Q. Which one of the following is a purpose of ‘UDAY’, a scheme of the Government?

  • Providing technical and financial assistance to start-up entre-preneurs in the field of renewable sources of energy
  • Providing electricity to every household iv the country by 2018
  • Replacing the coal-based power plants with natural gas, nuclear, solar, wind and tidal power plants over a period of time.
  • Providing for financial turnaround and revival of power distribution companies

Answer: (d) Providing for financial turnaround and revival of power distribution companies

Ujwal DISCOM Assurance Yojana:
  • In 2015, the Government of India (Ministry of Power) launched UDAY Scheme to aid operational and financial turnaround of Power Distribution Companies (DISCOMs) owned by any state.
  • UDAY is basically a debt restructuring plan for DISCOMs (to improve their operational efficiency) and was kept optional for states.
    • Joining states to undertake 75% debts of their respective DISCOMs, while the remaining 25% debts will be issued to DISCOMs in the form of bonds.
    • These states will receive additional priority funding under numerous schemes such as Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) and Integrated Power Development Scheme (IPDS).
  • This scheme was established with a vision to provide affordable and accessible 24×7 power to all.
  • It also aims to provide a solution for revenue-side efficiency and cost-side efficiency and envisages reform measures in the following sectors – generation, transmission, distribution, coal and energy efficiency.
  • Initially, the scheme was targeted for four years until 2019, providing a revival package for electricity distribution companies.
  • However, after understanding the impact and prospect of this scheme, the government launched ‘UDAY 2.0’ under the Union Budget 2020-21.
  • Key Objectives of the UDAY Scheme:
    • Reduce the aggregate technical & commercial (AT&C) loss (from ~22% to 15%) by 2018-19.
    • Improve operational efficiency via ensuring compulsory smart metering, upgrading transformers and meters.
    • Adopt energy efficiency measures such as initiate promotion of energy-efficient LED bulbs, etc.
    • Reduce power costs, interest burden and power losses in the distribution sector.
    • Encourage states to actively participate in the scheme by providing incentives to the performing state.
    • In addition, the following advantages will be provided:
      • Increased supply of domestic coal
      • Rationalisation of coal prices
      • Faster completion of interstate transmission lines
      • Power purchase through transparent competitive bidding, etc.