UDAY (Ujwal DISCOM Assurance Yojana)

Electricity is a subject in the concurrent list and the UDAY (Ujwal DISCOM Assurance Yojana) scheme is a show of collaborative federalism between centre and the states because of their shared responsibilities to revive discoms:

States' part in taking the responsibilities:

1, States will take over 75% of the debts of discoms over the two years till 2016-17. This will give more flexibility to manage the debt, as it is taken over by states.

2, States will take the losses of discoms in a graded manner till 2021

3, State DISCOMs shall comply with the Renewable Purchase Obligations as directed by the Ministry of Power.

Centre's part in incentivising states:

1, The debt taken by states in this regard will not be shown in the calculation of the fiscal deficit of states, giving some respite to state finances.

2, Participating states will receive priority funding from schemes like Deen Dayal Upadhyay Gram Jyothi Yojana, Power sector development fund, Integrated power Development Scehme and other schemes.

3, States will be supported through additional incentives to utilize its full power generation capacity like issue of coal at notified prices, low cost power from NTPC and other CPSEs.

As both the centre and states feel the need to revive Discoms for them to operate efficiently and get them out of the vicious debt cycle in financing their operations, it is clear show of collaborative federalism. Obligations on states and incentives from the centre to make sure the states show interest in the revival of the Discoms is a healthy way and collaborative effort in moving forward to rejuvenate the Electricity Sector of the country.