The government referred to the price reduction ujjawla yojana expansion as its present to the people on the occasion of Raksha Bandhan and Onam. The price reduction and PMUY expansion come ahead of Assembly elections in five states later this year and the Lok Sabha elections the next year.
The Pradhan Mantri Ujjwala Yojana (PMUY) will now include an additional 75 lakh low-income households as beneficiaries over the course of three years, at an estimated cost of Rs 1,650 crore, after approval by the Union Cabinet on Wednesday. The government’s approval of the Ujjwala yojana expansion and the plan to release grants to public sector oil marketing companies (OMCs) for it comes on the heels of its announcement on August 29 to reduce cooking gas prices for all domestic consumers by Rs 200 per cylinder and increase the PMUY beneficiary base from 9.60 crore to 10.35 crore.
The government referred to the price reduction and PMUY expansion as its present to the people on the occasion of Raksha Bandhan and Onam. The price reduction and Ujjwala yojana expansion come ahead of Assembly elections in five states later this year and the Lok Sabha elections the next year.
The planned subsidy of Rs 200 per 14.2-kg cooking gas cylinder for up to 12 refills per year is not included in the Rs 1,650 crore estimate, which solely covers the cost of connection to the new 75 lakh Ujjwala yojanarecipients during the three years 2023–24, 2024–25, and 2025–26. As part of Ujjwala yojana, women who live in low-income homes are provided free access to cooking gas hookups, stoves, and the first cylinder. The government also pays the Rs 200 per cylinder subsidy that recipients get via bank transfer from the OMCs. This is because the OMCs are paid for it.
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“Some eligible houses still lack a connection to liquefied petroleum gas. This is because of a variety of factors, including the growing population, weddings, migration, nuclearization of families, leftover homes, remote locations, etc. New households are created every year as a result of these factors. PMUY has received high accolades for being an effective social welfare program that significantly increased the country’s LPG penetration from 62% in 2016 to nearly saturation today, according to a government announcement on Wednesday.
According to official of Ujjwala yojana
the average LPG refill rate for Ujjwala yojana recipients was 3.71 cylinders in terms of 14.2-kg cylinders during the fiscal year 2022–23. Calculations suggest that based on the existing recipient base of 9.6 crore, PMUY users consume a total of 35.6 crore 14.2-kg cylinders annually, resulting in a subsidy outlay of more than Rs 7,100 crore. Assuming the PMUY refill rate maintains at 3.71 cylinders per year and the subsidy remains constant at Rs 200 per cylinder, the annualized cooking gas subsidy bill for the anticipated 10.35 crore beneficiary base will be close to Rs 7,700 crore.
When the price of oil and fuels fell dramatically globally in the first few months of the 2020–21 fiscal year, the government stopped subsidizing cooking gas. Later, the subsidy was reinstated, but only for low-income households that were covered by the program.
People in the know say that while the government will cover the cost of increasing the Ujjwala yojana beneficiary base and the ensuing rise in subsidy outgo, it is unlikely to cover the cost of the price decrease, and the OMCs are anticipated to take the pain, at least temporarily.
Due to the numerous factors in the calculation, the real cost can differ from this estimate. These include potential overre coveries on LPG sales by fuel merchants, future volatility in the price of crude oil and LPG on the global market, and exchange rate changes. The government, for its part, has not given a cost projection for the price reduction.
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