Which one of the following is a purpose of ‘UDAY’, a scheme of the Government?
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- AProviding technical and financial assistance to start-up entrepreneurs in the field of renewable sources of energy
- BProviding electricity to every household in the countries by 2018
- CReplacing the coal-based power plants with natural gas, nuclear, solar, wind and tidal power plants over a period of time
- DProviding for financial turnaround and revival of power distribution companies
Show answer
Answer: (D) Providing for financial turnaround and revival of power distribution companies
Answer: (d) Providing for financial turnaround and revival of power distribution companies
UDAY = Ujwal DISCOM Assurance Yojana (November 2015).
India's power distribution companies (DISCOMs) were drowning in over Rs.4 lakh crore debt from buying power at high rates and selling at low rates.
How UDAY works:
- State governments take over 75% of DISCOM debt (50% in 2015-16, 25% in 2016-17);
- remaining 25% serviced through state-guaranteed bonds;
- states then implement reforms to make DISCOMs profitable.
Why not others?
- (a) Start-up entrepreneurs - Not UDAY's purpose.
- (b) Electricity to every household - That was 'Saubhagya Scheme' (2017).
- (c) Replacing coal plants - UDAY is about financial restructuring, not replacing power sources.
Memory: UDAY = Ujwal (bright) = making DISCOMs bright/healthy = financial turnaround of power companies.
State electricity boards across India had accumulated over Rs 4 lakh crore in debt by 2015, threatening the power sector's stability.
UDAY was launched in November 2015 as an urgent response to prevent the financial collapse of state power distribution companies.
The question tests whether students can distinguish between financial restructuring schemes versus power generation or electrification schemes.
UDAY Scheme - DISCOM Revival
Indian Economy UDAY power distribution companies
UDAY Scheme: Financial Revival of Power Distribution Companies
Quick Facts
UDAY = Ujwal DISCOM Assurance Yojana, launched November 2015
Purpose: Financial turnaround and revival of power distribution companies (DISCOMs)
Addresses DISCOM debt crisis of over ₹4 lakh crore
States take over 75% of DISCOM debt in phases
The Problem
India's DISCOMs (Distribution Companies) were facing a massive debt crisis - over ₹4 lakh crore by 2015. The root cause was the gap between power purchase cost and selling price, especially due to heavy subsidies for agriculture and domestic consumers.
UDAY Mechanism
%%{init: {"flowchart": {"wrappingWidth": 460}}}%%
flowchart TD
s1["`**State Government Takes Over Debt**
**50%** of DISCOM debt in **2015-16**, **25%** in **2016-17** = Total **75%**`"]
s2["`**Remaining 25% Debt Restructured**
Converted into bonds with **state guarantee** at lower interest rates`"]
s3["`**Operational Improvements**
States commit to reduce **AT&C losses**, improve tariff rationalization`"]
s4["`**Financial Health Restored**
DISCOMs become viable, can invest in infrastructure upgrades`"]
s1 --> s2
s2 --> s3
s3 --> s4UDAY vs Other Power Schemes
Scheme | Launch Year | Primary Focus | Target Beneficiary |
|---|---|---|---|
UDAY | 2015 | DISCOM financial revival | State electricity boards |
Saubhagya | 2017 | Household electrification | Rural & urban households |
KUSUM | 2019 | Solar pumps for farmers | Agricultural sector |
PM-KUSUM | 2019 | Solar power & pumps | Farmers & cooperatives |
Expected Outcomes
Reduction in AT&C (Aggregate Technical & Commercial) losses from 20.7% to 15% by 2019
States to rationalize tariffs and reduce cross-subsidies gradually
Improved coal supply through Coal Linkage Rationalization
Enhanced energy efficiency and renewable energy adoption
Better power purchase planning and merit order dispatch
Trap: Confusing UDAY with Saubhagya (household electrification scheme)
Trap: Thinking UDAY is about renewable energy - it's about financial restructuring
Trap: Missing that UDAY deals with distribution companies, not generation
Memory Aid: Ujwal = Uplifting financially distressed DISCOMs
Power Distribution Companies (DISCOMs)
Indian Economy power distribution companies
Power Distribution Companies (DISCOMs) in India
Core Concept
DISCOMs = Distribution Companies that supply electricity to end consumers
Final link in power value chain: Generation → Transmission → Distribution
Major challenge: AT&C losses (technical + commercial losses)
Role & Function
DISCOMs are the final link connecting power generators to consumers. They buy electricity from generating companies, transmit it through local networks, and sell to households, industries, and commercial establishments.
