Raj Kumar Singh, the minister for power, new and renewable energy, announced the Gram Ujala scheme in Prime Minister Narendra Modi's Lok Sabha constituency Varanasi on Wednesday. In rural areas, the scheme provides the world's cheapest LED bulbs for INR 10.

The Gram Ujala program is fully funded by carbon credits. The scheme will seek carbon credits through the United Nations' Clean Development Mechanism (CDM). In addition, under the new scheme, rural consumers' incandescent and CFL (compact fluorescent lamp) bulbs will be collected.

“As we expand, this program will increase rural employment and local economies. It has enormous potential to uplift India's villages while also contributing to climate change mitigation," Singh said in a tweet. The first phase of the scheme, which has no government support or subsidy, began in Arrah, Bihar. Arrah (Bihar), Varanasi (Uttar Pradesh), Vijaywada (Andhra Pradesh), Nagpur (Maharashtra), and western Gujarat will receive 15 million LED bulbs in the first phase.

“India, according to the Power Minister, is at the forefront of both energy transition and energy efficiency. "This scheme is intended specifically for rural homes with affordability in mind, and it will also result in energy savings because a 12 Watt LED bulb provides the equivalent light as a 100 Watt incandescent bulb," the union power ministry said in a statement.

Convergence Energy Services Ltd (CESL), a subsidiary of the state-run Energy Efficiency Services Ltd, is offering the bulbs by leveraging scale. Mint previously reported on a proposed scheme to provide 600 million LED bulbs in rural areas for INR 10 per piece.

“Under Phase 1 of the GRAM UJALA program, 1 crore 50 lakh LED bulbs will be distributed, resulting in significant energy savings of 2025 million kWh/year and CO2 reductions of 1.65 million T CO2/year for India's climate change action. The program would provide better lighting at a low cost of INR 10 per bulb. This would result in a higher standard of living, financial savings, increased economic activity, and improved safety for rural residents, according to the statement.

According to EESL, India currently has the world's second-largest LED market in terms of value. The earlier Ujala (Unnat Jyoti by Affordable Lighting for All) scheme of the government reduced LED bulb prices to INR 70 from around INR 310 in 2014. The income earned from carbon credits would contribute INR 60 per LED bulb piece under Gram Ujala, with the remaining INR 10 paid by the rural consumer.

"The Power Minister also praised EESL's efforts in implementing the UJALA scheme, under which 36 crore LED bulbs were distributed and 1 crore 15 lakh streetlights were replaced with LED lights across the country, resulting in energy savings of thousands of megawatts," according to the statement.