Budget 2019: Govt Will Work to Eliminate UDAY Barriers for Discom Improvement

The government is aiming to work with the state governments to eliminate the barriers in the execution of the striving UDAY scheme for the improvement of power distribution companies, Finance Minister Nirmala Sitharaman said.

“The government had launched the UDAY scheme in 2015 for the financial and operational turnaround of power discoms. We are scrutinizing the performance of the scheme and will work with states to remove barriers like the Cross Subsidy Surcharge,” Sitharaman said in her initial budget speech in Parliament.

The UDAY scheme has met criticism of late owing to increasing debt and overdue of discoms. In a report last month, ratings agency CRISIL had said the collective external debt of discoms is set to increase to pre-UDAY levels of Rs 2.6 lakh crore by March 2020 from Rs 2.28 lakh crore in March 2019 and Rs 1.85 lakh crore in March 2018.

The discom debt was at Rs 2.75 lakh crore in September 2015 and fell to Rs 1.94 lakh crore in March 2016 after Uday. In an interview to ET recently, power secretary A K Bhalla had said the discoms cannot be blamed for the rising debt and the dues of discoms as electricity tariffs were often not keeping pace with rising input costs.

Sitharaman also said the government is expected to announce methods for addressing the issue of low utilization of gas-based power plants due to lack of availability of domestic natural gas.