UDAY (Ujwal Discom Assurance Scheme) Scheme

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Recently, the Union Power Minister has presented a review of the performance of UDAY (Ujwal Discom Assurance Yojana) scheme in the Parliament.

  • According to the data presented in the review, the private sector power distribution companies (DISCOMS) have registered a sharp improvement in the level of efficiency compared to their state-owned counterparts between FY 2016 and FY 2020.
  • It is to be noted that DISCOMs have already been more efficient at the beginning of the analysis period.
  • State utilities have reported an average decline of 20.9 per cent in FY20 as compared to 23.7% in FY16 in aggregate technical and commercial (AT&C) loss.
  • Also, a reduction in the Average Cost of Power Supply and Average Revenue Received (ACS&ARR) gap has also been reported.
  • It may be noted that the Center had launched the UDAY Scheme (Ujwal Discom Assurance Scheme) in FY 2016 as a centrally sponsored scheme to improve the financial stability and operational performance of DISCOMs. Special emphasis has been laid on debt restructuring in this scheme.
  • The objective was to reduce AT&C loss by 15 per cent for power distribution companies and reduce the ACSSARR gap per unit to zero level by FY19.
  • However, the scheme has failed to meet the targets set. As a result of this the government had announced a new scheme Revamped Distribution Area Scheme, a reform based and outcome linked scheme with a cost of Rs 3.03 lakh crore in the year 2021.
  • Under this new scheme, DISCOMs are provided result related financial assistance to strengthen the supply related infrastructure.

Objective-

To reduce AT&C losses by 12-15% at all India level by 2024-25 and to reduce ACS & ARR gap to zero by 2024-25.

Source – The Hindu

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