Q1. Ujjwala 2.0 (Pradhan Mantri Ujjwala Yojana) unquestionably improves access to LPG over its predecessor, but the poor will not fully benefit from it unless structural hurdles are addressed. Evaluate. (250 words)
Paper & Topic: GS II: Government Policies and Interventions
The Prime Minister has announced the launch of the Pradhan Mantri Ujjwala Yojana (PMUY) or Ujjwala 2.0 Scheme’s second phase. It intends to help migrants who live in other states but find it difficult to provide address verification as much as feasible. All that is left for them to do is submit a “Self-Declaration” to get the reward. Ujjwala is a component of the ambitious behavioral change strategy that will help India shift to a $5 trillion economy by 2024.
The PMUY has contributed to the proliferation of LPG cylinders, primarily in urban and semi urban areas, with a concentration on middle class and affluent residences. By providing access to LPG, a clean cooking fuel, it aims to protect the health of women and children by preventing them from having to risk their health in smoky kitchens or go into unsafe areas when gathering firewood.
The characteristics of Ujjwala 2.0 include:
The government has also set a target of providing piped gas to 21 lakh homes spread across 50 districts.
Migrant workers are qualified for a free cooking gas connection under Ujjwala 2.0 based only on a self-declaration, without the need for any accompanying documentation, such as address proof.
Ujjwala 2.0 aims to provide deposit-free LPG connections to low-income families who were not qualified for coverage under PMUY’s initial phase.
Along with free access to LPG supply and a free stove (hotplate), the beneficiaries will also enjoy these benefits. The first gas cylinder offered under the program is free, but clients must pay for subsequent cylinders.
The government provides Rs 1,600 in financial assistance for a PMUY connection. The cash assistance will pay for a domestic gas consumer card, a cylinder, a pressure regulator, an LPG hose, inspection, installation, and demonstration fees.
Evaluation of Ujjwala 1.0:
During the first phase of the PMUY, 8 crore low-income families, including those from Dalit and tribal communities, were given free cooking gas hookups.
The LPG infrastructure has grown significantly across the country. In the preceding six years, more than 11,000 new LPG distribution centers have popped up all throughout the country.
According to official statistics, LPG penetration increased from 55% to 97.4%. The initiative has been one of the main forces behind the socioeconomic advancement of women’s standing in the country.
In order to promote learning through peer group interaction, or Kuch Seekhein, Kuch Sikhayein, LPG Panchayats are being followed. This program intends to promote safe and sustainable usage of LPG in addition to experience sharing.
OMCs have given Ujjwala clients the option to convert their 14.2 kg cylinders for 5 kg refills or vice versa in order to increase access to LPG for low-income persons.
The World Health Organization (WHO) applauded the implementation of PMUY and hailed it as a crucial intervention to stop the indoor health pollution that the nation’s women are suffering from.
Challenges with the structure of Ujjwala 1.0:
Given that PMUY customers’ average yearly refill consumption on December 31, 2018, was only 3.21, the government’s audit watchdog stated in a Performance Audit Report that encouraging sustained LPG use remains a big concern.
The 0.92 crore consumers who took out loans but did not utilize all of their refills made it difficult to reclaim the outstanding loan balance of Rs1234.71 crore.
Consumers paid market pricing for refills up until the loan repayment for the stove and the initial refill was completed. This caused some customers to stop ordering these refills.
Financial Burden: Many clients now use firewood and cow-dung cakes instead of LPG due to the increasing monthly price.
9,897 LPG connections were supplied against AHL TINs, demonstrating a lack of care in beneficiary identification, while the Socio-Economic and Caste Census (SECC)-2011 list had no information about the beneficiary or any of their family members.
Because the IOCL software did not perform input validation checks, 0.80 lakh connections were distributed to beneficiaries under the age of 18.
issues with the de-duplication process It was disheartening for de-duplication that 1.60 crore (42%) of the 3.78 crore LPG connections were solely awarded based on the beneficiary’s Aadhaar.
In violation of PMUY regulations and the LPG Control Order, 2000, 59 lakh connections were issued to beneficiaries who were minors, according to SECC-2011 statistics.
Tribal groups notably struggle with connectivity in rural areas where there are no LPG cylinder bottling facilities.
Delivery and last-mile connectivity remain incredibly challenging.
The installation of 4.35 lakh connections was meant to take place in just seven days, but it took more than 365 days longer than expected.
