UPSC Exam Preparation: Topic of the Day – UDAY

Topic: UDAY-Ujwal DISCOM Assurance Yojana
Topic: Economy - Infrastructure-Electricity 

Ujwal DISCOM Assurance Yojana (UDAY)

  • Ujwal DISCOM Assurance Yojana or its acronym UDAY is a financial package for the turnaround and revival of electricity distribution companies of India (DISCOMs) initiated by the Indian Government with an aim to find a lasting solution to the financial disorder that the power distribution is presently in.
  • Under this scheme, the state governments (which are the owners of the discoms) will take over 75% of the debt of the discoms as on 30th September 2015, with a plan to repay creditors by selling bonds. The discoms will then issue bonds for the remainder of their debt (i.e., the remaining 25%).
  • Ministry of Power, GoI launched Ujwal DISCOM Assurance Yojana (UDAY) which was approved by Union Cabinet on 5th November, 2015.

The scheme envisages

  • Financial Turnaround
  • Operational improvement
  • Reduction of cost of generation of power
  • Development of Renewable Energy
  • Energy efficiency & conservation

Salient Features of the Scheme

  • States will take over 75% of the DISCOM debt as on Sept 30, 2015 with 50% being taken over in financial year 2015-16 and the rest 25% in 2016-17.
  • States will issue non-SLR including SDL bonds to take over debt and transfer the proceeds to DISCOMs in a mix of loan, grant and equity.
  • Borrowing will not be counted for calculating fiscal deficit of the State.

Benefits to Participating States

  • Reduction in Cost of power through Central Support
    • Increased supply of domestic coal
    • Allocation of coal linkages at notified prices
    • Coal price rationalization
    • Coal linkage rationalization & allowing coal swaps
    • Supply of washed & crushed coal
    • Additional coal at notified prices
    • Faster completion of Interstate Transmission lines
    • Power purchase through transparent competitive bidding

Additional priority funding under DDUGJY, IPDS, etc.

Impact of the Scheme

  • Financially & Operationally sound DISCOMs
  • Increased demand for power
  • Improvement in PLF(Plant Load Factor) of generating plants
  • Reduction in stressed assets
  • Availability of cheaper funds
  • Increased capital investment
  • Development of Renewable Energy sector

Ultimately, availability of 24*7 Power For All at affordable price.