Discom debt to return to pre-UDAY levels
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  1. 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.
  2. 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.
  3. However,Crisil’s report has found that while discoms enjoyed the benefit of debt reduction but structural reforms have not been implemented completely.
  4. 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.
  5. 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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