Union Cabinet extends deadline of UDAY scheme

The Union Cabinet has approved proposal of extending the deadline for implementing the Ujjwal Discom Assurance Yojana (UDAY) by a year to March 31, 2017.
With this decision, states shall take over 75% of ailing DISCOM (Power Distribution companies) debt as on 30th September, 2015 by 31st March, 2017 by issuing Bonds.
It is considered as a significant step in realising the vision of proving 24X7 affordable and environment friendly Power for All.
This intervention will also lower the interest burden of debt and allow states, which could not join UDAY earlier to put DISCOMs reforms on accelerated path.

About Ujjwal Discom Assurance Yojana (UDAY)

  • The UDAY scheme aims at bringing ailing power discoms to a state of operational efficiency, with state governments taking over up to 75% of their respective debt and issuing sovereign bonds to pay back the lenders.
  • It is the most comprehensive power sector reform ever undertaken. It shall conceive permanently resolve all DISCOM problems in the past, present and future.
  • The scheme is for the operational and financial turnaround of DISCOMs, which are the weakest link in the power value chain. It provides a clear roadmap and opportunity to DISCOMs to become profitable till 2019.
  • Power is a concurrent subject and requires the active participation of the States. Though, the scheme is optional, several States/Union Territories have joined or agreed to join it.
  • Under this scheme the turnaround of DISCOMs will be made possible through (i) Improving operational efficiencies of DISCOMs, (ii) Reduction in the cost of power (iii) Enforcing financial discipline on DISCOMs through alignment with State finances.
  • So far, 19 states have given in principle approval to join the scheme, out of which 10 states have signed MoUs with the Union Government.



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