Editorials/Opinions Analyses for UPSC 24 December 2021

Contents

1. PMUY: This clean cooking fuel plan needs more firing up
2. Do Indians need insurance for bank deposits?

PMUY: This clean cooking fuel plan needs more firing up

Context:

• The Pradhan Mantri Ujjwala Yojana (PMUY) is ‘a flagship scheme of 2016, with an objective to make clean cooking fuel such as LPG available to the rural and deprived households which were otherwise using traditional cooking fuels such as firewood, coal, cow-dung cakes’.
• The scheme originally envisaged the distribution of 50 million LPG connections to women below the poverty line. Later, it aimed to provide LPG connections to eight crore women by March 2020. However, this target was achieved seven months prior, in September 2019.
• In Union Budget 2021, the government has extended the benefits under PM Ujjwala Yojana additional one crore beneficiaries.

Relevance:

GS-III: Environment and Ecology (Environmental Pollution and degradation, Conservation of Environment and Ecology), GS-II: Social Justice and Governance (Welfare Schemes, Government Policies & Interventions)

Dimensions of the Article:

1. PMUY-I and II, LPG prices, CEEW Study

1. Eligibility for Pradhan Mantri Ujjwala Yojana
2. Data on LPG use
3. Benefits of Pradhan Mantri Ujjwala Yojana
4. Factors that helped in the success of PMUY
5. Way Forward

Click Here to read about PMUY-I and II, LPG prices, CEEW Study

Eligibility for Pradhan Mantri Ujjwala Yojana

Any applicant who fulfils the below-mentioned criteria is eligible to apply for the Pradhan Mantri Ujjwala Yojana:

• The applicant must be a woman aged above 18 years. She must also be a citizen of India.
• She should belong to a family below the poverty line and no one else from the household should own an LPG connection.
• The overall monthly income of the family should not exceed a certain limit that is prescribed by the UT/State Governments.
• The applicant’s name should be in the list of SECC-2011 and should also match with the information provided in the BPL database of the oil marketing companies.
• The applicant should not be registered under any other similar scheme provided by the government.
• Apart from the above, the applicant should also submit a set of documents indicating her BPL status, identity, etc.

Data on LPG use

• Over the five years, the average per capita consumption among Ujjwala customers has risen from three cylinders per year (of 14.2 kg) to 4.2 (2020-21).
• Relatively poorer Ujjwala consumers are reaching the LPG consumption levels of relatively well-off non-Ujjwala rural consumers.
• A paper in Nature showed that only 45% of non-Ujjwala rural consumers use five or more cylinders per year, while data from oil marketing companies show that from October 2020 to September 2021, 32% of Ujjwala households were using five cylinders or more in a year.

Benefits of Pradhan Mantri Ujjwala Yojana

• It has been seen that there are high returns in terms of health gains by targeting pregnant women to have LPG access.
• Cooking with gas helps tuberculosis patients.
• During extreme weather events, LPG cylinders come to the rescue. The scheme effectively addresses several difficulties faced by the people in the States of Jammu and Kashmir, Himachal Pradesh, Uttarakhand, Sikkim, Assam, Nagaland, Manipur, Mizoram, Arunachal Pradesh, Meghalaya, and Tripura in accessing LPG for cooking purposes.
• The scheme can be a tool for women empowerment in that LPG connections and clean cooking fuel can reduce cooking time and effort, and in most of India, cooking is a responsibility shouldered solely by women.
• Financial support of Rs. 1600 is provided by the scheme for each LPG connection for BPL households. The administrative cost of this support is borne by the Government. This subsidy is meant for the security fee for the cylinder, pressure regulator, booklet, safety hose, and other fitting charges.
• Under the scheme, oil marketing companies also provide interest-free loans for refilling and purchasing stoves.
• The Pradhan Mantri Ujjwala Yojana covers all the BPL families that come under all forms of distributorship and distributes various sizes of cylinders (14.2 kg, 5 kg, etc.) as per the field situation.
• The benefits of this scheme are also available for the people of all Hilly States including the NE States (who are treated as ‘Priority States’).
• The scheme also employs the rural youth in the supply chain of cooking gas.

