RURAL DEVELOPMENT PLAN

PM’s plan for free gas connections is failing

its objective – as government had been
warned it would
A study commissioned in 2015 said that for the Pradhan Mantri Ujjwala Yojana to succeed,
the price of gas cylinders would have to be reduced.

Reuters
Jan 23, 2018 · 12:30 pm
Nitin Sethi  &  Aroon Deep
In an interview to TimesNow on the weekend, Prime Minister Narendra Modi extolled the
virtues of the Pradhan Mantri Ujjwala Yojana, which offers free gas connections to the rural
poor. “What will be the ease of living for a poor woman, who uses a stove to cook food and
spends her entire life in that smoke?” he asked. “According to me, her ease of living is
possible if I free her from that smoke. I took the big step of Ujjwala and provided gas to
3,30,00,000 families. I may even complete the target of 5 crore families before the deadline.
This, in itself, is our step in the direction of ease of living.”

Modi was right – and he was wrong. Eighteen months after the Pradhan Mantri Ujjwala
Yojana was launched, the scheme is achieving its targets magnificently. It is, however,
failing in its objective of persuading households to stop using firewood and traditional
biomass fuels that have the potential to cause respiratory diseases.
In fact, soon after the scheme was launched, the Union government knew it had
shortcomings, official documents show. The government launched the scheme in haste,
without waiting for the results of a study it had commissioned to understand how exactly
poor households could be induced to use LPG gas as kitchen fuel. The month after Modi
launched the scheme in May 2016, the results of the study were submitted, showing
important flaws.

On the face of it, the Pradhan Mantri Ujjwala Yojana is an excellent idea. Every year, more
than 100,000 Indians die prematurely from diseases caused by inhaling smoke from firewood
and other biomass used as fuel in traditional chullahs, or stoves, said a study in Lancet in
2015. Other studies put the number of premature deaths much higher. Besides, the extraction
of firewood from forests has intensified India’s environmental problems.

When the Pradhan Mantri Ujjwala Yojana was launched, it aimed to provide 50 million free
gas connections by 2019. By September 2017, about 30 million connections had been
delivered.

A village woman in her

kitchen. Credit: HT Photo

Under the scheme, the government provides a subsidy of Rs 1,600 to government-owned oil
manufacturing companies for every free LPG gas connection that they install in poor rural
households without one. This subsidy is intended to cover the security fee for the cylinder
and the fitting charges. The beneficiary has to buy her own cooking stove. To reduce the
burden, the scheme allows beneficiaries to pay for the stove and the first refill in monthly
installments. However, the cost of all subsequent refills has to be borne by the beneficiary
household.
This is where the scheme is failing. While the number of LPG connections across India has
increased by an impressive 16.26% since the scheme was launched, the use of gas cylinders
increased by only 9.83%. This is even lower than the rate recorded in 2014-’15, when the
scheme did not exist, according to data from the government’s Petroleum Planning and
Analysis Cell and other data accessed by Scroll.in. This difference between the increase in
the number of connections and the sale of cylinders is a consequence of the fact that many
people with new connections are not buying refilled cylinders after their first one runs out.

A Comptroller and Auditor General’s report notes that in 2015-’16, households with LPG
connections were using an average of 6.27 cylinders in a year. But after the scheme was
launched, the number of cylinders used on average had come down to 5.6, the data shows.

Since the scheme was launched, the Mint  has reported the same trend using aggregate LPG
sales data by volume. Scroll.in using anecdotal information from the field has also noted the
shortcomings in the scheme. This reportage confirms the trends by using data specifically for
the number of 14.2 kg cylinders LPG gas cylinders bought by households.
CRISIL study
The fact that the scheme would not meet its objectives would have been obvious to the
government if it only it had waited for the results of a study it commissioned from the rating
and analytics company CRISIL in 2015 to try to understand why users were not abandoning
biomass fuels for cleaner LPG cylinders. Between October and December 2015, CRISIL
surveyed more than one lakh people without gas connections across 120 districts in 13 states.
The results were submitted to the government in June 2016, three months after the Union
cabinet hastily approved the details of the scheme in March and a month after Modi formally
launched the scheme.

The results of the report were stark. Of those surveyed, 86% said they had not shifted from
biomass to LPG because the price of installing a connection was too high. Almost the same
number – 83% – said the price of refills was too high. The long waiting time to get a refill for
an empty LPG cylinder was the second-highest reason for those wary of adopting LPG.
Gram-panchayat level surveys found that in a fourth of the panchayats, users had to wait for
more than 15 days on average to get a cylinder refilled.
The study noted that reducing the initial cost of a connection would help increase LPG use.
But that, said that study, would not be enough: the cost of refilled cylinders would have to be
further subsidised by the government. In addition, the infrastructure for delivering cylinders
– bottling plants, dealers and distributors – had to be enhanced substantially.

The CRISIL report noted that 37% of households in rural areas procure cooking fuel for free.
Across the surveyed states, an average 35% of the households procure firewood for free,
76% got cow-dung cakes for free and 88% obtained other kinds of biomass for free. By
contrast, a subsidised LPG cylinder refill costs around Rs 500 and an average family uses
around six a year. Those in rural India who did spend money for kitchen fuel, the survey
found, paid Rs 354 per month on average. Only those who already pay a significant amount
for solid fuels are likely to shift to LPG gas without additional subsidy.

CRISIL’s report highlighting the need to reduce costs of refills was the first study of this
nature commissioned by the government. Independent research had already highlighted this.
In 2015, a rural energy access survey by the Council for Energy, Environment and Water
said, “The high upfront cost to secure an LPG connection is cited as the biggest hurdle (for
95% of households) to adopting LPG. Furthermore, the high recurring monthly expenditure
(88%), and lack of distributors for the fuel in the local area (72%) also act as significant
impediments to LPG adoption.”

The Union ministry of petroleum and natural gas, which oversees the implementation of the
scheme did not reply to emailed queries on the report, the premature launch of the scheme
and the failure to achieve the scheme’s objectives.

Rather than reducing the price of LPG cynlinders, though, the government has done just the
reverse: It has tried to reduce its subsidy bill and passed on the rest of the burden to the oil
manufacturing companies, shows analysis of data from the Petroleum Planning and Analysis
Cell.

In 2015-’16, the government under-compensated oil manufacturing companies by about Rs

34-Rs 49 per cylinder. The compensation given by the government to oil companies fell far
shorter when global oil prices shot up or the transport costs of delivering cylinders to remote
areas increased. This led to the oil manufacturing companies bearing about Rs 5,000 crore of
financial burden for distributing subsidised cylinders. If oil prices continue to rise as they
have been doing in recent months, the cost of LPG cylinders will rise even further – making
them even more unattractive to people who don’t use them.

“We need to ensure that we are able to subsidise refills and that rural households are able and
willing to pay for them,” said Swati D’Souza, associate fellow with The Energy and
Resources Institute, who has researched the subsidies and costing of LPG in India. “This
enhances their health and quality of life, as well as urban air quality. It is a social
investment.”

To arrive at an accurate assessment of the Pradhan Mantri Ujjwala Yojna, experts say,
merely counting the number of new gas connections cannot be the only yardstick.

Support our journalism by subscribing to Scroll+ here. We welcome your comments

at letters@scroll.in.

 LPG Gas

 Kitchen Fuel

 Pradhan Mantri Ujjwala Yojana

 Biomass Fuels

 Gas Connections

 Indoor Air-Pollution

 Subsidies

 Social Security
  Public Health

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