Expert Speak Terra Nova
Published on Sep 21, 2022

Nearly half of Indian households still use biomass for cooking. A credible transition to LPG or equivalent cooking fuels will come only when household incomes rise to sustain consumption.

Household LPG access in India: An Update

This article is part of the series Comprehensive Energy Monitor: India and the World


Background

In 2021-22, LPG (liquefied petroleum gas) consumption constituted about 13 percent of total petroleum product consumption. About 90 percent of LPG was consumed by households, 8 percent by industrial users and 2 percent by vehicles. Over 60 percent of LPG was imported and over 99 percent of domestic production was from public sector refineries. LPG consumption grew by over 84 percent from about 15.3 MT (million tonnes) in 2011-12 to 28.3 MT in 2021-22. Most of the growth was accounted for by packaged LPG consumed by households and commercial entities.  Domestic LPG consumption grew by over 76 percent between 2013-14 and 2021-22 whilst commercial consumption grew by over 108 percent. In the same period, bulk LPG consumption by industry grew by about 59 percent whilst consumption of LPG by the automobile sector decreased by over 37 percent. Direct import of LPG by the private sector declined by over 83 percent from a peak of 489,000 tonnes (T) to 82,000 T in 2021-22. Most of the growth in LPG consumption is driven by government policy to increase access to LPG.

Source: Petroleum Planning & Analysis Cell

LPG Access

In the 1970s, LPG stoves started replacing kerosene stoves in urban households when new refineries in India started producing bottled LPG. In 1977, there were only 3.2 million LPG connections across India (or 2.5 percent of the households).  In 1984, the number of LPG connections tripled to 8.8 million (5 percent of the households) and in 1990 the number of LPG connections increased to 19.6 million (11 percent of the households). LPG connections grew at over 14 percent in the period between 1977 and 1990 which was above the rate of growth for electricity connections but the starting base for LPG was very small. Subsidy offered by the government that amounted to roughly half the cost of an LPG cylinder was the primary driver behind this growth which benefited middle-class families in cities and towns. Adoption of LPG in rural households was very low as the initial cost of the connection was relatively high compared to rural incomes. The difficulty in getting replacement cylinders also inhibited adoption in rural areas as dealers were mostly located in towns and cities. In the 1980s and early 90s, getting an LPG connection even in cities and towns was more a privilege reserved for wealthy households rather than a public good made available to all.

When LPG shortage eased in the late 1990s, a number of southern state governments launched dedicated programmes for the distribution of subsidised or free LPG connections to households ‘below the poverty line’ (BPL). This substantially increased the number of households with access to LPG in the southern states. This model was successful in galvanising political support for governments dispensing LPG programmes at the state level and was adopted by the Centre in the form of the Rajiv Gandhi Gramin LPG Vitran (RGGLV) scheme in 2009. RGGLV more than doubled LPG dealers in rural areas. Whilst the increase in adoption of LPG in middle-class urban households was a positive development, it initiated clientelism in the provision of LPG, a model that was already well established in the case of electricity. In 2016, the current government recast RGGLV with some minor changes and relaunched it as Pradhan Mantri Ujjwala Yojana.

Subsidy offered by the government that amounted to roughly half the cost of an LPG cylinder was the primary driver behind this growth which benefited middle-class families in cities and towns.

According to the Ministry of Petroleum & Natural Gas (MOPNG) household LPG ‘coverage’ was 99.8 percent in 2021-22. The figure is qualified as an ‘estimate’. The estimate was arrived at by distributing the total number of connections for packaged LPG equally by the number of households in the country. The assumption that LPG connections are equally distributed among households and the assumption of the number of households are not accurate.  Many households have multiple LPG connections, and many are diverted to commercial use. The number of households in India is an extrapolation from 2011 census data. By adjusting the number of households, the desired figure for coverage can be obtained. Household level surveys provide more accurate figures that suggest that LPG coverage is less than projected.

According to the fifth National Family Health Survey 2019-2021 (NFHS-5) carried out by the Ministry of Health & Family Welfare, 88.6 percent of urban households use LPG or piped natural gas (PNG) as the primary cooking fuel, while only 42 percent of rural households use LPG or natural gas. Overall, only about 56.2 percent of the population used LPG or PNG as the primary cooking fuel. About 8.9 percent of urban households used wood, straw, shrubs, grass, crop waste, dung, and other materials (solid fuels) as primary cooking fuel whilst 54.6 percent of rural households used solid fuels for cooking.  Nationally about 43.3 percent of households in India continue to use solid biomass as the primary fuel for cooking.

Issues

The retail price of a 14.2-kilogram (kg) cylinder was about INR410 in 2012 after subsidies. In 2022, the retail price was over INR1000/cylinder in most of the Indian states as subsidies have been phased out. This is likely to slow down LPG adoption and use as the primary fuel for cooking by poor rural households.  Bureaucratic systems of provision of public goods such as LPG are biased against the poor in India. This opens up an opportunity for the politicians to fill in as the provider of goods such as LPG connections with gratitude to be expressed in votes.  Studies by political economists have shown that economic reforms reduced the opportunity for political rent-seeking through licenses and permits but replaced it with mass voter appropriation through the dispensation of public resources (sources of energy like electricity and LPG) to the poor as private goods.

In the last two decades, political parties in electoral contests rarely competed in the space of economic or social policies but rather competed on the basis of promises to use state resources to deliver targeted private benefits such as LPG connections to potential support bases. Distributing public goods such as LPG connections as private transfers to individual citizens (voters) is a much more certain means to secure votes than providing broad-based services such as education and health care to which many would simultaneously have access. Distributing LPG cylinders to poor households with the short-term goal of winning elections partly explains the impotency of LPG access programmes in the longer term. Inconsistent or lack of delivery of LPG cylinders (especially replacement cylinders post-election) on account of ambiguities in institutional accountability and underfunding of programmes enables the re-launch of plans many times over multiple electoral cycles.  The rhetoric of redistribution and social justice that is used to promote LPG access programmes offers social legitimacy for the ruling parties in India. The imperfect design of these programs offers comfort to pro-market, neo-liberal stakeholders that the effort is likely to fail or have a low impact eventually and consequently not drain public resources to the extent presumed. The sweeping claims of social transformation through LPG access programmes also oversimplify complex social and gender challenges in India. A credible transition from biomass to LPG or equivalent cooking fuels will come only when household incomes rise to sustain consumption.

Source: Petroleum Planning & Analysis Cell

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Authors

Akhilesh Sati

Akhilesh Sati

Akhilesh Sati is a Programme Manager working under ORFs Energy Initiative for more than fifteen years. With Statistics as academic background his core area of ...

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Lydia Powell

Lydia Powell

Ms Powell has been with the ORF Centre for Resources Management for over eight years working on policy issues in Energy and Climate Change. Her ...

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Vinod Kumar Tomar

Vinod Kumar Tomar

Vinod Kumar, Assistant Manager, Energy and Climate Change Content Development of the Energy News Monitor Energy and Climate Change. Member of the Energy News Monitor production ...

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