- According to the credit ratings agency Crisil,the debt of state-owned electricity distribution companies(discoms) is set to increase to pre-Ujwal Discom Assurance Yojana(UDAY) levels of ₹2.6 lakh crore by the end of 2019-20.
- The Ujwal Discom Assurance Yojana(Uday) was launched in 2015.It envisaged state governments taking over 75% of the utilities debts,thus reducing the interest burden on the discoms.In turn,the discoms were to improve their financial and operational parameters and become more efficient.
- However,Crisil’s report has found that while discoms enjoyed the benefit of debt reduction but structural reforms have not been implemented completely.
- Crisil has suggested that discoms should become commercially viable through regular tariff hikes and a material reduction in aggregate technical and commercial(AT&C) losses.AT&C loss is the difference between energy input units into the system and the units for which the payment is collected.
- The report has also suggested that states need to take stringent actions to get discoms back into shape or prepare for another bail-out.However, improvement in discom operations may face challenges because the focus on new rural connections without adequate tariff hikes can increase losses.
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