DISCOM Structure
# DISCOMs in India
## State-owned
- State Electricity Boards
- MSEB
- PSEB
- KSEB
- TNEB
## Private
- Tata Power
- BSES
- Torrent Power
- CESC
## Functions
- Power procurement
- Distribution network
- Billing & collection
- Consumer serviceDISCOM Financial Challenges
Problem | Cause | Impact |
|---|---|---|
High AT&C Losses | Technical losses + theft | Revenue loss of 15-25% |
Cross-subsidy Burden | Subsidized agri/domestic tariffs | Industrial consumers pay more |
Delayed Payments | State subsidy delays | Cash flow problems |
Poor Infrastructure | Underinvestment in grid | Higher technical losses |
Reform Measures
Electricity Act 2003 - Unbundled state electricity boards into generation, transmission, distribution
Tariff policy - Move toward cost-reflective pricing and reduce cross-subsidies
Renewable Purchase Obligations (RPO) - Mandate for renewable energy procurement
Smart grid initiatives - Reduce AT&C losses through technology
Direct Benefit Transfer - Replace subsidies with direct cash transfers
Don't confuse: DISCOM ≠ Generation company - DISCOMs distribute, generators produce
AT&C losses = Aggregate Technical & Commercial losses (not just technical)
Cross-subsidy means industrial/commercial users pay more to subsidize agriculture/domestic
State Electricity Regulatory Commission (SERC) sets tariffs, not DISCOMs directly
Government Electrification Schemes
Indian Economy Providing electricity renewable sources of energy start-up entrepreneurs
Major Government Schemes for Power Sector Development
Key Schemes
Saubhagya (2017) - Universal household electrification by 2018
KUSUM (2019) - Solar pumps and grid-connected solar for farmers
National Solar Mission - Part of National Action Plan on Climate Change
Power Sector Schemes Comparison
Scheme | Full Form | Launch Year | Primary Objective | Target Group |
|---|---|---|---|---|
UDAY | Ujwal DISCOM Assurance Yojana | 2015 | DISCOM financial revival | State utilities |
Saubhagya | Pradhan Mantri Sahaj Bijli Har Ghar Yojana | 2017 | Universal household electrification | Households |
KUSUM | Kisan Urja Suraksha evam Utthaan Mahabhiyan | 2019 | Solar pumps & power | Farmers |
DDUGJY | Deen Dayal Upadhyaya Gram Jyoti Yojana | 2015 | Rural electrification infrastructure | Villages |
IPDS | Integrated Power Development Scheme | 2014 | Urban distribution strengthening | Cities |
Saubhagya Scheme Details
Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya) aimed to provide electricity connections to all households by December 2018. Unlike UDAY which focused on DISCOM finances, Saubhagya directly addressed last-mile connectivity.
Free connections for poor households
₹16,320 crore total outlay
Achieved 99.9% household electrification by 2019
Renewable Energy Focus
National Solar Mission - Target of 100 GW solar capacity by 2022
Wind Energy Mission - Target of 60 GW wind capacity by 2022
Green Energy Corridor - Transmission infrastructure for renewable energy
Solar Park Scheme - Ultra Mega Solar Parks of 500 MW+ capacity
Rooftop Solar Programme - 40 GW rooftop solar by 2022
Don't mix up: UDAY = DISCOM finances; Saubhagya = household connections
DDUGJY is about rural infrastructure, IPDS is about urban distribution
KUSUM is specifically for farmers/agriculture, not general renewable energy
Year trap: Saubhagya launched 2017 with 2018 target, not same year as UDAY