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Performance of UDAY Scheme


UDAY Scheme: Relevance

  • GS 3: Infrastructure: Energy, Ports, Roads, Airports, Railways etc.


UDAY Scheme: Context

  • Recently, Union Minister of Power has said in Rajya Sabha that UDAY scheme did not met its stated objectives.


UDAY Scheme: Key points

  • The Minister said that private sector power distribution companies (discoms) improved efficiency levels faster than state-owned discoms under UDAY scheme between FY16 and FY20.
  • The Minister has also said that discoms have faced mounting debt due to large accumulated losses and have repeatedly required financial support through government schemes.
  • He also informed that state utilities have reported a fall in average reduction in (AT&C) losses to 21% in FY20 from 23.7% in FY16 and a reduction in the ACS-ARR gap to Rs 0.30 per kWh in FY20 from Rs 0.48 per kWh in FY16.
    • UDAY scheme was aimed at reducing aggregate technical and commercial (AT&C) losses for discoms to 15% and to reduce the gap between average cost of power supply and average revenue realised (ACS-ARR gap) per unit (1 unit = 1 kilowatt hour) to zero.
  • UDAY was aimed at providing a permanent resolution to the financial issues in the power sector, but did not meet its stated objectives.
    • It led to government announcing a new Rs 3.03-lakh crore incentive-based reform scheme for discoms earlier this year with similar operational targets to be achieved by FY25.


Performance of UDAY Scheme_3.1


About UDAY scheme

  • In 2015, Ministry of Power had launched Ujwal DISCOM Assurance Yojana (UDAY) to achieve the following objectives in the power sector:
    • Financial Turnaround
    • Operational improvement
    • Reduction of cost of generation of power
    • Development of Renewable Energy
    • Energy efficiency & conservation


UDAY Scheme: Salient features

  • States will take over 75% of the DISCOM debt as on Sept 30, 2015 – 50% in FY 2015-16 and 25% in FY 2016-17.
  • States to issue non-SLR including SDL bonds, to take over debt and transfer the proceeds to DISCOMs in a mix of grant, loan, equity.
    • Maturity period of bonds – 10-15 years.
    • Moratorium period – up to 5 years.
  • Rate – G-sec plus 0.5% spread plus 0.25% spread for non-SLR.
  • Borrowing not to be included for calculating fiscal deficit of the State.



Performance of UDAY Scheme_4.1


UDAY: Targeted activities

Activity Expected date for achievement
Feeder Metering 30 June 2016
DT Metering 30 June 2017
Consumer indexing & GIS Mapping 30 Sept 2018
Upgradation of DT, Meters etc 31 Dec 2017
Smart meter for consumers > 500 Unit by Dec 17; >200 unit by Dec 2019
AT&C losses 15% by FY 2019
Elimination ACS-ARR gap FY 2019



UDAY scheme: Benefits to Participating States

  • Increased supply of domestic coal
  • Allocation of coal linkages at notified prices
  • Coal price rationalization
  • Coal linkage rationalization & allowing coal swaps
  • Supply of washed & crushed coal
  • Additional coal at notified prices
  • Faster completion of Interstate Transmission lines
  • Power purchase through transparent competitive bidding


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