Pradhan Mantri Ujwal DISCOM Assurance Yojana – UDAY


What is UDAY?

• Uday means Ujwal DISCOM Assurance Yojana. Discom means distribution firms.
• The purpose of this scheme is to enhance and revive the financial condition of the nation’s power distribution companies and to make sure a permanent solution to their issues.
• This scheme has been started by Ministry of Power under the title Ujjwal Discom Assurance Yojana or Uday.
• It is a pioneering improvement towards realizing the dream of guaranteeing 24 hours of reasonably priced and convenient electrical energy for all of the people of the Hon’ble Prime Minister.

Pradhan Mantri Ujwal DISCOM Assurance Yojana Overview
Name of the scheme
Pradhan Mantri Ujwal DISCOM Assurance Yojana
Started by
Ministry of Power
central government
Each person of the country
An objective
To enhance and revive the financial condition of the nation’s power distribution companies
Start plan
Nov 2015


Benefit from rise

• 24 hours electricity for all seven days.
• Electrification for all villages.
• Capable energy security.
• Revive investment in the energy sector to create employment opportunities.
• To make almost all the power distribution firms profitable.
• To save Rs 1.8 lakh crore yearly by improving UDAY efficiency.

Salient Features of UDAY

• The total outstanding debt of 26 states and one Union Territory who joined UDAY scheme was 3.82 lakh crore.
• Till date, bonds value Rs 2.32 lakh crore have been issued. Under the Uday Yojana, about 86 % of the state’s debt bonds have been issued so far.
Salient Features of UDAY Scheme
• As on September 30, 2015, 75% of the loans of the distribution companies shall be acquired by the states in two years.
• This acquisition will be 50% within the year 2015-16 and 25% in 2016-17.
• The loans acquired by the states under the UDAY scheme will not be included within the calculation of fiscal deficit of the respective states within the 2015-16 and 2016-17 monetary years by the Government of India.
• Non-SLR including SDL bonds shall be issued by banks to banks / monetary institutions offering loans to disbursing firms to the appropriate extent.
• It is to be noted that the loans of disbursing firms which are not acquired by the state, shall be converted into loans or bonds by the monetary institution / bank.
• Banks / Monetary Establishments will not cost rate of interest more than 0.1% (BASE RATE PLUS 01%) on this loan / bond with its base fee.
• Alternatively, the above loan disbursing firms can be issued in full or in part as ‘State Guaranteed Discom Bonds’ at prevailing market rates.
• These market prevailing charges shall be equal to or lower than the Bank Base Fee plus 01% (Bank Base Fee Plus 01%).
• It’s noteworthy that future losses to distribution firms shall be acquired by states in a hierarchical method.
• Electrical energy distribution firms of Haryana, Tamil Nadu, Rajasthan and Uttar Pradesh have began showing improvement after adopting Ujjwal Discom Insurance Scheme.
• In keeping with an official statement, the entire business and technical deficit in Haryana has come down from 29.8 % in FY 2015-2016 to 25.9 % in FY 2016-2017.
• Losses have additionally come down in Tamil Nadu, which has come down from 20.39 per cent in FY 2015-2016 to 14.53 per cent in FY 2016-17.
• Equally, Rajasthan has reduced the loss from 23.3 % to 23.6 % from the previous year and Uttar Pradesh has lowered from 33.84 % to 30.21 %.
• The purchase value of electricity in Haryana has additionally come down within the financial year 2016-2017. This has been lowered to Rs 5.01 per unit from Rs 5.05 final year.
• It has been mentioned within the statement of the government that as on September 30, 2015, the total debt of all state-owned power distribution firms was 3.95 lakh crore.
• This acquisition shall be as follows – 5% of 2016-17 loss in 2017-18, 10% of 2017-18 loss in 2018-19 and 25% of 2018-19 loss in 2019-20.
• State distribution firms will adjust to the excellent ‘Renewable Buy Obligation’ (RPO) from April 1, 2012 onwards, inside a sure time period after session with the Union Ministry of Power.
• It’s to be noted that states that settle for the UDAY scheme and perform as per operational targets will be supplied further / main funding through various schemes.
• Such states shall be supported by low value energy from NTPC and other central public sector undertakings in relation to availability by means of coal provide and high capacity utilization at notified costs.
• It’s known that UDAY schemes are optional for all states.

DISCOMs of the nation are going through a deficit of about 3.8 lakh crores and so they have an impressive debt of about 4.3 lakh crores. Financially weak DISCOMs are not able to provide sufficient energy at inexpensive rates. DISCOMs are trapped in a vicious cycle of debt due to already current problems.

  • Whether or not or not a state authorities will undertake the UDAY scheme depends on its discretion.
  • To this point 11 states have been associated with UDAY scheme – Gujarat, Chhattisgarh, Andhra Pradesh, Rajasthan, Jharkhand, Punjab, Haryana, Jammu & Kashmir, Himachal Pradesh, Madhya Pradesh and Uttarakhand.
  • Jharkhand is the first state to join the UDAY scheme.

With the arrival of UDAY scheme, DISCOMs might be removed from this vicious cycle and in 2-3 years DISCOMs purpose to recover from losses. But how will UDAY scheme make all this doable: –

  • Improvement in operational efficiency of DISCOMs
  • Reduction in value of energy
  • Reduction in interest value of DISCOMs
  • Implementing financial discipline in DISCOMs by keeping pace with the state


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