LPG Subsidy: Ujjwala Scheme, Ease of Living Via Clean Cooking, PM’s Women-oriented Approach Explained

The Narendra Modi-led central government on Tuesday slashed LPG cylinder prices by Rs 200, making it around Rs 900 while Ujjwala beneficiaries will get it for Rs 700. A big step, especially ahead of the 2024 Lok Sabha elections, it will not only work as a major poll attraction but also ease household spends while giving many the option of “clean” cooking.

Keeping in mind the welfare of women and many who do not have access to clean cooking methods, Prime Minister Narendra Modi called the Rs-200 subsidy a gift for his “sisters” on Onam and Rakshabandhan. “The festival of Raksha Bandhan is a day to spread happiness in our families. The reduction in gas prices will increase the comfort of the sisters in my family and make their lives easier. May every sister of mine be happy, be healthy, this is my wish from God,” he posted on X (formerly Twitter).

According to the World Health Organization (WHO), approximately 2.4 billion people worldwide – one-third of the global population – rely on open fires or inefficient cooking methods with the help of fuels like kerosene, biomass (wood, animal dung and crop waste), coal among others. This leads to air pollution inside homes, contributing to an estimated 3.2 million deaths annually in 2020 of which more than 2,37,000 were children under the age of five.

Indian households and clean cooking gas

Clean cooking gas reduces the burden of pollution inside households, leading to a much more sustainable lifestyle for all family members. Liquefied petroleum gas, or LPG, was introduced in India in the 1950s, but even after over 60 years only 14.5 crore gas connections had been provided by April 2014. This left at least 44 percent of the households without access to clean cooking gas.

Impoverished communities in India, especially in rural areas, used traditional fuels like firewood, coal and dung cakes without being aware of the adverse health effects caused by them. A study in 2015 showed that limited distribution networks and high acquisition costs significantly contributed to the absence of a gas connection in many households.

The government’s latest cut in LPG prices is in addition to subsidised rates for beneficiaries under the Pradhan Mantri Ujjwala Yojana (PMUY), who earlier got a relief of Rs 200 in March 2023. Now, the government will be giving away an additional 75 lakh Ujjwala connections taking the total number of beneficiaries to 10.35 crore.

What are steps taken by Centre to expand LPG coverage?

PMUY: The government launched the Pradhan Mantri Ujjwala Yojana on May 1, 2016, aiming at giving free LPG connections to rural and deprived households still relying on traditional cooking fuels.

PAHAL, or direct benefit transfer: Instead of providing LPG cylinders at slashed prices, they were sold at market price and subsidies were directly transferred to individual bank accounts. This reduced the number of “ghost” accounts and the illegal use of gas cylinders for commercial purposes. It also ensured that the beneficiaries receive the subsidy.

Giving up subsidised connections: Instead of removing subsidies by force, people were encouraged to voluntarily surrender their subsidies. Many willingly gave up subsidies, which helped redirect funds for those who genuinely needed assistance in acquiring LPG cylinders.

How has PMUY made a difference?

Under Ujjwala 1, the total cost was borne by the government at Rs 1,600 including security deposit as well as hosepipe, booklet and pressure regulator. Oil companies gave easy loans of Rs 2,000 to consumers for LPG in the first cylinder and a gas stove, which was deducted from the subsidy transferred to their accounts.

In 2021, under Ujjwala 2, the loan is also being paid off by the Centre. So, the government is giving Rs 3,600 for each connection, besides Rs-200 subsidy per refill later. Initially, targeting five crore LPG connections, the scheme surpassed expectations with an overwhelming demand and led to an increased target of eight crore connections.

The eligibility criteria was expanded to include more deprived sections, ensuring that all poor families who needed LPG connections could benefit from the scheme. Realising the need to achieve complete LPG saturation and for those who were left out, Ujjwala 2.0 was launched. Along with a deposit-free LPG connection, this version of the scheme provides first refill and a hotplate free of cost to beneficiaries.

The government also ensured migrants, who lacked proper address proof, are included by creating a special provision in Ujjwala 2.0. They were enabled to apply for LPG connections with a self-declaration as proof of identity and address. The target of releasing another 1.6 crore LPG connections under Ujjwala 2.0 was achieved on December 31, 2022.

