The Government of India wanted to deliver accessible power to all, which led to the launch of Ujwal DISCOM Assurance Yojana or the UDAY scheme. The scheme was initiated on 5 November 2015 through the Ministry of Power. It applies to DISCOMs, which means the power distribution companies in the state. Earlier, the scheme was planned for four years, but after observing the scheme’s scope, the government came up with Uday 2.0 under Union Budget 2020-21.
It is seen that in India, the companies which are distributing power have to face loss. They provide electricity at low tariffs, which do not meet the cost. This led to the outstanding debt. This, in turn, affected the overall quality of life as companies could not provide electricity at an affordable price. The power companies also had to borrow from banks as there were distribution losses of around Rs 2.75 lakh crore. To overcome these transmission and operational losses government wanted to bring a practical scheme.
Lower the power cost and other related costs
There is an inadequate
output with the high price due to outdated systems used for transmitting power. It also results in more maintenance. This led to the need for upgrading the infrastructure and also the technology. It could help bring down the cost of power and improve operational efficiency. Also, there will be low-interest costs which are paining the industry.
Effective financial discipline for DISCOMs
The scheme emphasizes building a debt restructuring plan. It is for the benefit of DISCOMs as this will help them come out of the debt burden. UDAY scheme aims to increase the prices when required and rationalize tariffs. DISCOMs will follow disciple if there are proper mechanisms. Hence, the government is planning to introduce effective systems.
Make the DISCOMs operationally efficient.
With the help of proper infrastructure and new technology, the scheme wants to enhance the operational efficiency of the power distribution companies. This includes installing advanced meters, agricultural pumps, upgraded transformers, proper feeder separators, energy-efficient bulbs, effective data collection for analysis, etc.
Building a sustainable future for DISCOMs
The scheme’s aim was both financial restructuring and creating a rescue plan to save the power companies from losses. Together, these purposes would lead to a sustainable future for power companies. This involved strict measures like no theft of electricity, market-friendly reforms, and so on. It can help turn the loss-making power companies into profitable ones with a business model that can sustain for a long.
Here are the advantages to states who are participating in the scheme:
In the line of Ujjwal DISCOM Assurance Yojana government has also initiated ‘UDAY 2.0’ for quick payment by power companies, reviewing the gas-based plants, installing smart prepaid meters, and making short-term availability of coal. Also, Rs. 3.05 lakh crore will be utilized to transform DISCOMs.
This Diwali, we present a portfolio that reflect both sector-specific and stock-specific opportunities. With 2…
Thank you for showing interest in taking a BTST position using our Delivery Plus product.…
Thank you for showing interest in the consultation on trading strategies! Our expert will reach…
Even if you are a new participant in the stock market, the process of buying…
A company’s debt position can be gauged using the interest coverage ratio or ICR. This…
Muhurat Trading, a cherished tradition in the Indian stock market, takes place on Diwali, the…