirmed that the situation in their states was no different from that in Uttar Pradesh, and that obstacles created by the oil marketing company loans have become insurmountable.

“When the government announced Ujjawala scheme, I went door-to-door to persuade BPL [below poverty line] families to apply for gas connections,” said VB Chanchiya, proprietor of Kahan Gas Agency at Odadar near Porbandar in Gujarat. “The response was good, and now they account for nearly half of my agency’s total customer base of 1,200.”

Chanchiya added: “Soon, however, I realised that unknowingly I had walked into a trap. As most of the Ujjawala connections have turned non-functional, my efforts have ended up affecting my agency’s finances rather adversely. These customers have in fact become a huge burden on the agency’s business. Since the Ujjawala scheme is a welfare measure, the government should come forward to own up its burden. Passing it on to gas agency dealers is not fair.”

Bhawani Singh of Jaitpur Kachaya Indane Gas Agency at Deori in Sagar district of Madhya Pradesh said that gas agencies like his have done all they could to help enrol people in the scheme, and the government now needed to step in.

“We know that awareness camps alone won’t help,” he said. “Daily advertisements in TV channels and newspapers cannot make Ujjawala scheme a success. For that, the government must either increase the purchasing power of BPL families or bring down the rate of gas so that they can afford it.”

Representatives of other gas agencies contacted – Abay Kumar Choudhary of Choudhary Indane at Darbhanga (Bihar), Ashwini Kumar of Gauri Shankar HP at Bangaon in Saharsa (Bihar), Manoj Kumar Gop of Ormanjhi Indane in Ranchi district (Jharkhand) and Yashvir Singh Rawat of Gopeshwar Gas Agency at Chamoli (Uttarakhand) – were also unanimous: the Pradhan Mantri Ujjawala Yojana generally stops working in rural areas the moment beneficiaries exhaust the first supply of gas, and unless some way is found to overcome the reason this is so, it would cease to remain operational on the ground.

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