Cooking gas for the poor

Prime Minister Narendra Modi on Sunday launched the Rs 8,000-crore Pradhan Mantri Ujjwala Yojana (PMUY), under which five crore women below the poverty line would be provided with free cooking gas connections. In the first year, 1.5 crore such connections will be released. The target of 5 crore will be completed in three years, he said, comparing it to the just 13 crore LPG connections provided in over 60 years of Independence. But the scheme translates to just Rs 1600 per beneficiary or about two unsubsidised cylinders a year. It is not enough. The government should be more generous. Experts have contended that the health care costs saved will more than offset a higher outlay. On March 27, Modi had officially launched the “Give-it-Up” campaign, urging the well-off to surrender their LPG subsidy so that it can be given to the needy. The Prime Minister claimed that 1.10 crore people have given up their subsidies since the government’s call to action. Although this figure has not been verified, both the government’s Give-it-Up campaign and its decision to provide free cooking gas connections to women below the poverty line, aims to achieve two specific goals. Besides the government’s desire to bring down the country’s dependence on energy imports by 10 percent by 2022, the subsidy surrendered will be used to provide free LPG connection to BPL families. The identification of eligible BPL families will be mawde in consultation with the state governments and the Union Territories. However, it must be noted that there are certain gaps in the current system of identifying those families below the poverty line (BPL) that could result in the exclusion of the very beneficiaries that the government seeks to address. Without fixing them, the current policy will not translate into substantial benefits for the poor.   

Late last year, the government announced that from January 1, 2016, taxpayers with an annual income of more than Rs 10 lakh would not be allowed to purchase subsidized LPG cylinders. Consistent policy decisions on this front will free up a substantial chunk of the LPG subsidy amount for the poor, the government argued. The benefits for the poor come in the form of subsidised LPG cylinder instead of cooking over firewood, which releases poisonous fumes. Even during his address on Sunday, Modi used a personal anecdote to emphasise the benefits of PSUY scheme, particularly for women in poor households. “I was born in a very small house, there were no windows. When my mother used to cook food on firewood, sometimes there used to be such thick smoke that we wouldn’t even be able to see our mother as she served food. This is why I can completely understand the pain of mothers and their children. I’ve gone through that,” he said. Rhetoric aside, the Prime Minister has made a larger point on the public health aspect of providing free LPG connections. According to estimates by the World Health Organisation (WHO), approximately 5 lakh deaths occur in India alone due to unclean cooking fuels. Experts say having an open fire in the kitchen is like burning 400 cigarettes an hour. Providing LPG connections to BPL households will ensure universal coverage of cooking gas in the country, besides empowering women and protecting their health.

It is also imperative to understand that the LPG scheme is intertwined with the Centre’s financial inclusion scheme, popularly known as the Jan DhanYojana. As expected, the rollout of the direct benefits transfers (DBT) scheme for LPG – where subsidies are directly paid into consumer bank accounts –will add further impetus for the Modi government’s flagship financial inclusion scheme. The aim here is to direct the subsidised resources to the right beneficiaries. The gross mishandling of the subsidy outgo in the past has damaged the country’s exchequer rather than ensuring the welfare of the poor. Despite making the right noises, the NDA government needs to give its citizens greater clarity on how this will be implemented and what it really entails. Moreover, there is a lack of clarity on whether the government is serious about pursuing its Give-it-Up policy. On April 22, Petroleum and Natural Gas Minister Dharmendra Pradhan said that those who voluntarily give up the LPG cylinder subsidy under the government’s Give It Up scheme can ask for it after a year. How does that work? On the question of subsidies, the general understanding is that once it is given it up, there is no coming back. Such an announcement could dilute the effect of the government’s Give-it –Up campaign. But if the government is willing to go down on this path, at what LPG price point is it willing to reconsider giving back the subsidy to those who gave it up. There must be greater clarity on this front too.