Will LPG Crisis Dent Flagship PM Ujjwala Scheme?

India has more than 332 million domestic LPG connections – 104.20 million are under the government’s flagship welfare Pradhan Mantri Ujjwala Yojana (PMUY) scheme.

While the Centre and state governments are closely monitoring LPG availability and distribution, especially for domestic use, the crisis could deal a blow to the PMUY scheme despite assurances that cooking gas availability will not be disrupted.

Gas Cylinder Availability: How It Impacts Other Schemes 

Sources said gas cylinder availability is being managed, but a continued crisis in Iran could lead to problems that will affect the PMUY scheme. “There has been no disruption, but the situation is fluid, and in case there is a shortage, the availability of cooking gas under PMUY will be affected,” a person directly involved with the matter told The Secretariat. The problem could even impact the government's other welfare schemes with the increase in prices of LPG cylinders. A rise in prices would mean that the Centre would have to pay more for the scheme. 

Besides, the government’s efforts to increase redirection of propane–butane, the key raw materials for LPG to secure supplies of cooking gas, may hit production of pharma products and other chemicals, with a frayed supply chain.

While there has been an increase in bookings of cooking gas, many say it was more driven by panic.

The problem has aggravated with the upcoming state elections in Kerala, Tamil Nadu, West Bengal, and Assam, besides Puducherry.

Strait Of Hormuz Crisis

US President Donald Trump called for help from other countries and American allies to send warships to help unblock the Strait of Hormuz. However, most countries have shown their reluctance to take any direct action.

External Affairs Minister S. Jaishankar is in talks with his counterpart in Iran on the issue.  

But every cloud has a silver lining. India, while putting in place a host of measures to ensure steady supplies of its energy requirements, will now also look at a long-term remedy. To begin with, New Delhi will take urgent steps to diversify its markets for the purchase of LPG and even increase production of the same, a senior government official said, adding that the matter is being reviewed by the Prime Minister’s Office (PMO).

Sources added that the push will be on expanding the piped gas connection to ensure households do not run out of cooking gas.

Crude Oil, Market Diversification

Until now, sources said, the single-point focus has been on crude oil and the diversification of its markets. “The other items in the energy basket never caught the attention of policymakers the way they should have, or else this problem could have been somewhat avoided,” an analyst said. 

The US, China and Russia are among the countries producing the maximum quantum of LPG.  

Policymakers are now underlining the need to be ready with proactive steps to protect the economy. “Until now, India has typically acted in a reactive mode. We need to adopt a proactive approach and be ready with a proper plan, which will ensure disruptions are eliminated,” a senior government official, on condition of anonymity, told The Secretariat. The issue has been taken up by the PMO as well.

“A country of India’s scale cannot allow clean-cooking resilience to depend excessively on a single imported fuel passing through a single strategic chokepoint,” a report by Observer Research Foundation (ORF) noted.