India has achieved significant growth in Liquid Petroleum Gas (LPG) consumers in the past nine years. The active domestic LPG consumers have increased from 14.52 crore in April 2014 to 31.36 crore as of March 2023. This significant increase can be attributed to the Pradhan Mantri Ujjwala Yojana (PMUY) which has led to an increase in LPG coverage from less than 40 per cent before 2014 to 62 per cent in 2016, then to a whopping 80 per cent in 2019 and an astounding 104.1 per cent in 2022. As of January 30, 2023, the total number of connections released under PMUY is 9.58 crore.
Further, on March 24, 2023, the Modi government approved a subsidy of Rs 200 per 14.2 kg cylinder for up to 12 refills per year for the beneficiaries of PMUY. And on September 1, 2023, the Centre reduced import duty and Agri and Infra cess on domestic LPG from 15 per cent to zero.
A WHO report in 2018 said that PMUY had provided 37 million women, living below the poverty line (BPL), with free LPG connections to support them in switching over to clean household energy use. This tremendous growth in LPG coverage among Indian households has been instrumental in improving women’s health by providing them with clean cooking fuel and an environmentally beneficial option by making the kitchens smokeless. In a relief to consumers, the Modi government, on August 29, 2023, reduced the price of a non-subsidised 14.2 kg LPG cooking gas cylinder by Rs 200. The price reduction also applies to beneficiaries under the PMUY. Prior to the August cut, a 14.2 kg LPG (liquified petroleum gas) cylinder in the national capital was priced at Rs 1103. Effective August 30, 2023, the same came down to Rs 903. For beneficiaries of PMUY, the effective price is even lower now, at Rs 703 as the subsidy is Rs 400.
The Modi government will also provide 75 lakh new LPG connections for free, under PMUY. At present, there are 9.6 crore beneficiaries of the scheme and with the 75 lakh new connections, the total beneficiaries under PMUY will rise to 10.35 crore. The subsidy for PMUY beneficiaries was introduced in May last year as the government had announced a series of relief measures amid surging global energy prices.
Now let us go back in time, to January 2014. The price of non-subsidised cooking gas (LPG), which customers buy after consuming their quota of subsidised cylinders, was raised by the then Congress-led United Progressive Alliance (UPA) regime by a steep Rs 220 per cylinder. The cost of the 14.2 kg non-subsidised LPG cylinder went up to Rs 1241, up from Rs 1021 in Delhi, in January 2014. In fact, in some places in India, Kolkata for instance, the price went up to as high as Rs 1270 per cylinder under a thoroughly corrupt Congress-led UPA. The erstwhile Congress government had in September 2012 capped the supply of subsidised domestic LPG cylinders to six per household in a year. The quota was raised to nine cylinders per household in January 2013. Any requirement above this limit had to be purchased at market rates. The subsidised quota of nine went up to 12 cylinders only under the Modi government.
Of course, there is no restriction on the number of non-subsidised cylinders that a consumer can buy. Also note that state-owned oil companies revise rates of non-subsidised LPG on the 1st of every month, based on the average imported cost and rupee-US dollar rate during the previous month. So exchange rate movements impact local LPG prices as much as international prices of Crude oil or other oil derivatives. While the Congress can harp about the fact that the Modi government had the benefit of lower global Crude oil prices, it fails to recognise that the international dollar index (DXY) which was only trading at a level of 76 or thereabouts under the Congress-led UPA-2, rose by a solid 51 per cent to as high as 115 levels a few months back, in September 2022. Despite a mammoth jump in the DXY, it is to the Modi government’s credit that the average price of non-subsidised gas cylinders under the last five years of the Modi government stands at Rs 762.80.
And guess what? As much as Congress hates to admit this, the harsh reality is that the average price of non-subsidised gas cylinders under the erstwhile, incompetent Congress-led UPA-2, was a stiff Rs 954.20. Effectively speaking, the average price of non-subsidised LPG gas cylinders under the BJP-led Modi government, has been anywhere between 20 per cent to 30 per cent cheaper compared to the previous Congress-led UPA-2. Also, the continuous policy of issuing oil bonds by the erstwhile Congress regime led to the issuance of oil bonds worth over Rs 2 lakh crore that were inherited by the Modi government and had to be repaid. The Congress kept fuel prices low artificially, but in the process, it wrecked the economy by running yawning fiscal deficits, which then fed into higher inflation and higher interest rates.
