Liquidity support helps discoms clear overdues, but they keep mounting

A year after Covid-relief measures kicked in, pending dues to power generation companies have declined, but remain tall, with an upside risk from weakening monthly clearances

In May 2020, two months into the nationwide lockdown that hit demand and paying abilities of people, India’s finance minister announced one-time liquidity support of Rs 90,000 crore to ailing power distribution companies (Discoms), some of whom were on the verge of default. The government later topped it up to Rs 1.3 trillion, providing a cushion to whom the discoms owe money: power generation companies (gencos). 

This was a much needed measure, rather, an imperative. In just about two years, the amount overdue towards a set of gencos, private and renewable included, grew more than 5x.   

In absolute terms,