Seven states have already joined the UDAY(Ujwal Discom Assurance Yojana) scheme which is an initiative to clear the debts of the state run power distribution companies.
Need of UDAY– It is a scheme for restructuring debt of power distribution companies (discoms) in the state.
Flash points
- The power discoms in the state had a total debt of Rs 34,500 crore, of which the state government would take over Rs 25,000 crore in two tranches
- In the first tranche, the state will take over Rs 17,000 crore debt in 2016-17
- Rs 8,000 crore will be taken over before September 2018
- The actual transfer would happen over five years. The grant component would be 20 per cent, while the remaining would be debt.
- Non-statutory liquidity ratio bonds would be issued against the 80 per cent debt for which the distribution companies would have to pay an interest of 8.5-nine per cent against 12.5-13 per cent, which is normally paid.
- The state discoms stand to gain Rs 8,000 crore from the scheme
Points to know
- UDAY scheme was started last year and so far 16 states have given their  in-principle approval to join UDAY
- So far 7 states have joined UDAY scheme and Punjab was the last
- Union minister of state for power & coal-Piyush Goyal
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