UDAY Discom Scheme: A Complete Essay [UPSC]

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The Government of India launched the UDAY Discom Scheme for Electricity Distribution companies in India in 2015. The Ujwal Discom Assurance Yojana (UDAY) Is helping various electricity companies which are under the burden of huge unpaid loans.

The scheme is run under the Ministry of Power, GoI. Electricity is very essential service for the development of Indian Industries as well as farming and other sectors. Companies are not able to provide 24 x 7 electricity Due to heavy rates in the production of electricity.

The government will not only reduce the rate of coal, petroleum and other electricity production products. But will also provide subsidies to overcome the high unpaid loan of DISCOMs.

We will provide with you complete information about UDAY and all the specific terminologies of this scheme such as what is DISCOM.

What are AT&C losses, how will this scheme help DISCOMs, the role of States in this scheme and the updated status of this scheme in current situations? So, you are suggested to read our article till the end.

Ujwal Discom Assurance Yojana [UDAY]

uday dicom scheme

Mr Piyush Goyal, the Minister under the Ministry of Power, announced Ujwal Discom Assurance Yojana in 2015 to strengthen the discom companies which are already under losses due to various state-level programs including free subsidy on electricity, Illegal use of electricity without paying the bill, distribution of electricity without metering etc.

It is a central-level scheme which does not force any state to implement it in their respective States.

But States can contribute to this scheme and provide the financial stability of their respective discount companies by signing in to UDAY Yojana.

The central government have also announced that States which are contributing to this scheme will also get the benefit of buying coal and other Petroleum products from the Centre. 

They will also be remembered in future electricity-related schemes. The government is aiming to develop electricity in India with the help of private Electricity distribution companies to provide them with facilities To produce electricity at low cost. 

Also, Read new electricity connection charges in 2022 in Uttar Pradesh

Key Features of the UDAY DISCOM Scheme

Division of percentage in the total cost of electricity production 

The central will overcome the turnaround cost of DISCOMs By providing them with various state-level and Central level benefits.

According to the scheme the state government have to overcome the financial burden of Electricity Distribution companies of their respective States by up to 75% for the financial year of 2015.

It means the state will pay 75% of the total cost spent in the financial year 2015. Further in session 2015-16, the state will take over  50% of total spending on electricity production, and 25% in 2016-17.

The state will issue SDL and SLR 

State development loans (SDL) are Dated loans which can be e asked by any state government to their respective banks.

According to the RBI State can ask for up to 10000 crore rupees as SDL. The central government helped suggests this state development loan to overcome the cost efficiency of electricity generator companies. 

The state will issue this loan and help DISCOMs. The state will not increase the rate of interest to all DISCOMs.

Special Arrangement for Jharkhand and Jammu Kashmir

Jharkhand and Jammu Kashmir were given special dispensation to borrow rupees 7431crore and 2140 crore rupees respectively to clear the provisional outstanding dues of various CPSUs on 30 September 2015.

Debt taken over by the state and borrowings by Jharkhand and Jammu Kashmir under this scheme Would not be counted against The fiscal deficit limit of Respect state in the financial year of 2015-16 and 2016-17.

You can follow this link to get an official notification of the UDAY DISCOM Yojana.

Technical terms used in UDAY Yojana 

DISCOM

The Government of India has used the DISCOM word for all the Electricity Distribution Companies in India.

Including electricity production companies,  distribution companies,  and other companies which are directly or indirectly involved in Electricity Distribution services.

AT&C Loss in UDAY

The full form of AT%C is Aggregate Technical and Commercial loss. It is a term which is used by bye Ministry of Power and other related departments.

The term indicates total loss in electricity production including Technical losses ( losses in machinery,  working system, Fraud in metering system), Thief of electricity and efficiency in building the electricity bill. 

G-sec Rate in UDAY

Government Security is also known as G-sec, Which is a tradable instrument issued by both Central Government and state government. 

It acknowledges The government’s debts and applications. The government will get G-sec 0.5% for state development loans and 0.25% for not SLR.

CPSU dues in UDAY

Central Public Sector Undertaking (CPSU) Is another  Centre Government scheme Which focuses on producing electricity.

How the government will reduce the cost of electricity generation through the UDAY scheme 

It is a central-level scheme which is open to all the states.  any state can participate in this scheme by following and accepting the terms and conditions of the UDAY yojana.

The state and Central Government will take the following steps to reduce the cost of electricity production for DISCOMs:

  • The government will increase the supply of Domestic coal.
  • The government will establish coal linkage rationalisation.
  • The government will also allow Liberty E for swapping the coal from an inefficient plan to an efficient plan Reducing the extra charge of transportation of coal.
  • According to Gross Calorific Value, it can reduce the price of coal in India.
  • Coal India is to supply 100% washed coal for G10 grade and above by 1st October 2018.
  • Supply of 100% crushed coal from coal India by 1st April 2016.

Latest Update on UDAY DISCOM Yojana

According to the report of Power Finance Corporation, The total AT&C  of loss of Discom ( power distribution companies) has reached up to 15,281 crore rupees Which is a major loss for DISCOMs.

The total aggregate and Technical loss of DISCOMs was 30,203 crore in 2019-20. The loss has been increased up to 20% in session 2020-21.

You can also check the consumer rating of discoms by clicking this official notification of the government.

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