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Ujjwala Yojana: devil is in the detail

By Saurabh Tripathi and Sasmita Patnaik, Oct 11 2017, 0:02 IST

Mere ownership of an LPG connection won't be enough to get households to switch from traditional chulhas.

The Pradhan Mantri Ujjwala Yojana (PMUY) has been one of the most strategic policies undertaken by the government in the last three years. Niti Aayog’s recent three-year action agenda emphasises the importance of the scheme in achieving universal access to clean cooking energy.

Since its launch, PMUY has provided LPG connections to over 2.9 crore women in BPL households. While the scheme significantly reduces the high upfront cost of an LPG connection for beneficiaries, a much greater effort is required to promote the sustained use of LPG as the primary cooking fuel of rural households.

In 2011, even as 53% of households in India had an LPG connection, only 28% used it as primary cooking fuel. Despite choosing to get a connection and paying the entire upfront cost for it, almost half of the households with LPG were not using it regularly. Data from the Petroleum Planning and Analysis Cell (PPAC) shows that while there has been a phenomenal increase in the number of LPG customers in the one year since PMUY, the actual sales of packed cylinders have not kept up. In Uttar Pradesh and West Bengal — states with the highest PMUY beneficiaries — connections have increased by over 30%, yet the sales of cylinders have increased by only 15%.

The mere ownership of an LPG connection then, while necessary, may not be enough to get households to switch from traditional chulhas. PMUY must look to address the structural challenges associated with the sustained consumption of LPG to enable a complete shift towards clean cooking energy solutions.

The first key challenge to sustained use is affordability. India’s largest rural energy access survey, ACCESS, conducted in 2015 by the Council on Energy, Environment and Water (CEEW) and Columbia University, showed that 43% of rural households do not spend any money on procuring their cooking fuel, relying entirely on collected biomass. This, coupled with the behavioural inertia of having used traditional chulhas for decades, renders them unlikely candidates for an immediate and sustained transition towards LPG.

For such households, clean cooking energy interventions need to be complemented with income support programmes. While India supports low-income families through direct LPG subsidies, countries such as Brazil have integrated compensation for cooking gas with their cash transfer programme, Bolsa Famlia, to increase the financial flexibility of households.

Access to clean cooking energy in Brazil is combined with the government’s efforts to address malnutrition and poverty, with the compensation conditional on family size, number of children, pregnant women, and nursing mothers. Similarly, with appropriate behavioural interventions, households in India may well be nudged to allocate part of the marginal increase in their income on procuring clean cooking energy.

The second key challenge is that of unpredictable cash flows in rural households. ACCESS data showed that over two-thirds of all households paying for their cooking fuel would be able to use LPG as their primary
fuel at current prices, if they could
stagger the monthly expenses.

Many rural households are accustomed to spending small amounts for procuring biomass on a weekly basis, and are likely to find the lumpsum monthly recurring expense of cylinder refills too steep. The state should assist such households by innovating payment mechanisms with oil marketing companies that allow for weekly or fortnightly instalments. It is equally vital to promote other clean fuels and technologies such as biogas, improved cookstoves and biomass pellets to complement household expenditure on LPG.

The third key challenge is the availability of LPG through an extensive network of rural distributors. Against the target of 10,000 new distributorships in 2016-17, the government could initiate the process for only 3,500. There is a need to streamline the bureaucratic hurdles to obtaining distributor licences and build the business case for distributors to operate from remote locations and home-deliver cylinders to households.

Further, as ACCESS data shows a higher willingness to pay for cylinder refills among non-BPL households, it is equally vital to extend instalment-based connections to them. This will help improve the commercial viability of rural distributors by creating sustained demand for LPG cylinders in the long-run. The extensive network of self-help groups (SHG) in India can also be leveraged to offer end-user finance and improve the availability of LPG cylinders in rural areas.

Notwithstanding the challenges to LPG adoption in rural India, there exists an immense opportunity for the government to show bold policy leadership by evolving PMUY from a connections-focused programme into one that ensures the sustained use of the fuel. Creating strategic incentives for rural distributorships and focusing on affordability will be crucial.

With the Ujjwala Yojana, the government has taken an important step towards eliminating reliance on traditional biomass for cooking. It must now evolve its strategy to empower rural households to sustain the transition to a suite of cleaner fuels.

(The writers are researchers at the Council on Energy, Environment and Water)

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