Impact of GST on propensity of LPG usage by BPL families

GST to impact LPG usage (1)

Ujjwala yojana and GST seems to be oxymoron for central government’s intention to safeguard the health of women & children by providing them with a clean cooking fuel – LPG and to ensure the proliferation of LPG usage in the country.

Ujjwala yojana is central government’s initiative to provide the entire for LPG connection to mitigate health hazards arising out of using firewood for cooking purposes. Inaccessibility of LPG for poor people is mainly because high amount for deposit to get the connection cost of stove and high costs for regular refills.

GST for the new connection and other administrative or service charges are under 18% slab. Also, Government has lowered subsidy for LPG refill by Rs.12. Apart from these costs the price of stove is upto Rs. 500 which is borne by the customer.

After the connection is sorted there has to regular refills to continue usage of LPG cooking but GST for gas refill is now at 5% but earlier VAT was between 2-4%

There are results showing failure of Ujjwala scheme because families fail to refill LPG citing affordability. The prices are high for BPL families to afford even though central govt is already providing some amount of subsidy. With further lowering of LPG subsidies and increase in GST will aggravate the situation and they will move back to firewood

APL families too will find it difficult to get connection with 18% GST for new connection. The motive of clean energy usage will take a hit.

Threat to secure connection: BPL families, in an event of leakage or repairs, will avoid reaching out to agencies because of increased service costs due to 18% GST. This will make them vulnerable for LPG related accidents.

With no disruption in supply but increase in price for LPG refills will reduce the overall demand for refills taking back to unhealthy energy solutions.

What should central government do to avoid disruption?

Central government should provide input subsidy for LPG connections for all BPL families irrespective of socio-economic census data.

They should increase the subsidy for LPG refills.

They should provide input subsidies for LPG refills for all BPL families.

Let us all urge central government to bring these reforms to promote clean energy usage for healthy rural India.

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