The per capita consumption of Ujjwala beneficiaries, which was 3.01 in 2018-19, has increased to 3.71 in 2022-23. They take more than 35 crore LPG refills per year now (2022-23). Hence, the government is committed to provide Ujjwala connections to every eligible household and, to further encourage consumption, it has started a targeted subsidy of Rs 200 per 14.2 kg cylinder for beneficiaries for up to 12 refills per year for 2022-23 and 2023-24.

How much does the Centre spend on Ujjwala?

The Centre has spent Rs 12,800 crore on providing free LPG connections to eight crore women in the first phase of PMUY. In addition, the public sector oil marketing companies (OMC) provided loans to beneficiaries to cover the cost of first refill and stove.

More than 6.3 crore beneficiaries availed this facility for which over Rs 10,100 crore was disbursed. The loan was free of interest with payment moratoriums and more than Rs 5,000 crore is still with beneficiaries due to relaxed repayment terms.

For Ujjwala 2.0, the government spent over Rs 2,500 crore. In addition, OMCs have spent more than Rs 3,200 crore in providing free refills and stoves. A targeted subsidy for PMUY families was started at Rs 200 per cylinder for 12 of them per year. For this, the government spent more than Rs 6,000 crore in 2022-23 and will spend another Rs 7,500 crore this year.

What are the results?

In India, LPG coverage has significantly improved – 105.1 percent as of April 2023 as compared to 55.9 percent in April 2014. The implementation of PMUY generated an estimated one lakh jobs in the LPG distribution system.

During the Covid-19 lockdown in 2020, a free refill scheme was implemented under Pradhan Mantri Garib Kalyan Yojana in which 14.17 crore PMUY beneficiaries got LPG refills. This way, the scheme provided a much-required safety net to those who belong to economically weaker sections and were adversely affected during the pandemic.

The increased adoption of LPG among PMUY beneficiaries resulted in a significant rise in domestic consumption from 14,411 TMT in FY 2013-14 to 25,381 TMT in FY 2022-23, indicating an improvement in cooking practices and a reduction of air pollution inside homes.

The gender factor

Research has indicated a gender problem in the use of traditional fuels: girls and women face increased exposure to them. Cooking with these fuels also delays progress towards five of the sustainable development goals (SDG) – good health and wellbeing; gender equality; affordable and clean energy; climate action; and life on land.

The Ujjwala scheme has economically and socially empowered women. With easier access to LPG, women are no longer burdened with the task of collecting firewood or other traditional fuels, which often required long and laborious journeys. The convenience of a gas cylinder allows them to take part in community life and have other income-generating opportunities.

The scheme has also helped enhance safety and security of women, as they no longer need to venture into isolated areas to collect firewood or fuel. It has been a transformative initiative with a positive impact on health, safety and livelihoods of women in rural as well as deprived areas.

What are the health and environmental benefits?

Studies and policy research shows that health, environment and gender equity, all are affected due to the use of traditional fuels. Household air pollution leads to 3.2 million premature deaths annually, a significant proportion being women and children. There is a heightened risk to life due to illnesses such as pneumonia, lung cancer, ischaemic heart and chronic obstructive pulmonary diseases, all of which are extensively reported.

Non-renewable wood fuels for cooking cause a gigaton of carbon dioxide emissions while burning residential solid fuels contribute to 58 percent black carbon emissions. These are also a significant contributor to household air pollution due to incomplete combustion of solid biomass.

According to a study by the ministry of health and family welfare, more than 40 percent of those who use cooking gas reported significant improvement in general health. At least 55 percent of the LPG users surveyed reported a significant decrease in the number of episodes of respiratory illnesses.

The study also showed that 40 percent of LPG users reported a decrease in the number of visits to hospitals. At least 99 percent reported less time consumed in cooking while 97 percent reported that it was easier to clean utensils.

Central govt’s role in keeping LPG prices low

Even when the Saudi contact price (CP), the international LPG benchmark, rose by a whopping 303 percent from April 2020 to April 2022, the prime minister ensured that domestic prices did not rise in the same range. Hence, there was an increase of ­­­63 percent in LPG prices in the same period.

India imports more than 60 percent of its domestic LPG consumption and prices are based on Saudi CP, which rose from $236 per MT in April 2020 to $952 per MT in April 2022. This hike was not fully passed on to Indians due to which the OMCs suffered under recoveries of approximately Rs 28,000 crore on sale of domestic LPG. The Centre, hence, approved a one-time compensation of Rs 22,000 crore for OMCs in FY 2022-2023.