UDAY not so bright

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Published: April 15, 2017 4:15:03 AM

On the face of it, 27 states opting for the Ujwal DISCOM Assurance Yojana—the latest being Mizoram—would make the scheme launched in November 2015 look like a success.

Data shows that the scheme has indeed worked in reducing the subsidy burden of state discoms, but the states’ peformance on most other counts doesn’t seem sound. (Reuters)

On the face of it, 27 states opting for the Ujwal DISCOM Assurance Yojana—the latest being Mizoram—would make the scheme launched in November 2015 look like a success. Data shows that the scheme has indeed worked in reducing the subsidy burden of state discoms, but the states’ peformance on most other counts doesn’t seem sound.

An analysis of AT&C losses posted on the UDAY website shows that while some states have seen considerable reduction in losses from FY16, for some like Rajasthan—where AT&C losses have remained constant—the situation hasn’t changed much.

 

States also don’t seem to have made noticeable progress on revising tariffs and shedding populist pricing—the gap between the average cost of supply and average revenue realised has remained constant for many states, Maharashtra being one, while it has actually increased for a few others like Bihar.

With cooling demand and renewables quoting attractive prices, it could get more difficult for states to close this gap. Although the improving health of some discoms keeps the hope from UDAY afloat, getting states to shed their reluctance to revise tariffs meaningfully is needed for the scheme to really shine.

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