The political will and a well-meaning execution machinery was what delivered the astounding results of the Pradhan Mantri Ujjwala Yojana (PMUY) in distributing deposit-free LPG cylinder connections to women. It is rare to find a scheme that has so successfully involved stakeholders down to the level of panchayats and had a perfect programme governance. It is learnt that the minister of petroleum and natural gas, the secretaries in the ministries and the chairpersons and managing directors of oil marketing companies personally supervised the work. They visited at least one district to understand the issues on the ground coming in the way and provided solutions.
The scheme took the household coverage from about 56% to about 81% in just three years. That was unimaginable a few years ago when, even for an urban consumer, getting a cylinder was a wait in frustration. Almost everyone in the beneficiary segment and the industry is complementing the doers most deservedly. Despite being a social scheme, the delivery was cost-effective with numbers indicating about ₹1,600 spend per beneficiary. The Ujjwala scheme was possible only because of the robust foundation created by the subsidy payment scheme, direct benefits transfer (DBT), which was another significant achievement of the government. The government plans to cover more women with additional budgetary provisions made in the interim budget of 2019.
The objective of the scheme was to make the rural households climb the energy ladder and stop using agro-waste as fuel at homes. The argument was that women face a health hazard, spend time of the day collecting agro-waste fuel, and are unduly held responsible for collecting fuel when men arguably are earning bread.
However, the excellent delivery of the Ujjwala scheme is inadequate to achieve the objectives. The next wave of reforms is necessary.
Agro-waste usage cannot be done away with yet because of unaffordability and often non-availability of refill, though cylinders are already at home. The subsidy against that refill is credited to their bank accounts with no delay. Many newly enrolled consumers, however, do not have the capacity to make upfront payment for the refill. Many micro issues lead to the consumers not updating their phone numbers and a vast majority of them, in turn, cannot order a refill with ease. Delivering low volumes, especially in sparsely populated, hilly and far flung areas, is not feasible and costly. Also, strengthening supply chain in new areas will take time.
The public sector has the strength to make these social schemes succeed. The efficiency of the private sector will make it sustainable. The size of the sector and the growth it promises makes it imperative to asses the possibility of courageously unbundling, decentralizing, and democratizing activities. The scope is in the whole value chain from sourcing infrastructure to storage and transportation, and from bottling to distribution.
Aggregation of demand from low-demand areas using technology, servicing them by vehicles that also carry other goods, and using private sector services may be a solution. Tech-enabled, Aadhaar-based micro-financing may help bridge the finance gap for refill purchase. The possibility of avoiding full payment, as subsidy follows immediately, can be explored in case of digital payments as the payer’s credentials are established while paying. Refill bookings need to become easy and quicker by making the interface simpler, including possibly by voice. Startups and tech companies have a potential to demonstrate their prowess here.
The government is aware of these issues. However, a new issue is being put across by social analysts. If women had the freedom to come out of homes and indulge in recreation while gathering agro-waste, how can we ensure they find other avenues of recreation instead of being restricted to their homes as they are in some sections of society. Also, the argument is that men benefit as much as women, as the indoor combustion of agro-waste is a health hazard for them as well, and in most households the economic benefits of subsidy are accruing to the earning members, the men. As such, social reforms are necessary too.
The DBT and PMUY are all set to be followed by reforms which will be far reaching in meeting the objectives. The success is already a benchmark, with many countries reaching out to India to help them replicate it.
*Deepak Mahurkar is partner and leader-oil and gas industry practice at PwC India.