Question 98 from UPSC CSE 2016 - Economy

Question

Which one of the following is a purpose of 'UDAY', a scheme of the Government?

IASCODEX · Accepted Answer

Correct Option: D. Providing for financial turnaround and revival of power distribution companies

Strategy: Identify the full form of UDAY (Ujwal DISCOM Assurance Yojana) and recognize that DISCOMs are power distribution companies. Deduce that the scheme's purpose relates to their financial health. Select the option describing the financial turnaround and revival of these companies, eliminating options related to other initiatives like renewable energy startups or universal electrification.

Key Info: The 'UDAY' scheme, formally known as **Ujwal DISCOM Assurance Yojana**, was launched by the Government of India's Ministry of Power in November 2015.

*   **Primary Purpose:** Its central objective is the financial turnaround and revival of financially distressed Power Distribution Companies (DISCOMs) owned by state governments. The scheme aims to ensure a sustainable and permanent solution to the DISCOMs' chronic debt issues.
*   **Key Features:**
    *   State governments assumed 75% of the debt of their respective DISCOMs as of September 30, 2015 (50% in 2015-16 and 25% in 2016-17).
    *   The remaining 25% of the debt was serviced through state government-guaranteed bonds issued by the DISCOMs.
    *   It included measures to improve operational efficiencies of DISCOMs, such as compulsory smart metering, feeder separation, and upgrading transformers.
    *   Provided incentives for states performing well, including additional coal linkages and cheaper power.
*   **Context:** DISCOMs accumulated significant debt due to operational inefficiencies (e.g., high Aggregate Technical & Commercial losses), inadequate tariff revisions, and power theft, posing a major threat to the entire power sector value chain. UDAY was conceived to address this systemic financial vulnerability. Other options mentioned refer to different government initiatives or broader policy goals:
    *   **Option (a):** Related to promoting renewable energy startups, a goal supported by various policies and schemes (e.g., Startup India, National Biofuel Policy).
    *   **Option (b):** Universal household electrification was a goal of schemes like the Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya), launched in 2017.
    *   **Option (c):** Represents a broader energy transition strategy towards cleaner power sources, a general policy objective for sustainable development, rather than a single scheme named UDAY.

IASCODEX · Answer

Option A: Providing technical and financial assistance to start-up entrepreneurs in the field of renewable sources of energy

IASCODEX · Answer

Option B: Providing electricity to every household in the country by 2018

IASCODEX · Answer

Option C: Replacing the coal-based power plants with natural gas, nuclear, solar, wind and tidal power plants over a period of time