(FE)
While many analysts have spoken of the electoral impact of the Pradhan Mantri Ujjwala Yojana which has, by giving 2 crore LPG connections to BPL households in rural areas, surpassed its target by a third this year—the eventual target is to give 5 crore free connections by 2019—the scheme is much more than just a political gimmick. For over 2 crore rural women who risk their lives every day choking over wood-fired chulhas, the LPG cylinders are nothing short of life-changing. And from even a narrow economics perspective, the prime minister has very carefully crafted the scheme—the fact that global oil prices are so low is, though, an additional benefit.
To begin with, LPG distributors were asked to eliminate duplicate accounts; after which, through a high-pitched #GiveItUp campaign led by the prime minister, over 1.5 crore families were encouraged to give up their subsidies. This was then followed up with income ceilings, beyond which households were denied subsidies. Just getting rid of 3.34 crore fake/duplicate customers allowed the government to save over `21,000 crore over FY15 and FY16. In other words, Ujjwala is the classic example of transferring subsidies from the undeserving to the truly deserving; over a period of time, especially as global crude prices start rising, the income criterion will have to be lowered further as it still covers large sections that are too rich to get the subsidy.
