In November 2015, the government launched an ambitious scheme, Ujwal Discom Assurance Yojana (UDAY), to improve the financial health and operational efficiency of India’s debt-ridden power distribution companies (discoms).
Three years on, the scheme may be failing to meet the desired objectives, research by Amandeep Kaur and Lekha Chakraborty of the National Institute of Public Finance and Policy shows. Under UDAY, discoms can convert their debt into state government bonds, but are required to fulfil certain conditions.
One such condition is to reduce the average aggregate technical and commercial (AT&C) losses to 15% by 2018-19. However, Kaur and Chakroborty use state-specific data from the UDAY portal to show that, at present, AT&C losses stand at 25.41% on an average.
Of the 24 participating states, which have reported data on aggregate technical and commercial losses, only seven—Himachal Pradesh, Andhra Pradesh, Goa, Gujarat, Kerala, Telangana, and Tamil Nadu—have losses below 15%. Read More