Borrowing limits fixed by UDAY of state government owned Power Discoms relaxed

Published: August 20, 2020

The Cabinet Committee on Economic Affairs (CCEA) has come up with the approval of the one-time relaxation of the borrowing limits for the state government-owned Discoms.

Key highlights

The decision has been taken against the stress of discoms being unable to avail the Rs. 1.25 lakh crore dues to the generation and transmission companies.

Previously Power Finance Corporation and Rural Electrification Corporation could borrow only up to 25% of their previous year’s working capital. The cap was set out under the UDAY scheme.

But now, the committee approved one-time relaxation for extending loans to discoms above the limits.

What is the UDAY scheme?

Ujjwal DISCOM Assurance Yojana was launched by the Government of India in 2015 to provide a permanent solution for financial turnaround and revival of Power Distribution companies (Discoms).

Atma Nirbhar Bharat Package loan

The Central government previously announced a loan of a total of 90,000 crores under the Atma Nirbhar Bharat package for the power distribution companies (Discoms). The progression of the scheme is much slower than it was expected.

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