Ujjwala scheme: Will 5kg cylinders improve refill rates?
In February, Research Institute for Compassionate Economics found that 90 percent of Ujjwala beneficiaries use old means of cooking. Chhattisgarh, Jharkhand, and Assam are some of the worst performing states.
Over seven crore households have benefitted from the Pradhan Mantri Ujjwala Yojana (PMUY) scheme. Now, the government is looking to improve this performance even further.
How does the Ujjwala Yojana work?
The state government identifies households that are below the poverty line (BPL) who can avail of the scheme. A registration to avail the LPG gas cylinder is made under the name of a female member from that particular family and a deposit amount of Rs. 1,600 is provided as an initial deposit amount.
“It is an important entitlement. Cooking gas is more healthy, better for the environment, saves time in collecting fuel as well as cooking,” says Dipa Sinha, Economics faculty at Ambedkar University, Delhi.
Public sector oil companies supply the connection with a regulator, connecting pipe, and gas stove. While the centre bears the cost of the connection, these companies pay for the stove and cylinder through loans, and recover it in installments from subsidies on refills. During the purchase of the refills, women have to pay the full price and wait for the subsidy to be transferred to their accounts.
Overall governance in some states is an issue when it comes to beneficiaries who bought refills. In February, the Research Institute for Compassionate Economics found that 90 percent of Ujjwala beneficiaries use old means of cooking. Chhattisgarh, Jharkhand, and Assam are some of the worst performing states.
Successful yet troublesome
The government is taking steps to achieve its goal of distributing cylinders to eight crore subsidiaries by 2020. Since its launch in May 2016 in Uttar Pradesh, it has achieved 87 percent of its desired target so far. In the past year alone, 82 percent of households have returned for at least one refill. But they face many problems.
The national average for the number of refills for a household is seven. But in the Ujjwala scheme, the number stands at three. According to the petroleum ministry, high cost of refills for a 14.2 kg cylinder is one of the main hindrances to this scheme. This is because not all refills are 100 percent subsidised. Moreover, the transfer and delivery of these large-sized cylinders poses difficulty.
As of now, this scheme is inadequate due to poor refilling. The government is now making 5kg LPG refills mandatory to power the Ujjwala scheme. Sinha said, “This change might help increase consumption because cost is a major barrier. If at a time, a smaller amount is required, some may now be able to afford it.” She added that a complete shift to LPG needs to be facilitated.
However, a positive change towards increased refill rate also depends on the transaction costs and availability. Delays in payments, exclusions in aadhar-related cases, and access to banking needs to be solved as well. The government hopes that the target of eight crore connections under the Ujjwala scheme will be completed in the first 100 days of Modi 2.0.