[Answered] What policy reforms have been introduced by the government through the introduction of the new tariff policy? How it will help achieving the objectives of Ujwal DISCOM Assurance Yojana (UDAY)?

Policy reforms introduced through new tariff policy:


  • 24X7 supply will be ensured to all consumers – via micro grids to remote unconnected villages and affordable power for people near coal mine from coal washery based plants.
  • Adopting UDAY is optional for States, but provides the fastest, most efficient and financially most feasible way for providing 24X7 Power for All.


  • Reduce power cost– through expansion of existing power plants, sale of un-requisitioned power, competitive bidding, and transmission capacity for accessing power from across India.
  • Improving operational efficiencies-installation of smart meters, energy efficiency measures like efficient LED bulbs.
  • This would reduce AT&C losses making DISCOMS more financially viable.


  • Promotion of renewable energy and energy security: Renewable Power Obligation (RPO) – 8% power consumption from solar by 2022, Renewable Generation Obligation (RGO) for moving to RE by newly established thermal power plants, No inter-State transmission charges solar and wind power, procurement of 100% power produced from Waste-to-Energy plants.
  • It’s mandatory for state DISCOMs to be compliant with RPO, RGO

Ease of Doing Business:

  • States allowed to set-up plants, with up to 35% of power procured by DISCOMs on regulated tariff.
  • Remove market uncertainty & clarity on tariff setting authority for multi-State sales
  • These measures would improve the competitive health of DISCOM market

Ujwal DISCOM Assurance Yojna (UDAY) provides for the financial turnaround and revival of Power Distribution companies (DISCOMs), and ensures a sustainable permanent solution to the problem. This is through four initiatives (i) Improving operational efficiencies of DISCOMs; (ii) Reduction of cost of power; (iii) Reduction in interest cost of DISCOMs; (iv) Enforcing financial discipline on DISCOMs through alignment with State finances.

New tariff policy 2006, aims to achieve the objectives of Ujwal DISCOM Assurance Yojana (UDAY) with the focus on 4 Es: Electricity for all, Efficiency to ensure affordable tariffs, Environment for a sustainable future, Ease of doing business to attract investments and ensure financial viability.

Thus these amendments complement schemes like UDAY by improvements operational efficiency, increased supply of cheaper domestic coal, bettering the financial position of DISCOM by fixed tariff and procurement policy. UDAY truly heralds the Uday (rise), of a ‘Power’ful India.

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