Budget 2021: Rs 3.1L-cr scheme for discoms aims to correct past flaws

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Updated: Feb 02, 2021 3:04 AM

Indian Union Budget 2021-22: Sitharaman also said “a framework will be put in place to give consumers alternatives to choose from among more than one discoms”.

After commissioning, the created transmission and distribution system will be owned and maintained by the respective state utilities.After commissioning, the created transmission and distribution system will be owned and maintained by the respective state utilities.

Union Budget 2021 India: The Rs 3.1-lakh-crore scheme announced for the state-run power distribution companies (discoms) by finance minister Nirmala Sitharaman in her Budget speech on Monday is seen to address the core issues of billing-collection inefficiencies and pilferage that cripple the sector. The new scheme is slated to reduce aggregate technical and commercial (AT&C) losses, an indicator of pilferage, after the earlier Ujwal Discom Assurance Yojana (UDAY) programme failed to achieve its target to bring down these losses to 15% by FY19 end. AT&C losses now stand at 26%.

Sitharaman also said “a framework will be put in place to give consumers alternatives to choose from among more than one discoms”. Having multiple discoms in one area was the idea behind the separation of ‘carriage and content’ — a project which has been on the back burner for six years — which will effectively allow end-consumers to choose who they want to buy electricity from, similar to the way telecom and direct-to-home TV operators work. The announcement comes at a time when the Union power ministry has tabled the latest electricity amendment Bill in Parliament, aiming to delicense the power distribution business and bring in competition.

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The transmission assets of state-run Power Grid Corporation (PGCIL) will contribute to the government’s asset monetisation programme, the FM added. PGCIL has placed five operational transmission lines worth Rs 7,000 crore that would constitute the asset portfolio in PGlnvlT, the infrastructure investment trust sponsored by it, and plans to float an IPO for the platform.

Though the details of the new discom scheme — with an outlay of Rs 3,05,984 crore over five years — are yet to be announced, sources said the new programme can subsume the existing Central government schemes for discoms — such as the Integrated Power Development Scheme and the Deen Dayal Upadhyaya Gram Jyoti Yojana — which have similar targets to reduce losses through smart metering, feeder separation and general upgrade of distribution infrastructure. “Discoms with high AT&C losses (Uttar Pradesh, Bihar, Madhya Pradesh and Jharkhand) could require high funding,” analysts at India Ratings and Research noted.

Discoms’ financial losses jumped 83% annually to Rs 61,360 crore in FY19. To help discoms clear the dues of power generators, the Centre has already announced the `1.2-lakh-crore liquidity infusion scheme under the Atmanirbhar Bharat package. Around Rs 40,000 crore had been disbursed by state-run sector lenders PFC-REC by the end of 2020. “The revamped scheme will be helpful in financing continued reforms focused on discom sustainability and will benefit consumers and industry alike,” Anish De, partner and national head, KPMG India, said. The scheme aims to install prepaid smart meters, helping discoms receive payments in advance and improving their cash flow.

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