Badly requires a targeted subsidy

Kartik Ganesan

With the latest rise this week, the price of LPG in the national capital has crossed the four-digit mark of Rs 1,000, a significant psychological hurdle for consumers. This steady increase comes at a time when LPG cylinders are already at historically high price-points. The growth in LPG consumption in the household sector, which averaged ~ 7.5% in the previous five years, has come down to a low of 1.5% in the last financial year. With the exception of a few urban centers, LPG is the main source of clean cooking in India due to its low penetration of natural gas and electricity-based cooking.

LPG has been slow since its entry into Indian cuisine in the 1960s due to its high price and strict control over its availability and marketing. In 2011, less than one-third of Indian households used LPG as their primary cooking fuel. The India Residential Energy Consumption Survey (IRES), conducted by the Council on Energy, Environment and Water (CEEW) since 2020, suggests that by 2020, the number has risen to about 71% after decades of sustainable support to help improve adoption. . LPG had a healthy universal subsidy provision until April 2020. Subsequent subsidy withdrawals and the epidemic-induced economic downturn that affected household incomes have now made LPG impossible for a large portion of our population. It has certainly lost its luster, especially for new customers added under the Prime Minister’s Bright Scheme (PMUY), who have not yet realized the health benefits accrued from the sustainable use of LPG.

Restoring subsidies, especially as a universal inefficiency, and of course outside the funding of the current government. One often hears that the market value of petroleum products in India is high due to high taxes and subsidies only offset the tax imposed on crude products. However, LPG is unique in that we import about 60% of our cost directly at international prices in the form of products. For more than two-thirds of the last seven years, subsidized LPG prices have been discounted compared to international prices. Sadly, the retail price was at a premium to the international LPG price during the Kovid-19 epidemic. With no clear alternative to LPG in the short to medium term, every effort should be made to encourage low-income families to switch to solid fuel use by raising awareness about the economic and health burden of using it. CSR programs are an important step in attracting hesitant consumers to make LPG more accessible and to give new users a first-hand experience in expanding the distributor base in rural areas. However, at the core of the effort, a targeted subsidy is essential to enable use.

The country will not shy away from this expectation of supporting its poor and vulnerable sections. Bringing down LPG costs to affordable levels for PMUY customers could cost ~ 33,000 crore a year, if the current market value of LPG continues. With payments to the states, from the GST compensation cess, over Rs 100,000 crore a year, this June is a fitting time for the Center to reuse the cess and restore financial aid to the poorest. It supports a tear level, but it simply ignores their needs for decades and makes them and indeed most of the country vulnerable to the harmful effects of solid fuel use. Consider this mandatory case for pulling all stops to finance clean fuel costs by the poor. Between 2002 and 2021, ~ 20,000 crore was spent annually to support non-PMUY LPG customers in India (fixed at 2011-12). These are primary recipients, urban dwellers and high income groups in rural areas However, only Rs 3,500 crore (fixed 2011-12) has been spent every year for the last five years to help the poorest consumers (PMUY beneficiaries). Now, there are no signs of the subsidy being reinstated.

The poor, who are unequally affected by the prolonged use of solid fuels, must ask, ‘Aapna samay kab ayega’ (when will our time come)? Therefore, we must ask the question: Isn’t now the time for so many years of inactivity, when the needs of the poorest consumers are not given priority, and the Indian state continues to support health and early harvesters? The economic benefits of eating LPG for decades? Many pundits, in their assessment of the 2019 election results, have blamed the speed and scale of the PMUY scheme’s deployment, citing the rural people as a major reason for a vote of confidence in Prime Minister Modi’s government. Reminders of this scheme are still an urban landscape point. Ujjwala itself is a strong brand, and it is a popular brand. Letting it die slowly is sending a strong signal and mocking the administrative effort that was made to launch it in the first place.

Sustainable support, in adopting quality products like LPG, can accelerate behavior change and move families away from reliance on solid fuels. This transition could play a key role in achieving the targets under the National Clean Air Plan and help focus efforts to curb deadly pollutants. More importantly, the pursuit of clean cooking will have a significant impact on health outcomes, especially for women and children. To that end, the cost of clean cooking must be seen as more complementary and complementary to the cost of basic health programs (more than Rs. 1 trillion in total budget) for women’s and children’s health and health and family welfare. FY23 is assigned to these Ministries). Thus, it is important to ensure that budget allocations are reviewed with a view to health and well-being, taking into account the interrelationships between internal and external pollution and health outcomes. And, if need be, budgets need to be strengthened to help achieve the desired results of a healthy and productive population that leads us to truly ‘self-reliant’.

Author Fellow and Director, Council on Energy, Environment and Water (CEEW)

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