Do LPG Subsidies Benefit the Poor?

On 1 December, the price of a liquefied petroleum gas (LPG) cylinder increased for the fourth successive month, with a non-subsidised LPG cylinder costing as much as Rs 725. Earlier, in June 2019, the central government relaunched the Pradhan Mantri Ujjwala Yojana (PMUY)—initiated in 2016 by the Narendra Modi government to provide subsidised LPG cylinders to 5 crore rural households—as the Ujjwala scheme. The government claims that the PMUY met its targets, and the Ujjwala scheme now aims to cover eight crore households by 2020. 

Previous governments too have attempted to subsidise LPG. In 2012, the United Progressive Alliance government announced that a household would be entitled to a maximum of six subsidised LPG cylinders per year. Prodyumna Goutam, Rahul Lahoti, and Suchitra J Y's 2012 article uses empirical data to question whether or not the already-existing LPG subsidy—where over 50% of the cost of a cylinder is covered by the government—has reached the intended beneficiaries. They argue that there is a dire need for a multipronged policy that focuses on rural areas. D C Patra responds to Goutam et al, and criticises them for using outdated data to draw conclusions, and contends that there has been an uptake in the use of LPG cylinders in rural areas. Lahoti et al reply to Patra and assert the validity of the data set used to draw their conclusions.

 

A few other works that are broadly related to this discussion:

  1. Deconstructing Government's LPG Subsidy Savings Claim,  Bhamy V Shenoy, 2016 
  2. Need to Redo the Draft National Energy Policy, Bhamy V Shenoy, 2017
  3. From LPG Connections to Use, Ashwini Dabadge, Ann Josey, and Ashok Sreenivas, 2016

Ed: To contribute to a more comprehensive discussion map, please share links to other relevant articles in the comments section or write to us at edit@epw.in with the subject line—“Welfare and Access.”

 

Curated by Yashashwani Srinivas [yashashwinisrinivas97@gmail.com] and Kieran Lobo [kieran@epw.in]

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