The little 5-kg cylinders weren’t dispersed far enough to encourage use.
Safety and behavior issues:
Safety is a problem with offering LPG connections, especially to BPL families. Because beneficiary households lack safety amenities and education, the likelihood of accidents has increased.
There were constantly cow poop cakes lying around the house. LPG cylinders are therefore only used on rare occasions, in dire situations, or when it’s simply too hot to burn wood.
Agency: Despite the association in their names, the majority of rural women have little say in when a refill is requested.
How to Proceed:
Greater reach: Slum families with low incomes in urban and semi-urban locations should have access to the program.
Greater Coverage: In order to improve the population’s LPG coverage, it is crucial to connect houses without LPG.
To make reduplication work, all adult family members of existing beneficiaries and new beneficiaries must submit their Aadhaar numbers, and distributor software must have the required safeguards to stop supply to ineligible beneficiaries.
lessen divergence Cases with significant refill usage should be frequently reviewed to reduce diversion.
Increased Affordability: One example is the state-run fuel stations’ offering of a 5kg refill option to reduce the cost of purchases.
In order to increase accessibility, gas agencies should be constructed within a 10-kilometer radius, particularly in rural and distant areas.
Alternatives like the gas grid and piped connections in towns and areas near to the bottling facilities, which can free up the cylinders for other usage, can increase availability.
The Economic Survey, 2019 had also suggested a strategic adjustment to boost the success of the program: retaining a central, independent of the gas company list of names of persons who had given up their subsidies and posting their images.
Encourage private players to open LPG franchises in rural areas.
Sensitization and instruction regarding the secure usage of LPG are provided through LPG Panchayats, NGOs, etc.
PMUY is an innovative program that supports women’s empowerment and environmental protection. By addressing the implementation issues, the benefits envisioned can be realised and can help ensure a future of sustainable energy usage. Future projects should focus on altering behavior, strengthening the supply chain, and converting to more environmentally friendly energy sources.
Q2. The economic and social development of the country depends on the micro, small, and medium-sized enterprises (MSMEs). The MSME sector must be provided with the resources required to address current issues in order to actually serve as a strategic asset for the country’s economy. Examine. (250 words)
Paper & Topic: GS III: Indian Economy
By creating employment opportunities, Micro, Small, and Medium-Sized Enterprises (MSME), referred to as India’s “engine of growth,” have made a significant contribution to the growth of the country. The Covid-19 outbreak has had an impact on every sector of the economy, but Indian MSMEs (Medium, Small and Micro Enterprises) have been the hardest hit.
The government and Reserve Bank of India (RBI) have recently started a number of initiatives to lessen their suffering.
Effects of COVID on the MSME sector:
A significant portion of India’s GDP, manufacturing output, and exports—48% of exports and 35% of GDP, respectively—are contributed by SMEs.
Concentrating on this sector is even more important because Covid-19 has exacerbated the operational challenges faced by SMEs.
600 million people will join the labor force in EMEs by 2030; a sizable portion of these people will be taken on by SMEs.
Because a sizable portion of these applicants will undoubtedly be from India, the Union and state governments must provide financial and institutional support for SMEs.
SMEs are geographically more evenly distributed than larger organisations.
Rural areas are home to 45% of the population, while urban areas are home to the remaining 55%. SMEs are therefore well-positioned to combat poverty in both cities and villages.
Urban poverty has grown more severe overall even though its percentage has decreased over time.
Of 2018, slums were home to 42–55 percent of the population in Kolkata, Delhi, and Mumbai. There is little doubt that this figure went up during the pandemic.
The MSME sector in India has potential:
Contribution to GDP: It is estimated that MSMEs account for around 32% of the nation’s gross value added.
Export Leverage: It also generates roughly 40% of all exports and 45% of industrial output.
Opportunities for Employment: It employs 60 million people, generates 1.3 million new employment annually, and manufactures more than 8000 high-quality goods for the Indian and global markets.
Diversity: India has about 30 million small and medium-sized businesses (MSME Units), and there is a wide variety of diversity among them in terms of size, level of technology used, scope of goods and services offered, and target markets.
Fostering Inclusive Growth: MSME promotes non-agricultural livelihood at the lowest possible cost, impartial regional development, significant female participation, and offering a deflationary protection, among other strategies.
The difficulties and worries posed by the expansion of the MSME sector:
Access to Financing: According to the Economic Survey (2017–2018), the MSME sector has a serious issue obtaining sufficient credit for the growth of business operations.
