Cabinet to take up tomorrow extension of UDAY scheme

Union Cabinet on Wednesday will consider 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 financial year.

"The proposal to extend timelines for taking over 50% of outstanding of discoms is listed on agenda for the Cabinet meeting scheduled on Wednesday," a source said.

"The proposal is likely to be 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," the source added.

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

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% of state discoms' during the current financial year itself.

Last financial year, the states issued bonds worth Rs 1 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%.

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.