BUSINESS, GOVERNMENT & SOCIETY

ASSIGNMENT 4
What are the challenges that will be
faced by the government if it wanted
to promote Oorja Stove under the
Ujjwala scheme?

Submitted by,
GROUP 6
SECTION A
In India, nearly two-thirds of the households (about 17crore households), cook on
conventional stoves that use solid bio-fuels. This practice has caused severe economic and
health implications. The Indian government, in 2016, introduced Ujjwala Yojana, to facilitate
the families under Below Poverty Line (BPL) use smoke-free LPG gas stove. Under this scheme
government will bear the connection charges. First Energy’s Oorja stove is also offering similar
benefits and let’s analyse what will be the challenges faced by the government if it is
promoted under this scheme.
Under the current scheme, even though the government is successful in rolling out new LPG
connections, the same is not getting reflected in the growth of LPG consumption. From 2015-
2016 to 2016-2017, the growth rate of LPG customers leaped from 10.2% to 16.2%, but y-o-
y growth rate of LPG consumption grew only from 9% to 9.8%[1]. This can be attributed to the
very low purchasing power of the customers. According to the Rangarajan committee report,
the new poverty line should be Rs 32 in rural areas and Rs 47 in urban areas. Meanwhile, a
standard 14.2-kg subsidised LPG is sold for Rs.500, which is more than half of a person’s one
month earning. So, after buying the first cylinder, most of the families resort to the traditional
cooking because they simply cannot afford to buy the second cylinder. This flipside will be
applicable for Oorja stove too.
Currently, Fair energy is selling their bio-mass pellets at Rs.20/kg (as of Feb, 2019) and is more
expensive than a subsidised LPG[2]. So, the only viable option for the government is to
subsidise the biomass pellets to a greater extent than LPG to ensure sustained use of Oorja
stove. So, the cost of refilling remains the biggest hurdle for mass adoption of cleaner cooking
methods.
Secondly, Supply-side bottlenecks also pose a formidable challenge for the proliferation of
Oorja stove. Contrary to LPG, which has a dealer in every nook and corner of the country (as
on 01.10.2016, Number of LPG distributorship allotted in India was 18214), the number of
retail outlets selling bio-mass based stoves and fuel are very sparse. As per our inquiry,
currently, Oorja stove is sold only in Pune and fuel is available in a very limited number of
states. So, even if the government decides to introduce it today, it cannot meet all the
demand with current available capacity. Also, ensuring an equal number of service centres is
also very essential. So, huge capital investment is required to overcome these challenges.
Finally, we need to investigate the nuances of how purchasing decisions are made in a typical
Indian family. Women are first-hand experiencers of the ill effects of cooking smoke. So, they
understand the problems associated with traditional cooking better than anyone. But, in most
of the Indian families, men remain the final deciding authority in all financial matters. So,
governments need to do targeted social advertising to this group, to encourage the adoption
of cleaner cooking methods.

1
APPENDIX
1.

Increase in LPG
Year LPG Consumption rate
Customers
2007-08 10.7 7.2
2008-09 1.5 4.9
2009-10 7.7 8.9
2010-11 9.1 9.1
2011-12 7.1 9.3
2012-13 1.6 9.8
2013-14 4.4 10.5
2014-15 10.5 9.4
2015-16 9 10.9
2016-17 9.8 16.2
(Source: thewire.in)

2. Current price of Biomass pellets - Rs.20/kg (Data provided by Oorja sales personnel)
Price of subsidised LPG cylinder - Rs.500 (approx.)

Every KG of LPG is replaced by 2.5 KG of pellets.

Equivalent price of bio-mass pellets - 14.2*2.5*20 = Rs. 710 (expensive than subsidised
LPG)

REFERENCES
- https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3945541/
- http://firstenergy.in/
- https://timesofindia.indiatimes.com/india/New-poverty-line-Rs-32-in-villages-Rs-47-in-
cities/articleshow/37920441.cms
- https://www.businesstoday.in/current/economy-politics/lpg-cylinder-price-reduced-by-rs-
120-for-unsubsidised-consumers/story/305633.html
- http://www.firstenergy.in/files/FE%20Oorja%20Sustainability+Efficiency_Aug2013.pdf