“Reform-based and result-linked scheme” to revive discoms

Why in News?
The Finance Minister proposed a plan to revive discoms. It will include a reform-based and result-linked scheme for electricity distribution companies(discoms).

The Minister also announced a framework to provide electricity consumers, an option to choose from among more than one distribution company. This will end the monopoly of discoms and promote competition in the power sector.

About the Scheme:

• Duration: Five Years
• At present, discoms are facing a fund’s crunch. Thus, they are not able to purchase power from production companies. Their total outstanding amount is over ₹1.35 lakh crore as of December.
• Purpose: The scheme will assist discoms in infrastructure creation and financial improvements. It will include providing prepaid smart metering, feeder separation, and upgrading systems.

UDAY (Ujjwal DISCOM Assurance Yojana) scheme

• It was launched in 2015 with the aim of revival of the debt-laden discoms.
• Under the scheme, discoms were envisaged to turn around financially within three years from signing agreements.

Source: The Hindu