The UJALA Program: A Cost Benefit Analysis

The UJALA program of the Government of India aims to distribute low cost LED bulbs, to replace 770 million IC bulbs in use in India. It is estimated that this will create energy savings and lead to a swift transition towards the usage of energy efficient appliances. We conduct a Cost Benefit Analysis (CBA) of the program, categorizing the various stakeholders who are affected by the program, and then estimating and comparing their costs and benefits in present value terms. We find that the benefits are very significant compared to the costs incurred, the output generated is 15 times the input costs. The net present value of the analysis is significantly positive and continues to remain so, even after including uncertainties in our analysis. Thus it can be said that this program generates significant economic value for all the stakeholders. It would take some more years before the target is achieved, but the positive effects from the policy create reasonable incentives for the government to persist. We discover that this program has led to a significant advancement in the light bulb manufacturing industry and, was instrumental in causing the transition of consumers towards the adoption of energy efficient technology. The problem of market failures, which limits the progress in the direction of energy efficient behaviors and sustainability, was overcome by the UJALA program. This is a testament to the positive impact that government policy instruments can have in the progress towards a more sustainable lifestyle and a healthier planet.