The Union Cabinet, chaired by the Prime Minister Narendra Modi, has given its approval to a new scheme moved by the Ministry of Power – Ujwal DISCOM Assurance Yojna or UDAY—for the financial turnaround and revival of power distribution companies (DISCOMs), as also to ensure a sustainable permanent solution to the problem. The weakest link in the power value chain is distribution, wherein DISCOMs have, as on 31 March 2015, accumulated losses of approximately Rs.3.8 lakh crore and outstanding debt of approximately Rs.4.3 lakh crore. Financially stressed DISCOMs are finding it difficult to supply adequate power at affordable rates, which is hampering quality of life and overall economic growth and development.
UDAY looks to assure the rise of vibrant and efficient DISCOMs through a permanent resolution of past as well as potential future issues of the sector. It will empower DISCOMs with the opportunity to break even in the next 2-3 years through four initiatives (i) Improving operational efficiencies of DISCOMs; (ii) Reduction of cost of power; (iii) Reduction in interest cost of DISCOMs; (iv) Enforcing financial discipline on DISCOMs through alignment with State finances. UDAY is a good example of the utilization of the best principles of cooperative and competitive federalism. Adopting UDAY is optional for States, but provides the fastest, most efficient and financially most feasible way for providing 24X7 Power for All. It will be operationalised through a tripartite agreement amongst the Ministry of Power, State Government and the DISCOM.
