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Ujwal DISCOM Assurance Yojana (UDAY)

• Ujwal DISCOM Assurance Yojana (UDAY) was launched in November, 2015.

• It allows state governments, which own the DISCOMS, to take over 75 percent of their debt as of September 30, 2015 (50% in FY 2015-16 and 25% in FY 2016-17), and pay back lenders by selling bonds.

• States to issue non-SLR including SDL bonds, to take over debt and transfer the proceeds to DISCOMs in a mix of grant, loan, equity.

• Maturity period of bonds - 10-15 years.

• Moratorium period – up to 5 years.

• Rate - G-sec plus 0.5% spread plus 0.25% spread for non-SLR.

• Borrowing not to be included for calculating fiscal deficit of the State.

• Balance 25% of debt to remain with the DISCOMs in the following manner:
○ Issued as State-backed DISCOM bonds; or
○ Re-priced by Banks/FIs at interest rate not more than bank base rate + 0.10%

• States to take over future losses of DISCOMs as per trajectory in a graded manner.
○ [0% of loss of 14-15 & 15-16; 5% of 16-17; 10% of 17-18; 25% of 18-19 & 50% of 2019-20]

• Balance losses to be financed through State bonds or DISCOM bonds backed by State Govt guarantee, to the extent of loss trajectory finalised with MoP.

• Jharkhand and J&K given special dispensation for takeover of outstanding CPSU dues.

• Rest of the debt with DISCOMs is mostly in the nature of CAPEX debt, which pays for itself, or Scheme based debt, which converts into grants fully or partially. Thus, they are not required to be taken over by the States.

• State DISCOMs will comply with the Renewable Purchase Obligation (RPO) outstanding since 1st April, 2012, within a period to be decided in consultation with Ministry of Power.

• States accepting UDAY and performing as per operational milestones will be given additional / priority funding through Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY),Integrated Power Development Scheme (IPDS), Power Sector Development Fund (PSDF) or other such schemes of Ministry of Power and Ministry of New and Renewable Energy.

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