Oil and Gas Sector – HELP, Open Acreage Policy, etc.

How LPG subsidy can be redesigned to privilege low-income households


From UPSC perspective, the following things are important :

Prelims level: Pradhan Mantri Ujjwala Yojana (PMUY)

Mains level: challenges faced by low-income households in India in accessing LPG

54% Indian households still using firewood, cow dung as cooking fuel: Study  - Gaonconnection | Your Connection with Rural India

Central Idea:

The article highlights the challenges faced by low-income households in India in accessing LPG refills despite government subsidies under the Pradhan Mantri Ujjwala Yojana (PMUY). It suggests reforms to the existing subsidy program to make it more effective, including on-time subsidy transfers and the use of digital payment solutions.

Key Highlights:

  • The Pradhan Mantri Ujjwala Yojana (PMUY) aims to provide LPG access to low-income households in India.
  • Despite subsidies, many households still rely on biomass for cooking due to liquidity constraints.
  • Existing subsidy policies have evolved rapidly, but they may not adequately address the needs of PMUY households.
  • Data analysis reveals that PMUY consumers are sensitive to the amount and timing of refill subsidies.
  • Upfront subsidies, like those provided during the Pradhan Mantri Garib Kalyan Yojana (PMGKY), can significantly increase LPG usage.
  • Fin-tech solutions, such as electronic subsidy transfers and digital vouchers, can alleviate the financial burden of refill purchases.

Key Challenges:

  • Ensuring subsidy benefits reach the intended beneficiaries without leakage.
  • Addressing liquidity constraints faced by low-income households.
  • Educating households about subsidy timing and logistics.
  • Overcoming credit constraints, especially for daily wage earners.
  • Implementing digital payment solutions effectively in rural areas.

Main Terms or keywords for answer writing:

  • LPG (Liquefied Petroleum Gas)
  • PMUY (Pradhan Mantri Ujjwala Yojana)
  • PAHAL (Pratyaksh Hanstantrit Labh)
  • PMGKY (Pradhan Mantri Garib Kalyan Yojana)
  • Fin-tech (Financial Technology)
  • e-RUPI (Electronic Rupee)

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Important Phrases for quality enrichment of mains answer:

  • Liquidity constraint
  • Direct benefit transfer
  • Upfront subsidy
  • Digital voucher
  • Electronic payment
  • Delayed subsidy transfer

Manmeet Singh Bhatti on LinkedIn: LPG is the immediate Fuel to reduce  Pollution Agree? Indian Oil Corp…

Quotes for value addition:

  • “Low-income households are sensitive to the amount and timing of refill subsidy.”
  • “An upfront subsidy transfer can increase the demand for LPG refills significantly.”
  • “Digital payment solutions hold promise in alleviating the financial burden of refill purchases.”


  • The Pradhan Mantri Garib Kalyan Yojana (PMGKY) saw a spike in LPG consumption among low-income households during the period of upfront subsidy provision.

Useful Statements:

  • “Ensuring subsidy benefits reach the intended beneficiaries without leakage is crucial for the success of LPG subsidy programs.”
  • “Digital payment solutions can address liquidity constraints and improve access to LPG refills for low-income households.”

Examples and References:

  • Data from Indore district reveals the sensitivity of PMUY consumers to refill market prices and subsidy amounts.
  • The success of the Pradhan Mantri Garib Kalyan Yojana (PMGKY) in increasing LPG usage among low-income households serves as a relevant example.

Facts and Data:

  • Before PMUY, a high percentage of rural households in India used biomass for cooking.
  • PMUY households have lower LPG refill consumption compared to non-PMUY households.
  • A significant increase in refill subsidy decreases monthly consumption by about 25% for PMUY consumers.

Critical Analysis:

  • The article effectively identifies the challenges hindering the effectiveness of LPG subsidy programs for low-income households.
  • It provides data-driven insights into consumer behavior and the impact of subsidy policies.
  • The proposed fin-tech solutions offer practical approaches to address liquidity constraints and improve subsidy delivery.

Way Forward:

  • Implement electronic payment solutions and digital vouchers to facilitate on-time subsidy transfers.
  • Educate households about subsidy timing and logistics to improve awareness.
  • Continuously monitor and evaluate subsidy programs to ensure effectiveness and address any emerging challenges.
  • Collaborate between government ministries, fin-tech companies, and local stakeholders to implement reforms successfully.

By addressing these challenges and implementing innovative solutions, India can enhance LPG access for low-income households and accelerate its energy transition goals.

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