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UDAY bonds fetch Rs.99000 crore


  • Eight states have issued bonds worth over Rs.98,959.96 crore underUDAY Bonds scheme in 2015-16, which is aimed at improving operational and financial efficiency of state power distribution companies.

  • As part of the scheme, Reserve Bank had issued the special bonds (non-SLR special securities) on behalf of eight state governments in the last fiscal, according to a Reserve Bank of India statement.

  • The Power Ministry had unveiled UDAY (Ujwal DISCOM Assurance Yojana) on November 20, 2015.

  • The scheme is expected to help discoms save about Rs. 1.8 lakh crore in the next three years. The cumulative debt of discoms is Rs 4.37 lakh crore.

  • These securities have been issued by the state governments under the Government Securities Act, 2006 and are eligible for market repo, RBI added.

UDAY (Ujwal DISCOM Assurance Yojana) for financial turnaround of Power Distribution Companies 

Ujwal DISCOM Assurance Yojna or UDAY – new scheme moved by the Ministry of Power

UDAY provides for the financial turnaround and revival of Power Distribution companies (DISCOMs), and importantly also ensures a sustainable permanent solution to the problem.

UDAY is a path breaking reform for realizing the Hon’ble Prime Minister’s vision of affordable and accessible 24×7 Power for All.

It is another decisive step furthering the landmark strides made in the Power sector over the past one and a half years, with the sector witnessing a series of historic improvements across the entire value chain, from fuel supply (highest coal production growth in over 2 decades), to generation (highest ever capacity addition), transmission (highest ever increase in transmission lines) and consumption (over 2.3 crore LED bulbs distributed).

The weakest link in the value chain is distribution, wherein DISCOMs in the country have accumulated losses of approximately Rs. 3.8 lakh crore and outstanding debt of approximately Rs. 4.3 lakh crore (as on March, 2015).

Financially stressed DISCOMs are not able to supply adequate power at affordable rates, which hampers quality of life and overall economic growth and development. Efforts towards 100% village electrification, 24X7 power supply and clean energy cannot be achieved without performing DISCOMs. Power outages also adversely affect national priorities like “Make in India” and “Digital India”.

In addition, default on bank loans by financially stressed DISCOMs has the potential to seriously impact the banking sector and the economy at large.

Due to legacy issues, DISCOMs are trapped in a vicious cycle with operational losses being funded by debt. Outstanding debt of DISCOMs has increased from about Rs. 2.4 lakh crore in 2011-12 to about Rs. 4.3 lakh crore in 2014-15, with interest rates upto14-15%.

UDAY assures the rise of vibrant and efficient DISCOMs through a permanent resolution of past as well as potential future issues of the sector. It empowers DISCOMs with the opportunity to break even in the next 2-3 years. This is through four initiatives

(i) Improving operational efficiencies of DISCOMs;

(ii) Reduction of cost of power;

(iii) Reduction in interest cost of DISCOMs;

(iv) Enforcing financial discipline on DISCOMs through alignment with State finances.

UDAY is a shining example of the utilization of the best principles of cooperative and competitive federalism and has been evolved through discussions at the highest levels with multiple States. Adopting UDAY is optional for States, but provides the fastest, most efficient and financially most feasible way for providing 24X7 Power for All. It will be operationalized through a tri-partite agreement amongst the Ministry of Power, State Government and the DISCOM.

UDAY accelerates the process of reform across the entire power sector and will ensure that power is accessible, affordable and available for all. UDAY truly heralds the uday (rise), of a ‘Power’ful India.

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