The increasing price of LPG cylinders is apparently forcing poor beneficiaries of Pradhan Mantri Ujjwala Yojana (PMUY) back to use of unclean fuel. To check this trend, SBI Research has suggested a number of measures in its recent Ecowrap report. One of these suggestions include providing four free LPG cylinders every year to eligible beneficiaries. The report notes that even as the PMUY has solved the problem of availability of LPG cylinders across the country, the problem of affordability continues to exist. The rising prices of LPG cylinders has only added to the woes of poor beneficiaries who can’t afford to buy costly refills.
In the last six months, the price on non-subsidised LPG cylinder in Delhi has increased by Rs 284 from Rs 575 per cylinder in August 2010 to Rs 859 in February 2020.
Analysing the state-wise refill data of 5.92 crore connections installed till December 2018 and refill up to June 03, 2019, the SBI Research found that 24.6 per cent of beneficiaries never came back for the second refill, 17.9 per cent consumers refilled either 1 or 2 cylinders, 11.7 per cent refilled three cylinders and 45.8 per cent consumers refilled four or more cylinders. “This indicates that 54.2 per cent of total PMUY consumers consumed up to 3 cylinders in a year or more. However logic suggests that a family of 4 requires at least 3-4 cylinders per year. This means that people are not using PMUY cylinders on regular basis,” the SBI Research said.
The report further said that even as PMUY is an excellent step in promoting clean energy to rural households, the PMUY use among the rural households in states with low per capita income may be lower due to continuous increase in LPG prices. “The beneficiaries are going back to use of unclean fuel (hazardous to their health also) as soon as the free cylinders get exhausted,” it concluded.
The SBI Research report has made several suggestions that may help in stopping the PMUY beneficiaries from going back to unclean fuel. It points out the need to improve the targeting of LPG subsidy, which is currently availed by over 85 per cent of customers. This can be done with the by creating a comprehensive database and then provide these people with a maximum of four free cylinders in a year.
“The Government can do this with the help of creating a comprehensive merged database using databases of Ayushman Bharat, PM-KISAN, PMJDY, PMUY and MUDRA and then provide these people with maximum four free cylinders in a year,” SBI Research says.
“Even if 4 crore people are eligible for this then the total cost to exchequer per year will be maximum Rs 12,800 crore (4 crore x 4 x Rs 800 per cylinder),” it adds.
The report also says that the number of subsidised cylinders per annum to households can be reduced from the current 12 to 9 (average all India consumption is 6.7 cylinders) which would be sufficient for most households.