State-run fuel retailers have decided to defer recovery of instalments on loan given to poor households for buying stove and the first cooking gas cylinder, or both, at the time of getting free LPG connection under the Centre’s ‘Ujjwala’ scheme.
According to the decision, taken after a nudge from the oil ministry, public sector oil marketing companies will not recover their loan for the next six refills booked by Ujjwala households. All existing Ujjwala beneficiaries with loan will also not have to pay their outstanding instalments for the next six refills
The decision comes ahead of the assembly election in Karnataka, where the state government had in February launched its own free LPG scheme, saying the state’s poor did not get ‘proper’ benefit of the Ujjwala scheme.
The moratorium on loan recovery is the second instance of the ministry giving in to political expediency ahead of a crucial state election. In October last year, two months before Gujarat election, the ministry had asked state-run fuel retailers to stop raising the price of subsidised cooking gas cylinders by Rs 4 per month. This decision came at a time of mounting popular anger over relentless rise in fuel prices, forcing the government to cut excise duty.
The deferment of loan recovery follows reports — stoutly denied by the ministry — of beneficiaries struggling to buy refills since they had to pay market price for a cylinder till the loan is cleared. The fuel retailers recover their loan by adjusting against the subsidy, currently pegged at Rs 195.91.
According to data culled by the fuel retailers, 70% of Ujjwala beneficiaries have availed of the loan facility and have to pay the full market price which is higher than the subsidised rate. Data indicates an average consumption of four cylinders by each household in one year of getting the Ujjwala connection.
A statement announcing the deferment of loan recovery, the country’s largest state-run fuel retailer Indian Oil accepted beneficiary households may be hard up in ordering a refill. “Paying the market price for the initial few refills is an additional hurdle that was coming in the way of their (beneficiary families’) shift towards cleaner fuel, resulting in periodic slip-back to biomass,” the statement said.