Factors that helped in the success of PMUY

• Government enhanced various capacities such as that of the ports for handling imports, of tanks for storage of LPG, of pipelines and trucks for transportation of gas, and of bottling plants for filling in more cylinders.
• Production of cylinders, pressure regulators, hose and affordable LPG stoves was also enhanced.
• Successful implementation of the Direct Benefit Transfer of LPG (DBTL) or PAHAL (Pratyaksh Hanstantrit Labh) scheme, also freed up the financial resources needed to dream of a large-scale programme for deposit-free LPG connections.

Way Forward

• The push has to be such that every household moves toward adopting a more sustainable cooking energy basket.
• Improvements in regular and on-demand supplies of LPG.
• Financing option for refill.
• Alternative remunerative uses for cow dung and biomass — possibly on the pattern of procurement of cow dung as is being done in Chhattisgarh.
• A massive boost to women’s incomes through the National Rural Livelihoods Mission will also help in nudging to a more sustainable cooking mix.

-Source: The Hindu

Do Indians need insurance for bank deposits?

Context:

Deposit Insurance and Credit Guarantee Corporation (DICGC) Amendment Bill, 2021 guarantees to compensate depositors up to a limit of ₹5 lakh within a period of 90 days from when a bank fails.

Relevance:

GS-III: Indian Economy (Banking, Issues relating to planning and mobilization of resources, Growth and Development of Indian Economy)

Dimensions of the Article:

1. About the Deposit Insurance and Credit Guarantee Corporation (DICGC) Amendment Bill, 2021
2. Causes of raising the deposit insurance limit
3. Disadvantages of India’s deposit insurance system
4. Way Forward

About the Deposit Insurance and Credit Guarantee Corporation (DICGC) Amendment Bill, 2021

• The deposit insurance scheme was upgraded through the Deposit Insurance and Credit Guarantee Corporation (DICGC) Amendment Bill, 2021.
• It guarantees to compensate depositors up to a limit of ₹5 lakh within a period of 90 days from when a bank fails.

Causes of raising the deposit insurance limit

• In India, the ₹1 lakh limit was set many decades ago. Now, if you do a simple calculation based on the inflation rate, the ₹1 lakh limit that was set in the 1990s is inadequate.
• India’s insurance limit is much lower than those of several comparable economies, e.g., South Korea, USA, etc.
• It is a step to try and infuse more confidence in the banking system. Raising the limit of deposit insurance will give confidence to depositors that if a bank does go down, they don’t need to run to the bank. They can keep their money in the bank, and the bank can continue operating without any financial trouble.

Disadvantages of India’s deposit insurance system

• As India has implicit insurance of 100% of deposits, that is why it led to a lack of discipline in depositors and investors.
• On the other hand, premiums the banks pay to deposit insurance agencies are flat premiums. Hence there is no difference among risky or less risky banks, both pay the same premium. In finance, it is not a fair practice.
• Due to the lack of a risk-adjusted premium model, investors are not discerning enough to figure out the good banks.
• In the current risk management system, RBI is always a few steps behind the banks. It always plays a catch-up game in terms of figuring out the true level of risk that banks have taken.

Way Forward

• India needs to move to a more risk-adjusted premium model. Hence, risk information will reach depositors sooner and they will be more wary of investing money.
• A better monitoring system of banks needs to be established.
• At the time of a banking crisis, the government should manage this issue. In India specifically, the RBI can do this decent job of regulating the system.
• The RBI and other regulatory agencies have to be really on top of the precise risk model, the disclosure of that information and quick action before a bank fails. To do this, the Indian banking system needs to have a good model to figure out which bank is under stress.

-Source: The Hindu