Third Phase of Pradhan Mantri Ujjwala Yojana Launched

On 13^th September, 2023, the Union Government launched the third phase of the Pradhan Mantri Ujjwala Yojana (PMUY).

Key Points

Extension of the Ujjwala Scheme: The third phase of the Ujjwala scheme will grant 7.5 million underprivileged households free liquefied petroleum gas (LPG) connections until March 31, 2026.
Benefits: Under this scheme, beneficiaries will receive deposit-free gas connections, including a stove, and the first 14.2kg cylinder at no cost.
Financial Aspects: The cost of one such connection, amounting to Rs. 2,200, will initially be borne by state-run oil marketing companies. The government will later reimburse these expenses. The estimated cost of the entire scheme is Rs. 1,650 crore.
Inclusivity in the Scheme: The Ujjwala scheme's extension now includes eligible households that lack LPG connections for various reasons, such as the formation of new nuclear families.

Background

The Pradhan Mantri Ujjwala Yojana (PMUY), also known as Ujjwala 1.0, was launched by the Prime Minister on May 1, 2016, in Ballia, Uttar Pradesh.
It aimed to provide clean cooking fuel to around 80 million impoverished households across India. The initial target was met in September 2019.
Subsequently, PMUY phase-2, or Ujjwala 2.0, began in August 2021 from Mahoba district in Uttar Pradesh, with an initial goal of 10 million connections, which was achieved by January 2022.
Additional 6 million connections were released under Ujjwala 2.0 until December 2022. The government has now introduced the third phase of the scheme.

Objectives

Providing clean cooking fuel, specifically LPG, to rural and deprived households.
Empowerment of women and safeguarding their health.
Reducing deaths in India attributed to unclean cooking fuels.
Preventing young children from suffering acute respiratory illnesses caused by indoor air pollution due to the combustion of fossil fuels.

Benefits of PMUY

Eligible beneficiaries are provided with a free LPG connection, promoting the use of clean cooking fuel.
Subsidies are extended to beneficiaries on the first six refills of 14.2 kg cylinders or eight refills of 5 kg cylinders, reducing their financial burden.
Beneficiaries have the option to utilize an EMI facility to cover the costs of the stove and the initial refill.
Enrolling in the PAHAL scheme enables beneficiaries to receive subsidy amounts directly in their bank accounts, streamlining the process for greater convenience and financial relief.

Limited Refill Consumption

Data indicates that, during 2022-23, the average PMUY beneficiary refilled fewer than four LPG cylinders.
Surprisingly, one in four PMUY beneficiaries either did not utilize any LPG cylinders or only obtained one refill within the same period.
In contrast, non-PMUY households exhibited significantly higher LPG cylinder consumption, with each household averaging 6.67 refills. This highlights a substantial consumption gap.

Rising LPG Cylinder Prices

Even with subsidies, the substantial increase in LPG cylinder prices has made them less affordable for rural and deprived households.
The high costs associated with LPG may discourage beneficiaries from utilizing it for cooking, undermining the scheme's core objectives.

Subsidy Expenditure

Between January 2018 and March 2023, rates for subsidised LPG cylinders surged by 82%, soaring from Rs. 495.64 in January 2018 to Rs. 903 in March 2023.
Subsidy amounts are determined based on the variance between the Retail Selling Price (RSP) and the government's subsidised cost.

International Factors Affecting LPG Prices

Various international factors contribute to the final LPG prices, encompassing import charges, bottling expenses, freight costs, delivery charges, GST, and distributor commissions. These factors collectively influence the affordability of LPG for beneficiaries.