Relief for discoms: Cabinet extends timeline for states to join UDAY scheme

New Delhi: Union Cabinet on Wednesday approved a proposal to extend timeline for joining UDAY scheme meant for revival of debt-laden discoms and issue bonds for paying their outstandings during this fiscal.

The proposal is cleared to facilitate all states who want to benefit from the scheme and could not join scheme or issue bonds to pay off discoms debt due to various reasons like elections and regulatory approvals.

Under the UDAY scheme, the states were required to join UDAY scheme formally last fiscal and issue bonds to pay off discoms 50 percent debt in 2015-16. They were supposed to issue bonds to pay off additional 25 percent of the discoms debt in the current fiscal.

However, some states could not join the scheme and some could not issue bonds due to delay in regulatory approvals or other reasons like elections. Now with this decisions, these state would be able issue the bonds to pay of 75 percent of state discoms during the current fiscal itself.

Last fiscal, the states issued bonds worth Rs one lakh crore to pay off their discoms debt.

UDAY scheme was launched in November last year to deal with the burgeoning debt of discoms in the country.

It was estimated that 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 upto 14-15 percent.

It was also estimated that state discoms suffer a loss of over Rs 60,000 crore every year. The main objective of the scheme to get these discoms out of vicious ciricle of debt and enable them to buy power to increase consumption in the country.