In what may give a fillip to the use of piped natural gas (PNG) by households, the ministry of urban development may include gas pipeline infrastructure in builders’ construction plans, much the same way as electricity and water supply facilities are part of such plans.
Thirteen states issued Ujwal Discom Assurance Yojana (UDAY) bonds for Rs 1,09,100 crore in FY17, the annual report released by the Reserve Bank of India noted. While about 45% of the UDAY bonds were issued in the fourth quarter of the financial year, their spreads between the corresponding tenor/10-year FIMMDA G-Sec yield declined to 35-75 bps in FY17. Eight states had raised Rs 99,000 crore in FY16 and the above spread was fixed at 75 bps in the period. Governments of 16 states have taken over around Rs 2.32 lakh crore of debt of their discoms under UDAY conditions. The Centre in mid-August had announced the completion of discom debt bond issuance under the UDAY scheme.
The debt takeover helped in lowering interest rates to 7%-8.5% from 11-12%, resulting in the discoms saving Rs 15,000 crore till March. The gap between the average cost of supply and revenue realised by discoms fell by Rs 0.11/unit to Rs 0.45/unit through UDAY-driven cost realisation programmes and tariff hikes. Under UDAY, state governments were required to take over 75% of the short-term liabilities of their respective discoms (as in September-end 2015), 50% in FY16 and the balance in FY17. The accumulated losses of discoms stood at a staggering Rs 3.8 lakh crore when UDAY was launched.
Their outstanding debt then stood at Rs 4.3 lakh crore. The states would start taking over losses of discoms in a graded manner from now on, starting with taking over 5% of FY17 losses from the ongoing financial year. Echoing the Economic Survey’s observation that the UDAY scheme played a role in deteriorating state-level finances, RBI said that the interest liabilities of the UDAY states would increase in the years ahead. UDAY bonds substituting bank credits was also partly responsible for subdued credit growth in FY17. Credit to the power sector contracted by 9.4% during FY17, RBI said.