The government recently reduced the price of non-subsidized domestic LPG cylinders by Rs. 200, the largest such reduction in more than five years. Data indicates that while the number of refills under PMUY has increased in 2022-23, it is still lower than in the earlier years. It remains to be seen whether the current reduction encourages increased refills.
The Government of India recently announced the reduction in the price of LPG cylinders. Effective from 30 August 2023, the price of 14.2 Kg LPG cylinders is reduced by Rs. 200 across the country. In the case of the households under Pradhan Mantri Ujjwala Yojana (PMUY), this reduction is in addition to the Rs. 200 subsidy on each cylinder. As per the information provided by the government in this announcement, this reduction will benefit around 31 crore domestic LPG consumers in the country, also including 9.6 crore beneficiaries under PMUY.
Furthermore, the government has also approved 75 lakh additional Ujjwala connections which would take the total number of PMUY beneficiaries to 10.35 crores.
Following this announcement, the Public Sector Oil Marketing Companies (OMCs) reduced the price of 19 Kg commercial gas cylinders as well. The Government stated that the reduction in the price of LPG cylinders is part of its efforts to ease the financial burden on the citizens. The proposed increase in the number of PMUY beneficiaries is also considered to be an effort towards the well-being of poorer households.
The announcement by the Government to reduce the prices of LPG has attracted varied responses. While some have applauded the move, others have raised apprehensions not only regarding the reduction of prices but also regarding the addition of new beneficiaries under the PMUY scheme. Our earlier analysis of the PMUY scheme can be read here.
The data relating to LPG prices & PMUY, used in this story are from the datasets available on Dataful.
Highest reduction in Domestic LPG price in more than 5 years
Domestic LPG: Prior to the government’s announcement of the reduction of the price of domestic LPG, the price of a 14 kg non-subsidized Domestic LPG cylinder in Delhi was Rs. 1103. With the reduction of Rs. 200, the price currently is Rs. 903.
With a similar reduction of Rs. 200 across the country, the prices in the other Metro cities i.e., Mumbai, Kolkata and Chennai fell to Rs. 902.5, Rs. 929 and Rs. 918.5 respectively. For the purpose of analysis, the prices in Delhi are being considered. This was the first drop in price since 01 April 2021, when it fell by Rs. 10. During this interval, the price increased multiple times, with a cumulative increase of Rs. 294. The previous reduction of price was in May 2020, when it reduced by Rs. 162.5. One must go back to 01 February 2018, for a reduction in price that is more than the latest reduction of Rs. 200. On 01 February 2018, the price of Domestic LPG fell by Rs. 206.5 in Delhi.
Commercial LPG: Compared to domestic LPG, the OMCs have changed the prices of commercial 19 kg LPG more frequently. The fall in price has also been comparatively more frequent. As per the revisions by OMCs, the revised price of commercial cylinders in Delhi is Rs. 1522.3 per cylinder. It is a reduction of Rs. 157.5. A higher reduction than this was on 01 May 2023, when the price dropped by Rs. 171.5
Nearly 60 lakh LPG connections under PMUY during current Financial year
As indicated above, the government has announced 75 lakh additional PMUY connections which could take the number of connections under this scheme to 10.35 crores. As per government data, the number of beneficiaries under PMUY is currently around 9.6 crores.
In the first year of the inception of the scheme i.e., in 2016-17, more than two crore connections were provided. This fell to 1.55 crores in 2017-18. The highest number of connections were issued in 2018-19, with nearly 3.63 crore connections. In the year 2019-20, about 82.6 lakh connections were issued.
In 2021, Phase II of the scheme was launched to release 1 crore deposit-free LPG connections on a pan-India basis. During 2021-22, a total of 1 crore connections were issued to meet the target. In 2022, the scheme was extended to 60 lakh more beneficiaries. As per the information available, the target is nearly met with 59.94 lakh beneficiaries added in 2022-23. The cumulative total of the number of beneficiaries under PMUY is over 9.6 crores. This is nearly 31% of the total LPG consumers in the country.
Around 1.55 crores took one refill during 2022-23
One of the concerns relating to the PMUY scheme was around the inability of the beneficiaries to go for a refill. In our earlier analysis of the PMUY scheme, we have highlighted that there is a fall in the average refills under PMUY.
As per the data available, the average number of refills under PMUY was 3.9 in 2016-17, which fell in the subsequent two years. In 2019-20, there was a slight increase to 3.01 which subsequently increased to 4.39 in 2020-21. This increase is attributed to the PMGKP scheme. However, as per the latest available data the average fell to 3.66 in 2021-22.
In terms of the total refills under PMUY, during 2021-22, there were a total of 31.47 crore refills, which is lower than 35.54 crore refills during 2020-21. This is the first time that there has been a yearly decrease in the total number of refills under PMUY.
Data also indicates that during 2022-23, around 1.55 crore consumers took only one refill. This is a fall compared to 2021-22, during which around 1.61 crores took one refill. However, there is an increase in the number of people who took two & three or more refills. During 2022-23, the number of consumers who took two refills increased to 1.49 crores compared to 1.48 crores in the earlier year. In the case of 3 or more refills, the number increased from 4.94 crores in 2021-22 to 5.35 crores in 2022-23.
Decrease in the price of LPG may encourage the use of LPG as envisioned under PMUY
As our earlier analysis and the data indicates, continuation in the usage of LPG under the PMUY scheme is a concern. Affordability is one of the prime reasons for the beneficiaries not going for refills.
In this context, the reduction in the price of the domestic LPG could encourage consumers who are beneficiaries under PMUY, as well as poorer households to refill and use LPG for their needs. The price drop could also help other LPG consumers, especially in view of the current inflation.