The survey had noted that only 17.4% of the total outstanding loans had gone to MSMEs.
The majority of banks are hesitant to lend to MSMEs because, in the eyes of bankers, these businesses lack experience, have poor financials, collateral, and infrastructure.
The formal banking system only provides less than one-third (or roughly Rs 11 lakh crore) of the credit MSME credit need that it can potentially fund, according to a 2018 report by the International Finance Corporation. This information is crucial because it explains why the Reserve Bank of India’s efforts to push more liquidity towards the MSMEs have had a limited impact.
Insufficient Infrastructure: MSMEs have very limited production capacity and very high production costs due to poor infrastructure.
Access to contemporary technology is limited by a lack of technological expertise and financial constraints, and as a result, technological adoption is still low.
Market accessibility: MSMEs have limited market accessibility. Comparatively speaking, their sales promotion and advertising are weaker than those of other large enterprises and global corporations.
It is challenging for them to compete with big businesses because of their inadequate advertising and weak marketing strategies.
Legal obstacles: Obtaining legislative permissions for matters of power, the environment, and labour are significant obstacles.
The laws governing every area of the industrial and service industries are extremely complicated, making compliance challenging.
With regard to the growth of MSME’s, training and development programmes have been. Consequently, MSMEs have experienced a persistent shortage of competent labour.
Certification or assurance of quality
Standardization of goods and effective marketing strategies to access new markets
The Indian government and banks should develop strategies and initiatives to increase easy, hassle-free credit access.
The RBI should implement strict non-performing asset (NPA) standards because they will deter defaulters on loans and encourage the collection of prospective good debts. Additionally, opponents claim that the SIDBI-run Credit Guarantee Scheme for MSME (CGTMSE) is an expanding contingent liability that requires urgent review.
To promote the growth and development of MSMEs, the government should improve the development and upgrading of the current rail and road network as well as other infrastructural amenities in less developed and rural areas.
The right amount of research and development should be done in relation to new manufacturing and service delivery methods. The government should also support and encourage technical know-how for Micro and small businesses.
To resuscitate the growth of ill units, the government should promote procurement programmes, credit and performance ratings, and comprehensive marketing support.
One of the most important steps to boost the sector’s production is to teach MSME employees and expand their skills.
The Center has redefined MSMEs, financial access, subordinate debt, and preference in government bids in order to “energise the MSME sector” through the implementation of Aatmanirbhar Bharat.
Additionally, the MSME Udyam portal has been launched, albeit registration is not required. It is important to bridge the information gap on government initiatives and registration incentives.
To increase their market access, diversify their clientele, and strengthen their supply chain, MSMEs must better integrate themselves into the digital economy.
Leveraging technology will assist business, the Indian economy, and MSMEs, which would increase employment and have a good knock-on effect on the GDP of the country.
In India’s wage-protection rule-books, there is no mention of the traditional concept of apprenticeship, which entails part-time labour and is a commonly used skill-building method, particularly in weaving, handicraft, and manufacturing units. This error may be corrected by
applying the regulations of the Social Security Act, the Wage Code, or possibly the Shops and Establishments Act, as appropriate.
The emphasis should be on high-quality production, the use of automation to improve processes, and the investigation of new markets via e-commerce.
This would necessitate a comprehensive strategy that involved assisting the sector’s current manufacturers, giving managers and their workforces the necessary training, and educating them on new technologies and standardisation norms, all while exposing them to new market opportunities and inspiring confidence in them that the nation’s ecosystem would support their expansion plans.
It is important to encourage new MSMEs in particular to start off with this advantage. • We will be able to create suitable job opportunities not only in India but also around the world thanks to skill-based training programmes that take into account industry-specific needs. Developed nations require skilled labour across a range of sectors, including manufacturing, software, and healthcare.
Indian policies need to be reviewed in order to eliminate inconsistencies and to encourage small businesses to use e-commerce platforms.
As a result, the Indian MSME sector serves as the foundation of the country’s economic system and protects it from external shocks and adversities by acting as a bulwark. Given the sector’s crucial position in the economy, problems it faces must be resolved quickly if the economy is to recover from the pandemic’s damage. In addition to fiscal stimulus, the sector needs a political economic strategy that puts MSME interests first. India must lessen the regulatory load on small businesses and assist their survival financially. They require level playing fields most of all with regard to large corporations.