1. Free LPG cylinder scheme spins-off this massive benefit; see storm it cooked up

Free LPG cylinder scheme spins-off this massive benefit; see storm it cooked up

The Narendra Modi government’s flagship Pradhan Mantri Ujjwala Yojana (PMUY), which has provided more than 3 crore liquefied petroleum gas (LPG) connections to poor households over the last one and a half years.

By: | Published: November 10, 2017 6:28 AM
The Narendra Modi government’s flagship Pradhan Mantri Ujjwala Yojana (PMUY), which has provided more than 3 crore liquefied petroleum gas (LPG) connections to poor households over the last one and a half years. (Image: IE) The Narendra Modi government’s flagship Pradhan Mantri Ujjwala Yojana (PMUY), which has provided more than 3 crore liquefied petroleum gas (LPG) connections to poor households over the last one and a half years. (Image: IE)

The Narendra Modi government’s flagship Pradhan Mantri Ujjwala Yojana (PMUY), which has provided more than 3 crore liquefied petroleum gas (LPG) connections to poor households over the last one and a half years, has had a multiplier effect on the manufacturers of equipment such as cylinders, pressure regulators, stoves and tubing — most of which fall in the micro, small and medium enterprises (MSME) segment. The number of cylinder makers across the country in 2014-15 was 102, which has gone up to 146 in 2016-17 and this industry’s turnover has surged from Rs 3,491 crore to Rs 5,258 crore during the period. Similarly, the number of stove manufacturers has gone up from 39 to 45 and the corresponding increase in turnover has been from Rs 2,253 crore to Rs 2,728 crore.

Overall, the total turnover of companies manufacturing cylinders, pressure regulators, stoves and connecting tubes has increased by 42% between 2014-15 and 2016-17 from Rs 6,240 crore to Rs 8,858 crore. For the six months between April and September, 2017, the combined turnover of these industries stood at Rs 4,281 crore.
The ministry of petroleum and natural gas under minister Dharmendra Pradhan launched PMUY in May 2016 to provide subsidised LPG connections to women belonging to the below-poverty-line category. The government is targeting to provide 5 crore LPG connections by May 2019 under the scheme with the ministry of finance providing a support of Rs 8,000 crore. As reported by FE earlier, the petroleum ministry is in the process of getting Cabinet approval to add another 3 crore beneficiaries at an additional cost of Rs 4,800 crore.  According to Anish De, partner at consultancy firm KPMG, growth in the equipment manufacturing segment is likely to continue at least till 2019 as there will be a continued push.

“It (PMUY) has definitely helped manufacturers. However, a saturation point will come once the scheme is over,” said De. The manufacturers of pressure regulators and tubes have also benefited with number of makers going up from 35 to 26 and 12 to 17, respectively, between 2014-15 and 2016-17. The turnovers has correspondingly increased during the period from Rs 250 crore to Rs 497 crore for makers of regulators and from Rs 246 crore to Rs 375 crore for pipe makers. The total number of manufacturers has grown by 34%. Kolkata-based Chandawat Udyog (Cylinders) has seen a surge in demand from oil marketing companies (OMCs). “Earlier tender size used to be 1 crore cylinders per year for each OMC. This has gone up five times now,” said Bhupesh Agarwal, director of the company which produces 30,000 cylinders per year. He added that competition has gone up after the launch of PMUY and there used to only 64 companies manufacturing cylinders in 2005.

Agarwal, however, is cautious about the future as he, like De, sees demand stagnating after two or three years.  The average life of an LPG cylinder is 20 years wherein it is typically repaired once after 10 years and then five years from then. The three OMCs — Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation — together hold an inventory of 25-30 crore LPG cylinders at any point in time as many of the cylinders undergo repair at bottling plants. The increased usage of LPG has also led OMCs to plan expansion of bottling capacity. As reported by FE earlier, they are expected to have an additional capacity of 1,242 tonnes per annum in their LPG bottling plants by the start of FY22 through six brownfield and 10 greenfield projects. The existing capacity is 23,514 tonnes per annum among 228 bottling plants for the three OMCs.

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    pmshah
    Nov 11, 2017 at 7:15 pm
    How many of these cylinders and stoves meet the bare minimum quality standards? The way these are handled by skinny and puny handlers it is surprising there have not been many disasters.
    Reply
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      Gp Capt S B Majumdar
      Nov 11, 2017 at 2:18 am
      This is one scheme launched by Modi Govt. which has transformed lives of bpl housewives. As brought out in the report, it has had a multiplier effect on small and micro industries manufacturing gas cylinder accessories. All kudos to Modi Govt. for this ground breaking scheme. Wish many more such schemes are launched in near future.
      Reply
      1. மணி
        Nov 10, 2017 at 9:40 pm
        பெட்ரோல். டிசல். சமையல்கேஸ் விலை உயர்வுக்கு மோடி அரசு தான் காரணமா ஏன் இப்படி விலையேற்றிஏழை மக்களை துன்பத்துக்கு உள்ளாக்குகின்றனர். கடந்த காங்கிரஸ் ஆட்சி காலத்தில் கூட இவ்வளவு கொடுமைகள் இல்லை.
        Reply
        1. लोकेश सोलंकी
          Nov 10, 2017 at 7:57 pm
          माननीय प्रधान मंत्री जी,प्रणाम ,राम राम माननीय प्रधान मंत्री जी हमारे गांव मे 50 से अधिक महिलाओं को निशुल्क एलपीजी कनेक्शन नहीं मिला है गांव मुंडियापूरा , जिला बडवानी
          Reply
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            Bikash Gupta
            Nov 10, 2017 at 11:39 am
            After the Success of Distributing LNG Cylinders for poor, Now Modi Government is coming with another Fantastic Scheme that is Modernising Solar Cookers and popularising the same among all the of People of India. Hats Off.
            Reply
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              Madhav Bastodker
              Nov 10, 2017 at 7:36 am
              Why such ordinary tricks of a tea boy not taught in Harvard or Stanfod?
              Reply
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