nd str and n rastr t re 9.29
permanent resolution of past as well as potential States will issue non-SLR including SDL
future issues of the sector. It empowers DISCOMs (State Development Loan) bonds in the
with the opportunity to break even in the next 2-3 market or directly to the respective banks
years. This is to take place through four initiatives: and Financial Institutions (FIs).
(i) Improving operational efficiencies; DISCOM debt not taken over by the
(ii) Reduction of cost of power; State shall be converted by the Banks and
(iii) Reduction in interest cost; and FIs into loans or bonds with interest rate
not more than the bank’s base rate plus
(iv) Enforcing financial discipline.
0.1 per cent. Alternately, this debt may
Operational efficiency to be improved via steps be fully or partly issued by the DISCOM
such as – compulsory smart metering, upgradation as State guaranteed DISCOM bonds at
of transformers, meters, etc., energy efficiency the prevailing market rates which shall be
via steps like efficient LED bulbs, agricultural equal to or less than bank base rate plus
pumps, fans & air-conditioners etc.—to reduce 0.1 per cent.
the average AT&C loss from around 22 per cent
States to take over the future losses of
to 15 per cent and eliminate the gap between ARR
DISCOMs in a graded manner.
(Average Revenue Realised) and ACS (Average
Cost of Supply) by 2018-19. States accepting UDAY and performing
as per operational milestones will be given
Reduction in cost of power would be achieved
additional / priority funding through
through measures such as increased supply of
Deendayal Upadhyaya Gram Jyoti
cheaper domestic coal, coal linkage rationalisation,
Yojana (DDUGJY),Integrated Power
liberal coal swaps from inefficient to efficient
Development Scheme (IPDS), Power
plants, coal price rationalisation based on GCV
Sector Development Fund (PSDF) or
(Gross Calorific Value), supply of washed and other such schemes of Ministry of Power
crushed coal, and faster completion of transmission and Ministry of New and Renewable
lines. NTPC alone is expected to save Rs. 0.35 Energy. States not meeting operational
unit through higher supply of domestic coal and milestones will be liable to forfeit their
rationalization and swapping of coal which will be claim on IPDS and DDUGJY grants.
passed on to DISCOMs.
Such States shall also be supported with
The salient features of the scheme are as additional coal at notified prices and,
given below66: in case of availability through higher
States shall take over 75 per cent of the capacity utilisation, low cost power from
DISCOM debt—50 per cent in 2015–16 NTPC and other Central PSUs.
and 25 per cent in 2016–17. This will UDAY is optional for all States. However,
reduce the interest cost to 8–9 per cent, States are encouraged to take the benefit
from as high as 14–15 per cent. at the earliest as benefits are dependent on
GoI will not include the debt taken over the performance. [By March 2017, most
by the states in the calculation of fiscal of the states/UTs had joined the scheme.]
deficit of the States in the financial years Basically, financial liabilities of DISCOMs
2015–16 and 2016–17. are the contingent liabilities of the respective
66. Ministry of Finance, Economic Survey 2015–16, States and need to be recognized as such. Debt of
pp. . DISCOMs is de facto borrowing of States which