Pradhan Mantri Ujjwala Yojana Subsidy Extended for Another Year

Why in news

• The government extends PMUY subsidy until March 31, 2025.
• Beneficiaries to receive 300 rupees per cylinder directly credited to their accounts.
• Over 10.27 crore households to benefit, with a total allocation of 12,000 crore rupees for 2024-25.

About Pradhan Mantri Ujjwala Yojana

• The Pradhan Mantri Ujjwala Yojana (PMUY), initiated by the Ministry of Petroleum and Natural Gas (MOPNG), is a flagship plan aimed at delivering clean cooking fuel, such as LPG, to rural and impoverished households.
  These homes had previously relied on traditional cooking fuels such as firewood, coal, and cow dung cakes, which had both negative health effects and contributed to environmental deterioration.
• Objectives:
  • Empowering Women and Protecting Their Health:
    • Pradhan Mantri Ujjwala Yojana aims to empower women by providing them with access to clean cooking fuel, thereby reducing their dependency on traditional fuels.
    • This not only enhances their health and well-being but also promotes gender equality by relieving them from the burden of collecting firewood or cow dung for cooking.
  • Reducing Deaths Due to Unclean Cooking Fuel:
    • By transitioning households from traditional fuels to LPG, PMUY seeks to decrease the number of deaths caused by indoor air pollution.
    • Traditional fuels emit harmful pollutants that can lead to respiratory diseases and other health issues, particularly among women and children who spend significant time near cooking fires.
  • Preventing Respiratory Illnesses in Young Children:
    • Pradhan Mantri Ujjwala Yojana aims to protect young children from acute respiratory illnesses caused by indoor air pollution.
    • Exposure to pollutants from burning fossil fuels indoors can lead to respiratory infections, asthma, and other respiratory ailments, posing a significant health risk to children in rural households.
• Features:
  • Financial Assistance:
    • Pradhan Mantri Ujjwala Yojana grants Rs 1600 for each LPG connection to households in the Below Poverty Line (BPL) category.
    • This assistance helps offset the initial cost of obtaining an LPG connection, making it more affordable for economically disadvantaged households.
  • Deposit-Free Connection:
    • Under the Ujjwala 2.0 initiative, beneficiaries are given a deposit-free LPG connection, removing the financial barrier to using clean cooking fuel.
    • Furthermore, beneficiaries receive the first refill and a hotplate free of charge, promoting the use of LPG for cooking.

Benefits of Pradhan Mantri Ujjwala Yojana

• Free LPG Connection: Eligible beneficiaries receive a free LPG connection, enabling them to switch to cleaner and safer cooking practices.
• Subsidized Refills: Beneficiaries also receive a subsidy on the first six refills of 14.2 kg cylinders or eight refills of 5 kg cylinders, making subsequent purchases more affordable.
• EMI Facility: To ease the financial burden, beneficiaries can opt for an Equated Monthly Installment (EMI) facility to pay for the cost of the stove and the first refill, spreading out the expenses over time.
• PAHAL Scheme Integration: Beneficiaries can join the PAHAL scheme to receive the subsidy amount directly in their bank accounts, streamlining the subsidy disbursal process and ensuring transparency.

Phases of PMUY:

• Phase I:
  • Launched on May 1, 2016.
  • Targeted release of 8 Crore LPG connections to deprived households by March 2020.
  • This initiative increased LPG coverage from 62% in May 2016 to 99.8% in April 2021.
• Ujjwala 2.0:
  • Announced in the Union budget for FY 21-22.Provision for the release of additional 1 crore LPG connections to eligible households by March 31, 2022.Target achieved in January 2022, with subsequent release of an additional 60 lakh LPG connections.
  • OMCs successfully released 1.6 Crore LPG Connections under Ujjwala 2.0 by December 31, 2022.

Concerns Regarding PMUY

• Limited Refill Consumption:
  • Data indicates that the average PMUY beneficiary refilled fewer than four LPG cylinders during 2022-23.One in four PMUY beneficiaries either did not use any LPG cylinders or took just one refill in 2022-2023.
  • In contrast, non-PMUY households showed significantly higher cylinder refill consumption, averaging 6.67 refills per household, highlighting a consumption disparity.
• Rising LPG Cylinder Prices:
  • Despite subsidies, steep price increases in LPG cylinders have made them less affordable for rural and deprived households.
  • High prices may discourage beneficiaries from utilizing LPG for cooking, undermining the scheme’s objectives.

Subsidy Expenditure:

• Between January 2018 and March 2023, rates for subsidized LPG cylinders surged by 82%, reaching ₹903 in March 2023 from ₹495.64 in January 2018.
• Subsidy amounts depend on the difference between the Retail Selling Price (RSP) and the subsidized cost set by the government.
• Non-subsidized LPG cylinders witnessed a 49% price hike, reaching ₹1,103 in March 2023.

International Factors Impacting LPG Prices:

• Various factors contribute to the final LPG price, including import charges, bottling charges, freight, delivery charges, GST, and distributor commission.
• The price is calculated based on the import parity price (IPP), which depends on the international market.
• The IPP calculation considers factors like Saudi Aramco’s LPG price, crude oil price fluctuations, and various costs involved in transportation and handling.
• Inland prices include freight costs, oil company’s margins, bottling costs, marketing expenses, dealer commissions, and GST.

People also ask

Q1:  Why was the Pradhan Mantri Ujjwala Yojana (PMUY) introduced?
Ans: Pradhan Mantri Ujjwala Yojana was introduced by the Ministry of Petroleum and Natural Gas (MOPNG) to provide clean cooking fuel, such as LPG, to rural and deprived households. This initiative aimed to replace traditional cooking fuels like firewood, coal, and cow dung cakes, which not only had adverse health effects but also contributed to environmental degradation. By promoting the use of LPG, PMUY aimed to empower women, protect their health, reduce deaths due to unclean cooking fuel, and prevent respiratory illnesses in young children.

Q2:  What are the key features of PMUY?
Ans: PMUY provides financial support of Rs 1600 for each LPG connection to Below Poverty Line (BPL) households. Additionally, under the Ujjwala 2.0 scheme, beneficiaries receive a deposit-free LPG connection, along with the first refill and a hotplate free of cost. The scheme offers various benefits, including free LPG connections, subsidies on cylinder refills, EMI facilities for stove and refill costs, and integration with the PAHAL scheme for direct subsidy transfer to beneficiaries’ bank accounts.