Topic : Infrastructure – Energy
6) Discuss the objectives of Ujjwal DISCOM Assurance Yojana (UDAY), How far has UDAY been able to address the stagnation/decline in the electricity generation capacity of State power utilities?(250 words)
Why this question:
The article highlights the recent report made by Crisil that suggested State-owned power generation firms have to become commercially viable. Aggregate external debt of State-owned electricity distribution companies (discoms) is set to increase to pre-Ujwal Discom Assurance Yojana (UDAY) levels of ₹2.6 lakh crore by the end of this fiscal, according to Crisil’s analysis of discoms in 15 States, which account for 85% of the aggregate losses.
Key demand of the question:
Analyse in detail the role played by UDAY – its features and objectives, what are the current issues in the State power utilities, how is UDAY addressing it etc.
Discuss – This is an all-encompassing directive – you have to debate on paper by going through the details of the issues concerned by examining each one of them. You have to give reasons for both for and against arguments.
Structure of the answer:
In a few introductory lines highlight the observations made by Crisil.
In brief discuss –
- Discuss the Scheme Objectives:
- The scheme was launched for operational and financial turnaround of State-owned Power Distribution Companies (DISCOMs).
- It aims to reduce the interest burden, reduce the cost of power, reduce power losses in Distribution sector, and improve operational efficiency of DISCOMs.
- Strategy of UDAY? – 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.
- What is the current scenario?
- Discuss the efforts of the government in this direction.
Conclude with what needs to be done, suggest way forward.