Modi's Gas for the Poor Scheme Marred by Data Inflation, Poor Implementation

Apart from subsuming all earlier Central and state schemes under the PMUY to boost numbers, a major proportion of scheme beneficiaries cannot afford to use gas despite getting a free connection.

New Delhi: The Pradhan Mantri Ujjwala Yojana (PMUY) is one of the flagship schemes of the Narendra Modi government. Officially launched on May 1, 2016, the government regards it as one of its greatest success stories. The official claim is that within a short span of 26 months, the scheme has achieved its target – “five crore LPG connections will be provided to BPL families with a support of Rs 1,600 per connection in the next three years”. The latest figure is “5,14,07,565 connections”.

The number is impressive by any yardstick, even if the Modi government has built upon the success of pre-existing Central schemes as well as parallel schemes run by state governments – particularly in south India. And yet, a closer look at the data suggests the new scheme is falling short of meeting the underlying objective, which is to provide families below the poverty line with continuous, affordable gas for cooking.

In October 2009, the erstwhile UPA government launched the RGGLV (Rajiv Gandhi Gramin LPG Vitarak Yojana) with the objective of installing Liquified Petroleum Gas distributors in remote and inaccessible areas to increase LPG penetration. In 2009, the government also started a programme of one time financial assistance for LPG connections to families below the poverty line (BPL). The assistance was provided through corporate social responsibility (CSR) funds of the government’s oil marketing companies (OMCs).

Under this scheme, the government asked all central public sector undertakings (PSUs) in the petroleum business including OMCs to spend 20% of their CSR funds to give free LPG connections (first LPG cylinder and regulator free of cost) to BPL families. An IOCL publication mentions in their CSR page that since 2009, the company has been using 2% of its net profit year for CSR and 20% of this 2% for free LPG  for BPL families.

It details: “Under the scheme, the security deposit for 1 cylinder and 1 pressure regulator is provided from the fund created for this purpose by contributions from the CSR budget. During 2015-16, 22.8 lakh new connections were released by IndianOil and cumulatively, 32.4 lakh BPL families have benefitted from this scheme.”

Other than IOCL, five more oil PSUs – ONGC, GAIL, OIL, HPCL and BPCL participated in the programme. Under this scheme, a total of 69,32,322 free LPG connections were distributed to BPL families as on March 31, 2016. From the above mentioned government circular and the details published by IOCL, it becomes clear that under PMUY, the concept of free connections remains the same as in the earlier scheme of giving the first cylinder and the pressure regulator free of cost.

The official poster of the Pradhan Mantri Ujjwala Yojana.

That said, the PMUY scheme has been pushed by the Modi government with a degree of seriousness absent before. The new scheme involves one major difference from the earlier one. Instead of the limited PSU CSR funds, the PMUY infused government funds in a big way and added an option of instalments for the cost of a stove/hot plate and the connecting hose pipe with the repayments adjustable against the LPG subsidy on refills. That made the programme financially much more viable for BPL families – at least on the face of it. Being a government-funded programme with immense future business potential, OMCs pushed PMUY with all their might and the number of connections released shot up drastically.

Similar schemes have been in place before PMUY, run by different state governments which provided LPG connections to BPL families. Three southern states and Puducherry (the Deepam Scheme in Andhra Pradesh with 35,04,653 connections, Free BPL connection Scheme in Tamil Nadu with 29,38,907 connections, the Deepam Scheme inTelangana with 22,25,078 connections and 85,437 connections in Puducherry) gave away 87,54,075 free LPG connections.

The Kerosene Free Delhi scheme was also launched by the Delhi government in August 2012. The government received 2,14,149 applications for free gas connections under the scheme, and 1,83,842 eligible LPG connections were released by the end of 2014. Himachal Pradesh, Uttarakhand, Assam, Mizoram, Sikkim, Jharkhand, Chhattisgarh, Goa, Gujarat, Madhya Pradesh and Maharashtra also had state run programmes to release free LPG connections to BPL families. All the state governments schemes put together,  a total of  93,05,747  free LPG connections were distributed to BPL families before the launch of PMUY.

In the run-up to PMUY, the Modi government discontinued the CSR scheme of the OMCs on March 31, 2016.

