CAG report on Pradhan Mantri Ujjwala Yojana (PMUY)

The Comptroller and Auditor General (CAG), in its report on the Pradhan Mantri Ujjwala Yojana (PMUY), has highlighted the risk of diversion of domestic cylinders for commercial use.

Pradhan Mantri Ujjwala Yojana (PMUY)

• Launch-
  • The Government of India (GoI) launched Pradhan Mantri Ujjwala Yojana (PMUY) in May 2016  to safeguard the health of women and children by providing them with a clean cooking fuel.

• Target Beneficiaries-
  • Under the scheme, an adult woman belonging to a poor family not having LPG connection in her household, is an eligible beneficiary under the expanded scheme.
• Government covered the following categories under the Scheme-
  • Beneficiaries listed in the SECC 2011 list
  • All SC/STs households beneficiaries of Pradhan Mantri Awas Yojana(PMAY) (Gramin)
  • Antyoday Anna Yojana (AAY)
  • Forest dwellers
  • Most Backward Classes (MBC)
  • Tea & Ex-Tea Garden Tribes
  • People residing in Islands
  • People residing in river islands.
• Benefits-
  • Under the scheme, five crore LPG connections are to be provided to BPL households.
  • It was expanded from 5 crore to 8 crore LPG connections.
  • The Scheme provides a financial support of Rs 1600 for each LPG connection to the BPL households, interest free loan to purchase a stove and refill by Oil Marketing Companies.
  • The administrative cost of Rs. 1600 per connection, which includes a cylinder, pressure regulator, booklet, safety hose, etc. would be borne by the Government.
• E-PMUY- launched in March 2018:
  • BPL households not covered under the Socio-Economic Caste Census (SECC) data and PMUY would be facilitated to avail of the PMUY LPG connection by showing their Ration Cards.
• E-PMUY-2 - launched in January 2019:
  • BPL households not covered under the Socio-Economic Caste Census (SECC) data and EPMUY would be facilitated to avail of the E-PMUY LPG connection by showing their Ration Cards.
  • This scheme will lead to near 100 percent LPG penetration in the state.

Major findings of the CAG report-

1. Related to the distribution of LPG connections under PMUY-

• De-duplication- Out of 3.78 crore LPG connections, 1.60 crore (42%) connections were issued only on the basis of beneficiary Aadhaar which remained a discouragement in de-duplication.
• Identification- Lack of input validation check in IOCL software allowed issue of 0.80 lakh connections to beneficiaries aged below 18 years.
• Violation of guidelines- 8.59 lakh connections were released to beneficiaries who were minor as per the SECC-2011 data, which was in violation of PMUY guidelines and LPG Control Order, 2000.
• Inadequate efforts- Adequate efforts were not made in distributing the small cylinders(5-kg) for encouraging usage.
• Connection in the name of male- PMUY envisaged release of LPG connection in the name of a woman. However, due to lack of input validation check in Indian Oil Corporation Limited (IOCL) software, 1.88 lakh connections were released against AHL TIN of males.
• Delay in Installation- Delay of more than 365 days was noticed in installation of 4.35 lakh connections against stipulated time period of seven days. 

2. Related to safety-

• Carelessness in saPre installation inspection report and installation certificates was not available in many cases.
• Cases of unsafe LPG practices by PMUY beneficiaries were also observed as the stoves were kept on ground/below the level of cylinder, non-standard hose pipe was being used etc. as noticed during beneficiary survey. 

3. Related to Infrastructure preparedness-

• Distributors at long distance- Inadequate efforts in commissioning targeted 10000 new LPG distributorships by OMCs led to a compelling situation for existing LPG distributors to supply cylinders either at long distance or from godown/designated points instead of door delivery.
• Delay in Delivery- Delay of more than 10 days (ranging up to 664 days) was noticed in delivery of 36.62 lakh LPG refills against the stipulated delivery period of seven days. 
• Inadequate efforts- Adequate efforts were not made in distributing the small 5-kg cylinders for encouraging usage. And, also, the importance of small 5 Kg cylinders to make PMUY successful considering high refill cost as a barrier to LPG usage.

4. Related to transition of BPL households to LPG-

• Refilling- Encouraging the sustained usage of LPG remains a big challenge as the annual average refill consumption of 1.93 crore PMUY consumers (who have completed more than one year as on March 31, 2018) was only 3.66 refills.
• Level of consumption- It seems improbable in view of the BPL status of such beneficiaries as 1.98 lakh beneficiaries had an average annual consumption of more than 12 cylinders.
• Recovery of Outstanding loan- Low consumption of refills (up to three) by 0.92 crore loanee consumers (who had completed one year or more as on 31 December 2018) had hindered recovery of outstanding loan of ?1234.71 crore.

5. Related to Financial Management-

• Partial settlement of OMC- Neither the Revised Estimates for 2017-18 nor the Budget Estimates for 2018-19 was allocated in line with the revision of targets or for meeting the shortfall for the previous years.
• CSR funds- There was excess parking of funds under Corporate Social Responsibility (CSR) pool which was contributed on the directives of Ministry of Petroleum & Natural Gas (MoPNG) without any realistic assessment thereof.

