In 2015, then Power Minister Piyush Goyal had said that the Ujwal DISCOM Assurance Yojana (UDAY) was “a permanent resolution of past as well as potential future issues of the sector” and that it would allow DISCOMs to break even in next 2-3 years.
However, three years on, an analysis of the data available on the UDAY portal shows a significant increase in the losses of DISCOMs.
In an article published on the National Institute of Public Finance and Planning (NIPFP) website, it is pointed out how the scheme has been falling short of its objectives.
According to the listed target number for the financial year 2018-19, UDAY’s Aggregate, Technical and Commercial (AT&C) losses should have been reduced to 15 per cent for all the states that are currently part of the scheme.
However, the AT&C losses for the states stand at around 25.41%.
The article also states that compared to May 2017, the AT&C losses for certain states have increased in the time-period up to October 26, 2018. These include: Manipur (43.74%), Uttarakhand (40.92%), Uttar Pradesh (37.92%), Chhattisgarh (31.62%), Madhya Pradesh (31.06%) and Punjab (31.3%).
| Table 1: AT&C Loss of DISCOMs | ||
| States | AT&C Loss as of May 2017 (in %) | AT&C Loss as of 26 Oct. 2018 (in %) |
| Chhattisgarh | 19.34 | 31.62 |
| Jharkhand | 29.9 | 36.97 |
| Madhya Pradesh | 25.16 | 31.06 |
| Manipur | 36.89 | 43.74 |
| Punjab | 17.57 | 31.3 |
| Uttar Pradesh | 30.21 | 37.92 |
| Uttarakhand | 14.5 | 40.92 |
| Maharashtra | 18.3 | 19.87 |
| Rajasthan | 23.81 | 27.31 |
| Tripura | 16.61 | 23 |
Source: UDAY Portal
A factor contributing to the increasing AT&C losses is the increase in difference between the Average Cost and Average Revenue (ACS-ARR). While the UDAY guidelines stipulate the average ACS-ARR difference at 0.55 per unit Kilowatt, the actual difference is more for those states whose AT&C losses are more than 30%. But there are also states whose AT&C losses are high but whose ACS-ARR difference is not as significant.
| Table 2: ACS-ARR Gap of DISCOMs | ||
| States | ACS-ARR Gap (Rs/Unit kWh) as of May 2017 | ACS-ARR Gap (Rs/Unit kWh) as of 26 October 2018 |
| Chhattisgarh | -0.15 | 0.5 |
| Jharkhand | 1.48 | 1.85 |
| Madhya Pradesh | 0.86 | 0.37 |
| Manipur | 0.1 | 1.61 |
| Punjab | 0.71 | 1.1 |
| Uttar Pradesh | 0.66 | 0.37 |
| Uttarakhand | 0.14 | -0.02 |
| Assam | 0.65 | 1.04 |
| Chhattisgarh | -0.15 | 0.5 |
| Goa | 0.95 | 1.17 |
| Haryana | 0.08 | 0.58 |
| Tamil Nadu | 0.36 | 0.55 |
Source: UDAY Portal
A previous report had highlighted how the UDAY scheme was a huge burden on the finances of many state governments. A flagship scheme of the NDA government, UDAY is a financial restructuring scheme aimed at helping debt-ridden DISCOMs. Under the scheme, state governments have been made to bear 75 per cent of the debt burden.
All states and Union Territories — except Odisha, West Bengal, Chandigarh and Delhi — have joined UDAY since the scheme was launched.
Then Power Minister Piyush Goyal had said at the time of the launch of the scheme that it was “a permanent resolution of past as well as potential future issues of the sector” and that it would allow DISCOMs to break even in next 2-3 years.