As on March 31, 2014, India had 16,932 LPG distributors inclusive of 3,036 distributors under RGGLY and another nearly 2,000 distributors under the same scheme were in the pipeline after approval of their applications. By the time the Modi government halted new allotments under RGGLVY in August 2015, 4,987 RGGLVY outlets  were operational in the most backward and poorest rural areas of the country, which made it easy for the OMCs to reach out to more BPL families. By October 2016, more of the previously sanctioned RGGLVY outlets were up and running and they counted 5,580 in number or 30.61% of the then existing total LPG distributors of 18,214. By the end of March 2017, the number of RGGLVY outlets grew to 5,761 outlets. After April 1 2017, the Petroleum Planning and Analysis Cell (PPAC) of the Ministry of Petroleum and Natural Gas stopped publishing the segregated numbers of RGGLVY outlets from the total LPG distributor outlets.

Hence, the total free LPG connections given to BPL families stood at 1,62,38,069 before the launch of PMUY.

Interestingly all these schemes were subsumed by PMUY and those numbers are now counted under PMUY. Details of PMUY subsuming the state schemes only came to light when, in 2017, the Karnataka government launched a scheme called the Mukhya Mantri Anila Bhagya Yojana to distribute free LPG connections to BPL families.

The Modi government asked the government of  Karnataka to implement the state scheme as a part of PMUY, which chief minister Siddaramaiah refused, in the belief – justifiable from a political point of view – that this would only give more mileage to Modi’s BJP government at the centre at the expense of the state government. The Modi government issued a press release on February 6, 2018, stating how the Karnataka government’s new scheme is not in line with PMUY and how other states are running schemes according to PMUY guidelines.  It clarified that no Central assistance will be provided to the scheme and no PSU OMCs will directly participate in it.

Summarising what we know about the PMUY scheme, two points stand out:

a) Providing free LPG connections to BPL families is not the brainchild of the Modi government. The only change from the RGGLV scheme is that instead of OMC CSR funds, the Central government has allocated funds to expand the scheme. The Modi government had all the infrastructure and logistical support in place and ready in the form of a large LPG distributor network with 16,932 distributors. For example, 34% of the existing LPG distributors as on October 1, 2017,  were appointed under RGGLVY. Beside this established distributor network, a ready database – the socio-economic and caste census – done by previous UPA government came handy for the Modi government to determine the approximate number of eligible households.

b) The Modi government boosted the PMUY success rate by adding existing BPL subscriber numbers (under various state government schemes and CSR schemes of OMCs) of almost 1.7 crore to its numbers to create hype over the five crore plus target being reached under PMUY. The latest PPAC LPG Profile, unlike the earlier ones, shows only PMUY numbers  – 3,26,02,141 till April 1, 2018. Yet the officially publicised claim is of having achieved the set target – this when the scheme had said 5 crore connections “will be provided” (as opposed to “will be reached”).

Beyond the numbers, a look at the ground reality

If we have to look at the sheer numbers of LPG connections released under the PMUY, we can say, without any doubt that the scheme is a huge success. Adding nearly 3.6 crore new BPL families as subscribers for a costly product like LPG in the span of 26 months is a commendable achievement. But did this help in any way to achieve the objective of the scheme? No. The success of a welfare scheme is when the objectives of the scheme are met, and not merely the target numbers. This is why it’s important to see what’s happening on the ground.

The same PPAC report shows the anomalies in the reporting system. For example, in seven states, the subscription base is more than the estimated number of households. Goa has 3.41 lakh households and 4.7 lakh active domestic LPG connections. That is 137% active LPG users. Similarly, Delhi has 126% and Punjab has 124% LPG coverage.

Though the number of LPG users increased drastically in the last few years, the number of active users shows a different story. As on April 1, 2018, there were an estimated 27.72 crore households in the country and  25.68 crore households have an LPG connection. That is almost 93% coverage (46.4% of the registered domestic customers had double cylinder connections). But only  80% of households  (22.43 crore) have an active LPG connection as on April 1 this year. In simple words, 3.25 crore or nearly 13% domestic LPG consumers are inactive!

