The Ujjwal Discom Assurance Yojana (UDAY) introduced by the Narendra Modi government to reduce interest burden on debt-laden power distribution companies (discoms) seems to be finally yielding results, bolstering hope that 24×7 power supply would become a reality.
A recent survey by India Ratings and Research has found marked improvement in discoms’ operational and financial performance.
“India Ratings and Research’s initial assessment of UDAY scheme suggests both financial outcome (gap between Average Cost of Supply and Average Revenue Realisation) and operational efficiency (decline in aggregate technical and commercial (AT&C) losses have improved at an aggregate level,” the domestic ratings agency has said in a recent report.
It said that a reduction in interest burden has also benefited discoms’ finances, which is estimated to have freed up Rs 22,000 crore capital of the banking sector.
“However, in the medium-to-long-term, improvement in operational performance such as increased billing efficiency through feeder metering and feeder audit leading to higher collection will be crucial for keeping the discoms’ finances healthy.
Tighter monitoring of action plan, appointment of nodal officers and state level monitoring committee are also equally important for achieving the desired results,” the report said.
At the end of March 2017, 26 states and one union territory have joined UDAY.