- Impressive rise in LPG gas cylinder connections
- New connections to six crore families
- But 1.20 crore beneficiaries may not have taken cylinder refills
- Poor families are not able to afford the refills
- LPG use has not risen at the same pace as gas connections
The Pradhan Mantri Ujjwala Yojana provides free cooking gas connections to families living below the poverty line. It is one of the most heavily advertised of Modi government’s schemes. Positioned as a welfare measure for women, its tagline says, ‘Every woman will get her due respect and dignity.’
The aim of the scheme is to provide clean cooking fuel to every poor household, especially in rural areas, where household air pollution from traditional cooking fuels like wood and coal is a major health hazard. Connections are given in the name of the adult woman in the house.
Prime Minister Narendra Modi launched the scheme in May 2016. The initial target for the scheme was to provide Liquified Petroleum Gas connections to five crore families by 2019, which has since been raised to eight crore families by 2021. The initial budget of the scheme was Rs 8,000 crore. The government announced an additional Rs 4,800 crore in February 2018, bringing the total allocation for the scheme to Rs 12,800 crore.
In January 2019, the government released data to show it has provided about six crore connections so far, exceeding its targets for every year since the launch of the scheme.
But about 1.20 crore of the beneficiaries may not have taken any LPG cylinder refills, based on data shared by the oil minister. Critics say the scheme’s impact is limited since many poor families cannot afford gas refills.
An analysis of the scheme’s performance based on data from the government’s Petroleum Planning and Analysis Cell showed that while the number of LPG connections across India increased by 16.26% in 2016-’17, the use of gas cylinders increased by only 9.83% – lower than the rate recorded in 2014-’15, when the scheme did not exist.
How does the scheme work?
Initially, the beneficiaries of the scheme were families living below the poverty line, according to the Socio-Economic Caste Census conducted in 2011. The ambit was expanded in February 2018 to include all Scheduled Caste and Tribes households, beneficiaries of the Pradhan Mantri Awas Yojana Grameen and the Antyodaya Anna Yojana, forest dwellers, most backward classes, tea garden tribes and people who live on islands.
The government bears the cost of Rs 1,500 for an LPG connection that includes a security deposit, installation costs, and a hose for each beneficiary. Oil marketing companies Indian Oil, Bharat Petroleum and Hindustan Petroleum extend an interest-free loan of Rs 1,600 for a hot plate and the first gas cylinder.
The companies are allowed to recover the loan amount from the subsidy to the beneficiary, which is in the range of Rs 200 to Rs 300 per refill.
Therefore, beneficiaries have to pay market rates for the second cylinder onwards till the loan is recovered by oil companies. Once the loan is recovered, the subsidy is transferred into beneficiaries’ bank accounts.
What are its limitations?
At the subsidy rate of Rs 200 to Rs 300 per refill, it would take five to seven refills for the loan to oil marketing companies to be repaid. According to one analysis that assumes an Ujjwala consumer avails 4.32 refills in the first year, she will have to spend Rs 2,500 to Rs 3,000 over one year to continue using LPG.
The normal expectation for consumption of LPG for all cooking needs is 12 cylinders per household per year. The average use in India before the launch of the scheme was 7.3 cylinders, indicating that LPG was used only for 60%-80% of cooking needs. But official estimates have shown that Ujjwala users consume less than the average use: between 35% and 50% of cooking needs.
A survey of six states in 2018 by the non-profit Council for Energy, Environment and Water found that the Ujjwala scheme had helped the uptake of LPG, but it is still not the primary cooking fuel in the majority of beneficiary households. About 73% non-beneficiary households reported using LPG as their primary fuel while only 45% Ujjwala households reported the same.
Another survey led by researchers Aashish Gupta and Sangeeta Vyas in 127 villages in rural North India in 2018 found about three-quarters of households reported owning LPG, up from about one-third in a similar survey done in 2014. But 37% of LPG-owning households used both LPG and solid fuels, and 36% cooked everything using solid fuels.
What is the ground experience so far?
As Scroll.in reported in June 2017 – one year after the launch of the scheme – many beneficiaries in Uttar Pradesh’s Faizabad district had finished using their first free cylinders and then gone back to using firewood as cooking fuel. Representatives of gas agencies in the area also unanimously said that the scheme stopped working after BPL customers finished their first cylinder and that it had become a big burden on the agencies.
Social sector specialists working with the programme reported in Mint in September 2017 that Ujjwala’s uptake had been promising in Bihar. According to their data, a total of 452,239 connections had been issued in the year since the launch of the scheme. Till August 2017, 62% customers had taken four or more refills, while only 5% had not bought any refill.
But other states reported less promising numbers. In Odisha, according to government data, only 27% beneficiaries took a second refill in 2016-’17 and only 21% in 2017-’18.
In Madhya Pradesh, Adivasi women beneficiaries of the scheme told Scroll.in in May 2018 that they had gone back to using firewood but faced more trouble from forest officials who taunted them, saying ‘go use your free gas’.
In January 2019, The Indian Express reported that Adivasi women in Gujarat were taken off the list of Below the Poverty Line families after they received LPG cylinders under the Ujjwala scheme. The report cited a study conducted by an NGO called Disha which found that 953 of the 1,080 surveyed Ujjwala beneficiaries had been converted to Above Poverty Line status after receiving LPG connections. The Adivasi women said ration shop dealers refused to give them subsidised kerosene and food supplies meant for BPL families.
How is the government plugging the holes?
In March 2018, with the aim of addressing the problem of refills and possibly with an eye on elections in large states like Karnataka, oil marketing companies announced they would defer recovering loans from the LPG subsidies of Ujjwala beneficiaries for up to six refills or one year.
To encourage usage, they also introduced five kg refill cylinders that are more affordable. According to oil marketing companies, loan deferment and behavioural change has raised the average number of refills under the scheme to three, which is still less than half the national average of seven.
Oil minister Dharmendra Pradhan said that 80% of Ujjwala Yojana beneficiaries have been refilling the cylinders. This means that about 1.20 crore beneficiaries have not taken any LPG cylinder refills. The minister said that the average consumption under the scheme is 3.28 cylinders per year, which is a significant change in households that have been dependent on traditional cooking fuels.
However, there are concerns that the loan defaults could end up burdening the oil companies with debt.
This article is part of The Modi Years series which recaps the major milestones, controversies and policies of the BJP government.