There is a huge mismatch in growth of LPG consumption and customers in 2016-17, even as the government's Ujjwala scheme has been a roaring success so far
On 1 May 2016, Prime Minister Narendra Modi launched the Pradhan Mantri Ujjwala Yojna (PMUY). The scheme intends to provide 50 million LPG connections to women from Below Poverty Line (BPL) families. It has been a roaring success so far. 20 million LPG connections have been issued in 2016-17 against a target of 15 million. These numbers suggest a revolution in cooking methods for the poor.
Many commentators had held PMUY as an important factor behind Bharatiya Janata Party’s (BJP) victory in the Uttar Pradesh assembly elections of March 2017. However, statistics from the ministry of petroleum question the euphoria around PMUY. LPG connections have increased no doubt. But PMUY beneficiaries do not seem to be using their LPG cylinders.
Growth in the number of LPG customers was the highest in the past decade in 2016-17. PMUY is the reason for this. Out of 32.2 million new LPG connections in 2016-17, 20 million are PMUY beneficiaries. This increase, however, does not reflect itself in consumption of LPG. Year-on-year (y-o-y) growth in LPG consumption increased from 9% in 2015-16 to 9.8% in 2016-17. Contrast this with y-o-y growth in LPG customers, which increased from 10.2% in 2015-16 to 16.2% in 2016-17.
A story by Dhirendra Kumar Jha on news website Scroll reported that a large number of PMUY beneficiaries have not come back for refills in many states. The gap between consumption and customer growth for LPG in 2016-17 confirms the ground-based reporting of PMUY customers not buying refills in Jha’s story.
There is nothing surprising about this. PMUY beneficiaries do not have to pay security deposit or other overhead costs while taking LPG connections. They also have the option of paying for gas stove and first refill at the time of getting connection in instalments. However, there is no extra concession from the second refill stage.
Even a subsidised cylinder costs around Rs450. Paying for one LPG cylinder per month is not an insignificant expenditure for poor households in India. A Plainfacts column had reported that the bottom 20% of India’s households spent less than Rs7,000 per month in 2016. Kerosene, which is around Rs20 per litre, or firewood is a much cheaper cooking fuel.
A state-wise comparison lends support to this logic. Relatively poorer states such as Bihar, Uttar Pradesh and Madhya Pradesh are the ones with the highest mismatch between sales and customer growth between 2015-16 and 2016-17.
Given the high growth in the number of LPG subscribers, the government is right in celebrating the success of PMUY. However, it should make a fresh assessment whether these numbers have taken us closer towards more widespread use of a clean cooking fuel.
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