Ujjwala scheme takes India to second rank in LPG imports

• The Pradhan Mantri Ujjwala Yojana (PMUY) has so far provided over 6.31 crore free LPG connections since its launch, and now the target has been upped to 8 crore connections by March 2020.

• This has helped the country achieve a LPG coverage of close to 90 per cent, but this has also led to a rapid increase in LPG imports.

• With estimated imports of above 12 million metric tonnes in the financial year 2018-19, India stands as world’s second largest importer of LPG, after China.

Achieve the feet

• The country’s LPG imports have registered a remarkable trend in the last five years, growing at a healthy CAGR of 12.5 per cent, surpassing import volumes of Japan in the financial year 2017.

• For the April to December period in the current financial year, India had imported 9.47 million mt of LPG, and in the last financial year, 11.38 million mt, registering a rapid rise from 8.9 million mt in 2015-16.

• While India has excess refining capacity, and has no need for import of any of the transportation fuels, LPG production is short of demand and met through majority imports.

Key highlights

• This demand is projected to further rise 34 per cent by 2025, oil secretary M M Kutty said. He said the active LPG consumers have grown at a CAGR of 15 per cent from 2014-15 to 2017-18—in absolute numbers 14.8 crore to 22.4 crore.

• As per (oil) ministry’s projections and forecasts, LPG consumption is expected to grow to 30.3 million tonnes by 2025 and 40.6 million tonnes by 2040.

• With only kerosene and LPG have subsidized categories, and LPG being the growing segment, government’s subsidy burden can increase especially in case of higher global oil prices.

• For the current financial year the government has estimated a fuel subsidy of 24,833 crore as per the revised estimates, and budgeted for 37,478 crore for the next fiscal.

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Mains Paper 3: Economy | Infrastructure: Energy, Ports, Roads, Airports, Railways etc.

Prelims level: WLPGA, Asia LPG Summit

Mains level: PMUY , its prospects and challenges.

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