Context: 

For the first time, LPG consumption in Indian households saw an absolute reduction in 2023 (minus 0.5% versus FY22) after years of steady growth.

Liquefied Petroleum Gas (LPG) Adoption in India:

• The Grameen Vitrak Yojana: It was launched in 2009, and has helped grow the rural distributor base from 18% to 60% of the total LPG distributor base today. 
• Pradhan Mantri Ujjwala Yojana (PMUY): It was launched in 2016, and has provided more than 9.5 crore new households with LPG connections since 2016. 
  • In FY21, three free cylinders were provided to all PMUY consumers as part of the Pradhan Mantri Garib Kalyan Yojana. 
  • This drove the annual refill rates for LPG among PMUY consumers to their highest levels of 4.55 cylinders per active connection. 
• The India Residential Energy Consumption Survey (IRES): It was conducted by the Council on Energy, Environment and Water (CEEW) reported that the share of Indian households using LPG as the primary cooking fuel had risen to 71% in 2020 from 33% in 2011.
• Reduction of Health and Environmental Hazards: The increased adoption of LPG has led to a reduction in health hazards caused by traditional cooking fuels like firewood and dung cakes.
  • Indoor air pollution, particularly affecting women, has decreased.

Challenges Faced by the LPG Sector:

• Global Events:
  • COVID-19 pandemic and the ensuing loss of livelihoods and income.
  • The Russian invasion of Ukraine and the resulting surge and volatility in crude and product prices.
• Internal Events:
  • Withdrawn of Subsidy: In 2020, with the onset of COVID-19, subsidy for LPG consumption was withdrawn for all consumers.
  • Distribution Issue: Despite significant efforts, home delivery and distribution channel issues remain
  • High Importing of LPG: Another challenge is India’s dependence on imported LPG, the refined commodity — has steadily increased to over 64% in FY23.
  • Less Consumption: Despite providing three free cylinders to all PMUY consumers in FY21 as part of the Pradhan Mantri Gareeb Kalyan Yojana, only 14.1 crore out of the possible 24 crore free cylinders were consumed.
  • High Price Rise: All the above factors, particularly Ukraine-Russia issue led to nearly doubling in LPG prices since May 2020 in nominal terms. 

The Path Ahead:

• Promotion of Electric Cooking: India needs to shift from an LPG-only strategy and electric cooking should be promoted. 
  • With near 100% access to electricity connections, rural households can also shift specific cooking needs to electricity. 
  • A CEEW study: It finds that even at a high tariff of ₹8 for each unit of electricity, e-cooking would still be cheaper than cooking using LPG at today’s prices. 
• More Budgetary Outlay: Adequate funding will be needed for subsidies to entice the poor to consume LPG and avail its health benefits.
• Rise in Manufacturing: High electric products in the market would lead to decline in their price and result in higher adoption by the people and simultaneously reduce the dependence on imported LPG and crude products. 
• Targeted Support: Targeted support should be provided to the manufacturers to achieve efficiency as per the needs of Indian households.
• Monetize Avoided Emissions: With the newly launched carbon market, India can actually monetise these avoided emissions and help finance the capital needed by poorer rural communities to adopt e-cooking. 
• Need to Shift Focus & Policy beyond LPG: There is a need to shift to a clean cooking transition for the climate and clean air benefits, with a bouquet of solutions.
  • Environment-Friendly: Displacement of ‘chulhas’ by e-cooking would also avoid climate pollutant release. 
• Increasing LPG Prices: It could displace LPG in higher-use groups and, in turn, create a demand for new e-cooking technologies and models.

News Source: The Hindu

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