PM Narendra Modi. Credit: PMO India

The Prime Minister, Shri Narendra Modi interacting with the beneficiaries of the Pradhan Mantri Ujjwala Yojana, in New Delhi on February 13, 2018. Credit: PMO India

A study by Prayas explains this better. It shows that Chandigarh has nearly 40% inactive subscribers and urban Himachal Pradesh has 157% households that use LPG. They point out the reasons for such glaring anomalies. Most of the people who researched the topic say that the main reason is the huge pressure the Modi government exerts on OMCs to achieve targets. In turn, the OMCs pressure their distributors to achieve those numbers. And as in other government schemes like Pradhan Mantri Awas Yojana (PMAY), there is no local or district level reporting on PMUY, only state level data. This is likely fuelling the inflation of numbers. 

After comparing government data, an article published by Scroll pointed out: “While the number of LPG connections across India has increased by an impressive 16.26% since the scheme (PMUY) was launched, the use of gas cylinders increased by only 9.83%. This is even lower than the rate recorded in 2014-’15, when the scheme did not exist”. A CAG report notes, before PMUY was launched, households with LPG connections used 6.27 cylinders in an average every year; but that came down to 5.6 cylinders after the launch of the scheme.

Another report in LiveMint shows, year on year, the number of consumers has grown by 16.9% after the launch of the scheme from 2015-16 to 2016-17, but consumption increased only 0.8% (from 9% to 9.8%) in the same time period. A field report published by Scroll contacted many LPG distributors across different states. All of them had the same thing to say – the PMUY customers had become a huge burden on them. One dealer says, as reported, “I realised that unknowingly I had walked into a trap. As most of the Ujjawala connections have turned non-functional, my efforts have ended up affecting my agency’s finances rather adversely. These customers have in fact become a huge burden on the agency’s business. Since the Ujjawala scheme is a welfare measure, the government should come forward to own up its burden. Passing it on to gas agency dealers is not fair.”

What exactly is happening here? OMCs pushed their distributors to enrol the maximum number of people under the scheme because of the pressure from the government. As the initial payment of Rs 1,600 for the cylinder and regulator was waived off, the government asked OMCs – to increase the reach – to provide the cost of stoves/hotplates and the connecting hose pipes in instalments which has to be adjusted against the subsidy on every refill. That means a poor family has to shell out the market price for a cylinder till the cost of the stove/hot plate and hose pipe is  covered. i.e a BPL family in rural West Bengal has to spend Rs 817.50 for the refill of an LPG cylinder.

It is important to remember that as per the current definition of the poverty line in India, a person in rural India who can spend Rs 33 a day is not considered poor. With this parameter, the price of an LPG cylinder is exorbitant for BPL families without subsidy. With the current subsidy level, if the cost of stove and connecting hose pipe is Rs 1,800, it would require a PMUY consumer to refill approximately six cylinders for OMCs to be able to recover their cost. So the OMCs are staring at losses while they are pressuring the distributors.

A government scheme’s success is not judged solely on how many people subscribe to that scheme or how many subscribers are added in a short span of time, but how much utility the subscribers are able to obtain from to the scheme and how much people are able to use the facility provided under it.

When the scheme was launched in May 2016, the price of a non-subsidised LPG cylinder was Rs 554 in Calcutta, but is Rs 781.5 as on August 8, 2018. Similarly the price of a subsidised cylinder went up from Rs 419.15 to Rs 499.48 in the same time period, in same city. This affected the affordability factor more.

The Modi government claims that the yearly refill average under PMUY is 4 whereas the normal national average is 7.2 cylinders. The government says that the dropout under PMUY is less than 20% and 60% had four or more refills. But the available data and related reports paint a different picture.

An article published in Financial Express says three government-owned OMCs kept nearly Rs 320 crore to cover up the “bad debt” they have incurred by pushing the PMUY scheme in 2018 alone. The same article throws up some more interesting numbers on Ujjwala Yojana. Market leader Indian Oil Corporation released 48 lakh connections under PMUY in FY 2017-18 but 27 out of the 48 lakh (56.25%) did not turn up for a re-fill at the end of the year. Similarly, Bharat Petroleum issued nearly three million connections in FY 18, of which 1.7 million or 57% has not returned for a single refill by March 31, 2018.

As the Modi government and the BJP celebrate the ‘success’ of PMUY by advertising the number of the LPG connections they have released, there is little discussion of the harsh reality behind those numbers.

Ravi Nair can be contacted on Twitter @t_d_h_nair.