Better targeting may have reduced LPG connections

According to data available with ministry of petroleum and natural gas, oil marketing companies have added only 36 million consumers in past two years

Prime Minister Narendra Modi might have overshot the LPG (cooking gas) figures in his Independence Day speech.

“Fourteen crore (140 mn) gas connections were given in 60 years, while on the other side, we have given four crore (40 million) connections in only 60 weeks,” Modi said from the Red Fort on Monday. He said there were plans to add 50 million consumers in the next three years under the petroleum ministry’s flagship Pradhan Mantri Ujwala Yojana (PMUY).

According to ministry data, oil marketing companies (OMCs) added 36 million consumers in the past two years, 16 million in 2014-15 and 20 million in 2015-16. While from March to August this year, the government added 7.45 million new customers, gathering impetus from the launch of PMUY.

It was, however, also able to cut 69 million illegal LPG connections in the past two years through a de-duplication exercise. “Direct Benefits Transfer (DBT) helped in weeding out bogus connections. PMUY is an innovative measure that is helping poor women. However, when you calculate subsidy savings, (lower) crude oil prices should also be factored in," said K Ravichandran, senior vice-president at ratings agency ICRA.  

PMUY has given fresh life to the plan for a kerosene-free country in cooking. The Rs 8,000-crore PMUY was begun on May 1 this year, to provide 50 million free LPG connections in the name of women members of poor households. “Till August 15, the government had given 3.4 million connections under the scheme and got another 630,000 cleared for connections. In addition, OMCs added another four mn connections outside PMUY this year,” said a ministry official, who does not want to be named.

If these figures are true, the PM's claim of adding 40 million consumers in 60 weeks looks incorrect, as it took about 100 weeks, between 2014 and 2016, to add 36 million consumers.

Under PMUY, the government pays OMCs about Rs 1,600 for each LPG connection given to a Below Poverty Line household. India currently has 172.5 million LPG connections, of which 159 million are eligible for subsidy. According to the ministry, the estimated savings from DBT in the past two years was around Rs 21,000 crore. In 2014-15, when the average subsidy per cylinder wasRs 369.72, the government saved Rs 14,818 crore on this and in 2015-16, when the average subsidy was Rs 150.82 per cylinder, it saved Rs 6,443 crore.

Last week, a Comptroller and Auditor General report had said the government and OMCs had overstated savings on the subsidy due to the implementation of DBT or the PAHAL scheme. The CAG had said 92 per cent of the Rs 23,316 crore the government saved in subsidy payout in 2015-16 was due to the drop in crude oil prices.