(Ujjwala 2.0 series) Realising the Ujjwala dream
By Sasmita Patnaik and Sunil Mani
This article is part of a series of commentaries submitted by prominent Indian researchers and their collaborators on how the next phase of the Pradhan Mantri Ujjwala Yojana could better sustain LPG usage among the poor. Click here to access a summary of the major recommendations, along with links to the rest of the series.
Over the last three years, the Pradhan Mantri Ujjwala Yojana has captured global attention owing to its ambition and pace of implementation. Under the scheme, almost 75 million subsidised LPG connections have been provided as of 18 July 2019. However, the typical rural Indian household still continues to stack LPG with biomass for its cooking needs. Indoor air pollution due to continued biomass use negates the health benefits of using LPG for households.
In 2018, the Council on Energy, Environment and Water (CEEW), in collaboration with National University of Singapore and Johns Hopkins University conducted a panel survey (ACCESS) of more than 9,000 rural households across the six major energy-access-deprived states, to understand the change in access to energy among households in the last three years. We found that while the proportion of rural households with an LPG connection increased two-fold, from 22 per cent to 58 per cent in 2018, 81 per cent households continue to use biomass for cooking. So, going forward, PMUY needs to focus on addressing affordability of use, ensuring home delivery of LPG cylinders, navigating the intra-household gender dynamics impacting the use of LPG and exploring linkages with livelihood opportunities for women.
Affordability of LPG
Affordability remains one of the biggest barriers to the sustained use of LPG, especially among the PMUY households who are socio-economically marginalised. Our research found that PMUY households use four cylinders per year (median) while the non-PMUY households with an LPG connection for the same amount of time use six.
As per the poverty line estimates by the Rangarajan Committee, almost 56 per cent of PMUY beneficiaries are below the poverty line, against 37 per cent in case of non-PMUY households. When we compare the monthly median spending on cooking fuel, PMUY households spend INR 204 a month whereas non-PMUY households spend INR 325. This disparity indicates that PMUY households would require a greater level of financial assistance than non-PMUY households. A differential subsidy mechanism that weans away well-to-do household from the subsidy net and provides greater support to low-income households would be essential to support the sustained use of LPG. It would, therefore, be timely to design and conduct a set of pilots to determine the threshold level of subsidy at which various households are gradually able to use LPG exclusively. While exclusive use of LPG is necessary to eliminate indoor air pollution, the short-term interventions of the government should aim for primary use of LPG, defined as a certain number of refills by family size per year. Based on a case study by Institute of Economic Growth and University of Zurich, the average willingness to pay for an additional cylinder among households in Bikaner was about INR 350. Using this as the base, we could set a subsidy amount where a PMUY household’s out-of-pocket expenditure is limited to INR 350. The process could be iterative to test how many households shift to primary use (approximately six refills a year) based on the subsidy provided. The remaining households could be provided additional incentives, depending on what is the barrier for them, to nudge them towards a similar use of LPG.
The other dimension of affordability is cash flow, which is an equally strong barrier for many PMUY households. To address this, the Ministry of Petroleum and Natural Gas (MoPNG) is allowing households use 5 kg and 14.2 kg cylinders interchangeably. In addition, reducing the amount adjusted against the loan under PMUY to INR 50 per refill to be recovered over a longer time period would help. Further, extending support to households through staggered payments and direct debit of subsidised refill amount from the linked bank account of the customers could be ways to address the challenge of cash flows. This would need to be accompanied by greater financial inclusion in practice by improving access to mobile money.
Availability of LPG
Our research shows that the reduction in the distance travelled to procure the cylinders increases the likelihood of households to use more LPG. However, despite the improvement in the number of households receiving home deliveries since 2015, it remains at 41 per cent in 2018, and the median distance to procure LPG stands at 4km one-way.
The number of distributors has also increased in the last three years. But low density of customers in rural areas, lower refills rates, and higher transport costs, mean that rural distributors need higher incentives or margins to be economically viable. The incentives could be a function of a few factors such as the average distance covered to deliver a cylinder, difficulty of terrain, quality of roads, number of refills per day, etc. to create an index of differentiated incentives. In addition, more cost-effective and decentralised distribution models through partnerships with self-help groups, farmer cooperatives, and local civil society organisations that have worked with communities, must be explored to improve LPG availability.
Influence the household decision makers
Socio-economic interventions are strongly influenced by the pre-existing social relations. Though PMUY provides connections in the name of the adult women of the household, only in one-third of the surveyed households women decide when to order an LPG cylinder; and only in 14 per cent of households, women place the order for the cylinder. Sustained use of LPG remains strongly influenced by the decision-making authority in the household prioritising household expenses. To achieve sustained use, it would be prudent to also sensitise the primary decision-makers or the influencers in the households such as elder members and spouses of PMUY beneficiaries through platforms such as LPG Panchayat. Learning about the access to and use of LPG subsidies by the primary beneficiaries of PMUY - women of the households - could be useful to understand their agency in decision making as well the impact of such subsidy mechanisms in enabling the use of LPG. Based on current decision-making patterns, interventions could be designed to ensure the financial support to use LPG reaches the intended beneficiaries.
Income generating opportunities for women
Use of LPG for cooking would save women’s time in cooking, cleaning and collection of biomass. Women could spend this time on productive activities. This would further provide them the economic independence to gradually transition to exclusive use of LPG. To enable this, the Ministry should partner with livelihood programmes to create opportunities in the LPG value chain for women, particularly in states with low refill rates.
Soon enough the LPG penetration in India would be at 100 per cent. Now, the goalpost must shift towards sustained use of the cleaner fuel, with requisite monitoring. Only targeted efforts for different customer segments at the institutional, community, and household level would lead to a smoke-free kitchen in every Indian household.