Pradhan Mantri Ujjwala Yojana helps lower rural fuel inflation

MUMBAI: Ever since the government launched the Pradhan Mantri Ujjwala Yojana ( PMUY) in May 2016, non-discretionary inflation, which is essentially food fuel and housing inflation, has almost halved from 6.44% in May’16 to 3.05% in October’17

“ While the crash in food prices has been one of the reasons, we believe such decline is also fueled by the big impetus that has been given to PMUY that almost coincided with the beginning of such decline (launched in May 2016)” said S K Ghosh, group chief economic advisor, State Bank of India.

PMUY aims at empowering poor women who are forced to inhale unhealthy emissions from burning coal, wood and other unclean fuels while cooking. More than 3 Crore LPG connections have been released across the country under the scheme so far.

An analysis of the impact of PMUY on rural fuel and light CPI inflation for 10 states that accounted for 95.3% of total connections by the SBI’s research team shows that the States where the number of connections was distributed, states like UP, Rajasthan, Odisha, the rural fuel and light inflation has significantly declined/ stayed flat since the launch of the scheme- May’16.

SBI in its report concludes that government could do undertake number initiatives for further success of the scheme. The government could frontload the subsidy payments to the oil marketing companies so that the subsidy payments is released to the poor people within a stipulated time of say maximum a fortnight from booking. Second, the government should now target some of the states like Chhattisgarh, Haryana and Maharashtra where the number of LPG connections have not expanded significantly. This will ensure a universal reach and appeal of the PMUY scheme across Pan India, it said.