Other Issues related to PMUJ-

Substantive Issues-

• Difficulty in Refilling- A recently published study called ACCESS by the Council for Energy, Environment and Water across six cities shows, a large number of households stack LPG and biomass.
  • Affordability of refill and difficulty in getting a refill are the reasons for this scenario.
• Affordability- In rural India many households are using biomass such as firewood, crop residue and dung cakes as their primary cooking fuels which are much affordable for them.
• Price Issue- The Council of Energy, Environment and Water(CEEW) study across Uttar Pradesh, Madhya Pradesh, Jharkhand, Bihar, West Bengal and Odisha found people were unwilling to pay upfront Rs.900-1,000 for a 14 kg refill but would pay about Rs.300 for a refill which is about the price of refilling a 5 kg cylinder.
• Ignores the volatility- While it is true that use of cylinders does increase over the years, the assumption of union government on cylinder consumption ignores the volatility in rural incomes.
• Lack of knowledge- It also ignores that that most rural women do not have a say in determining when a refill is ordered, even though the connection is in their name.

Budget related issues-

• Budget for settlement of PMUY claims-
  • Neither the Revised Estimate for 2017-18 nor the Budget Estimate for 2018-19 was allocated in line with the revision of targets or for meeting the shortfall for the previous years which has resulted in partial settlement of the claims in these years due to shortfall in the budget.

•  CSR funds collected from NOCs without assessing the realistic requirement- 

• MoPNG, instead of working out the realistic requirement of CSR funds for utilization in PMUY, directed the NOCs to pool in 20 percent of their CSR fund as per past practice.

• Expenditure on  activities in excess of maximum eligible amount-
  • There has been an extra expenditure on Information, Education and Communication(IEC)/ Project Management Expenditure(PME) activities by the OMCs over and above the reimbursable amount which is an additional burden on the OMCs.

• Non-transfer of subsidy to PMUY consumers- 
  • Non-transfer of subsidy to six per cent of PMUY consumers may act as a disincentive to consume more refills since they belong to BPL category and have paid higher cost for the refills without receiving subsidy.
• Ineffective scrutiny of PMUY Claims by Petroleum Planning & Analysis Cell(PPAC)-
  • The consumer data furnished by OMCs to PPAC did not contain some important fields like gender, date of birth etc. of the consumers. 
  • The methodology adopted by PPAC for this de-duplication was limited to the extent of matching of AHL TIN.

Recommendations of CAG-

• Effective deduplication- Aadhaar numbers of all adult family members of existing as well as new beneficiaries should be entered in the system to make deduplication effective. 
• Cut twin benefits- E-KYC needs to be initiated to reap twin benefits viz. capturing the correct information and authenticating genuineness of the PMUY beneficiaries.
• Minor beneficiaries- LPG connections issued to minor beneficiaries may be transferred in the name of adult family member if the family is otherwise found eligible under PMUY.
• Safety campaigns- Massive safety campaigns need to be organized in order to ensure safe usage of LPG by PMUY beneficiaries.
• Curb diversion- Cases of high consumption of refills should be regularly reviewed to curb diversion.
• Low consumption category- As the target of releasing PMUY connections has been broadly achieved, PMUY beneficiaries in nil/low consumption category need to be encouraged for sustained usage.
• Identify and restrict the ineligible- The entire LPG databases as well as physical records need to be scrutinized to identify and restrict release of connections to ineligible/male/minor beneficiaries/multiple connections.
• Third Party Audit, as envisaged in the scheme, may be carried out to assess the implementation of scheme.
• Avoid risk hazards- The option of subsidizing the cost of mandatory inspection may be explored to avoid risk hazards in the absence of regular inspections.
• Feasibility of sharing- The feasibility of sharing the AHL TIN with the beneficiaries may be explored by MoPNG in coordination with MoRD.
• Measurable benefits- MoPNG, in consultation with the concerned ministries, may develop a comprehensive roadmap for assessing the outcome in terms of measurable benefits like improvement in the health of women and reduction in Household Air Pollution.
• Appropriate input controls, data validations and mandatory fields should be deployed in distributors’ software to restrict issuance of LPG connections to ineligible beneficiaries.

Way forward

• Increase in coverage- PMUY, having main focus on providing LPG access to BPL households, has helped to increase the LPG coverage in the country as the pace of releasing connections witnessed a surge after launch of E-PMUY (March 2018) by including BPL beneficiaries apart from SECC-2011 database.
• Prevention from price volatility- If Crude oil prices were to rise in the future then the cost of use of LPG would rise for the BPL families, unless the subsidy provided is increased to nullify the rise in price.
  • Preventing such relapse will require the government to set aside more funds for energy subsidy. 
• Impact assessment- It would be useful to carry out an impact assessment of the program by a credible third party. While internal assessment by the government and OMCs had indicated that there were significant benefits, a third party assessment would be more credible.

Conclusion

Solar Energy can become an alternative source of primary. There should be policy flow path for transition from LPG to solar energy for cooking. Ujjwala had released a considerable amount of time of women (as well as men, who would not spend time in collecting fuel wood) as the time and effort needed for cooking would be much less. This time Should be productively utilize to enhance the rural household incomes.