There were times when retail inflation crossed 12 per cent under the UPA-2. From January 2012 to April 2014, on 22 out of 28 occasions, retail inflation under the erstwhile Congress regime was in double digits, well over 10 per cent. The average retail inflation under UPA-2 was 10.25 per cent. Despite two Black Swan events, the average retail inflation under the Modi government in the last 5 years, however, has been far lower at 5.45 per cent. It is true that in July 2023, retail inflation shot up to 7.44 per cent. But that was due to heavy rains and floods in Himachal Pradesh, large parts of Karnataka and Uttarakhand and inclement weather in many other parts of the country like Maharashtra, Assam, West Bengal and Uttar Pradesh. Inclement weather led to a sharp spike in the prices of perishables like fruits and vegetables. Since food as a category has over 46 per cent weightage in the retail inflation basket, versus a mere 25 per cent weightage in the wholesale price index (WPI), even minor changes in food prices have a disproportionately high impact on the overall consumer price index (CPI). But core inflation excluding food and energy prices was only 4.9 per cent in July 2023. Also note that in April, May and June 2023, retail inflation was at 4.68 per cent, 4.25 per cent and 4.87 per cent respectively. July was an outlier, defined by abnormal weather conditions.
The moot point to note here is that in Prime Minister Narendra Modi’s second term, the highest retail inflation in the last 5 years was 7.79 per cent in April 2022, on the back of severe supply disruptions, amidst a raging Russia-Ukraine conflict. However, under UPA-2, the highest retail inflation figure was a staggering 12.17 per cent in November 2013. Coming back to July 2023, the highest retail inflation was not in BJP-ruled states, but in Opposition-ruled states, with inflation at 9.7 per cent in Congress-ruled Rajasthan, 9.2 per cent in Jharkhand and 9 per cent in Tamil Nadu. The highest rural inflation in July 2023 was also witnessed in Opposition-ruled states, namely Jharkhand at 9.9 per cent and Telangana at 9.7 per cent. The highest urban inflation was again witnessed in Rajasthan, at 10.4 per cent. Congress keeps harping about subsidised gas cylinder prices being a mere Rs 414 under UPA-2, but that is a big charade. That price of Rs 414 lasted for barely a few weeks in 2013-14 and the penetration level of subsidised gas cylinders was in any case, pathetically low under the erstwhile Congress regime, so the poor hardly benefitted.
It was only after the PMUY was launched by the Modi government in 2016 that the penetration level of subsidised cylinders jumped manifold, thereby helping the poorest of the poor. Having a product that is priced low can benefit people only if they have access to that product. Under the erstwhile Congress regime, subsidised cylinders existed largely on paper, but thanks to the game-changing Ujjwala Yojana, under the Modi government, subsidised cylinders are now made available to rural households, even in the remotest corners of India. About two-thirds of India’s population lives in rural areas and in the past, prior to PMUY being launched in 2016, women typically used firewood, coal or dried dung cakes for cooking. But things have changed dramatically since then. India consumed a record 24.9 million tonnes of LPG in the financial year 2018-19, 53 per cent higher than the previous five years and 6.9 per cent higher than the previous financial year. The boost obviously followed one of the world’s largest social welfare programmes, the Ujjwala scheme, which provided new LPG connections to households in over 700 districts in India.
Suffice to say that the PMUY is a successful attempt to make the dream of smokeless rural India a reality. 88 per cent of poor families received refills under the Ujjwala scheme in 2022–23. Beneficiaries taking refills have increased from 3 crore in 2017-18 to 6 crore in 2018-19, 6.5 crore in 2019-20, 8 crore in 2020-21, 8.05 crore in 2021-22, and 8.41 crore in 2022–23. The total refills taken by the beneficiaries of the Ujjwala Yojana have increased from 16 crores in 2018–19 to over 35 crores in 2022–23 and that speaks volumes about how the outstanding vision of Prime Minister Narendra Modi has truly transformed the rural landscape in more ways than one.
Sanju Verma is an Economist, National Spokesperson for BJP and Bestselling Author of “The Modi Gambit”. Views expressed in the above piece are personal and solely that of the author. They do not necessarily reflect News18’s views.
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