States' DISCOMs or Distribution Company has suffered a substantial financial loss and accumulated outstanding debt over several years. The Indian Government launched the UDAY scheme on 15th November 2015 to improve this situation. This scheme aims to improve the operational efficiency and financial turnaround of these Power Distribution Companies. However, there are additional vital aspects that you must learn, which you can find in this upcoming segment.
The full form of the UDAY scheme is Ujwal DISCOM Assurance Yojana.
This PM UDAY scheme envisages achieving the following objectives:
Here are the following features of this Ujwal Discom Assurance Yojana (UDAY) mentioned below:
1. States will take responsibility for more than 75% of DISCOMs' debts as of 30th September 2015. It was 50% for 2015 to 2016 and 25% for 2016 to 2017.
2. States will issue non-SLR and SDL bonds to clear off the outstanding debts of DISCOMs and transfer profits earned by them via a grant, loan and equity. The maturity period of bonds is 10 to 15 years, and the moratorium period is up to 5 years.
3. The rate at which the States will issue this bond is G-sec 0.5% spread and 0.25% spread for non-SLR bonds.
4. This borrowing cost will not be considered while calculating states' fiscal deficit.
5. 25% of debt balance will stay with DISCOMs in the following manners-
6. States will take responsibility for future financial losses of DISCOMs according to a graded manner.
7. The state-backed DISCOM bonds or state bonds will finance the monetary balance loss. The Ministry of Power will finalise the extent of loss and take action accordingly.
8. Jammu, Kashmir, and Jharkhand are provided with a special dispensation to clear off the outstanding dues of a Community and Public Sector Union.
UDAY covers approximately 32 states and all the Union Territories. Some of the states and Union Territories covered under this scheme are mentioned below–
Participating states will get benefits in the following ways:
Additionally, positive impacts of this scheme will be –
Thus, the UDAY scheme aims to alleviate the financial situations of cash-strapped DISCOMs, enabling them to provide affordable electricity to all.
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Disclaimer: This information is added only for informative purposes and collected from different sources across the Internet. Digit Insurance is not promoting or recommending anything here. Please verify the information before making any decisions.
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