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Ujjwala ‘free LPG’ connections fly off the shelves

The government’s ‘free LPG connection’ scheme, Ujjwala, has seen 60% higher demand than expected, and the objectives of the three-year scheme will be met within two years at the current pace of rollout.As of the end of February, the total number of beneficiaries under the scheme rose to 2 cr (20 mln) from 15 mln in December, according to data from the oil ministry.

Against a target of providing 1.5 cr (15 mln) such connections in the 11 months of this financial year, 20 mln connections have been provided in ten months, averaging 2 mln per month.

The Ujjwala Yojana waives off the initial ‘administration fees’ of Rs 1,600 charged by state-owned oil companies if the recipient is recognized as living ‘below poverty line’ according to government records.

Contrary to its name, the ‘free LPG scheme’ does not provide free LPG. Monthly refills are charged at the rate fixed for all domestic customers — which is around Rs 600 per refill.

The recipient also has to buy a stove at his own expense, though other equipment — such as the gas regulator and a rubber pipe — come free with the connection. The connection comes with one free cylinder.

The oil companies have been aggressive in extending the benefit of the scheme, which was started between May and July of last year in various states.

The scheme is being funded by proceeds from the ‘Give it Up’ campaign that urged well-off LPG customers to give up their subsidy. The government provides a subsidy of around Rs 200 per cylinder up to a maximum of 12 times per year.

It is estimated to cost a total of Rs 8,000 cr, out of which the first year was expected to cost Rs 2,000 cr.

The scheme is aimed at expanding access to cooking gas to those who could not afford the start-up costs.

It is not clear whether the number of new gas connections given by oil companies has increased significantly since the launch of the scheme — as was intended — or whether people living below the poverty line who would otherwise have taken gas connections under the regular scheme switched to Ujjwala Yojana this year. Over a fifth of the population is classified as living below the poverty line.

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