Ujjawala Discom Assurance Scheme
Ujjawala Discom Assurance Scheme

Ujjawala Discom Assurance Scheme

Ujjawala discom assurance scheme was launched for reforming the economic health of electricity distribution companies. This scheme will sought out all the financial problems of electricity distribution companies. So that everyone can get electricity 24 hours.

But first here is important to tell you that what is a discom? Discom is called to an electricity distribution company and it is the short form of the distribution company. These companies are mostly under state governments. Uday scheme was launched on the 5th of November 2015.

This scheme is optional for states means they are free to choose to be with this or leave it. You can see this scheme as a debt management for electricity distribution companies.

Why Uday Scheme was launched

Uday scheme was launched for reforming economic health of discoms or electricity distribution companies. Because debts on the electricity distribution companies were 2.4 lakh crore during 2011-12 financial year which increased to 4.3 lakh crore in the financial year of 2014-15. And it is obvious that if electricity distribution companies are in debt then how can they provide us electricity at low prices.

Debt management under the Uday Scheme

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According to this scheme, 75% debt of the discoms is acquisitioned by state governments. And the central government will not include these acquisitioned debts in the fiscal deficit. State governments will issue SDL bonds to those banks and financial institutions which provide loans to electricity distribution companies.

The remaining debt which is not acquisitioned by the state governments is converted into bonds by banks and financial institutions which provide loans to discoms. But all these things will happen only for the first two years of the launch of the scheme.

How do Discoms do better under the Uday Scheme?

  • There are four steps taken under this scheme for the betterment of distribution companies.
  • Increasing the operating capacity of electricity distribution companies.
  • Decreasing the cost of the production of electricity.
  • Decreasing the cost of interest for the electricity distribution companies.
  • Financial discipline will be implemented by coordinating the distribution companies with the state finances.

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Benefits of the Uday scheme

  • Benefits of the Uday scheme are given below
  • Electricity will be available 24 hours for everyone.
  • Every village will get electricity.
  • Under this scheme, the investment will be increased in the electricity sector and this will also increase the new job opportunities.
  • Everyone will get cheaper electricity.

This scheme is an optional scheme for the states. And the state which will join it will get support from the NTPC and other central public sector undertakings through low-cost electricity in relation to the availability of the coal supply and high capacity utilization at the notified prices.

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Conclusion

This scheme will improve the power sector of the country. And at the same time, it will also ensure the proper distribution of electricity. Increasing investment in the power sector will also create jobs. So this was the Ujjawala discom assurance scheme. If you like this article, then share it. And if you have any suggestion, then write it in our comment box.

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