What is UDAY scheme?

UDAY scheme

  • UDAY scheme was launched in November 2015, the Ujjwal DISCOM Assurance Yojana (UDAY) was designed to turn around the precarious financial position of state distribution companies (DISCOMS).
  • The state governments took over 75 % of the debt of their DISCOMS, issuing lower-interest bonds to service the rest of the debt.
  • In return, DISCOMS were given target dates (2017-19) to meet efficiency parameters like reduction in power lost through transmission, theft and faulty metering.
  • It empowers DISCOMs with the opportunity to break even in the next 2-3 years. This is through four initiatives.
    • Improving operational efficiencies of DISCOMs;
    • Reduction of cost of power;
    • Reduction in interest cost of DISCOMs;
    • Enforcing financial discipline on DISCOMs through alignment with State finances
  • Successes of the scheme:
    • Of the 28 states that implemented it, 10 have shown either reduced losses or profits in FY ’19.
    • Most of the states registered an improvement in reducing the ACS-ARR gap and in bringing down AT&C losses.
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