economics medium MCQ

The 'UDAY' (Ujwal DISCOM Assurance Yojana) scheme was launched to address the chronic financial distress in the power sector. What was its primary mechanism?

  1. Privatizing all state-owned power generation plants
  2. Taking over 75% of the outstanding debt of State Power Distribution Companies (DISCOMs) by issuing state government bonds
  3. Providing free electricity to all agricultural consumers across India
  4. Banning the import of thermal coal to force reliance on solar energy

Answer: Taking over 75% of the outstanding debt of State Power Distribution Companies (DISCOMs) by issuing state government bonds

State DISCOMs were drowning in massive debt due to high Aggregate Technical & Commercial (AT&C) losses and the provision of heavily subsidized or free power. UDAY aimed to financially restructure them by having state governments take over their debt (which carries lower interest rates than private bank loans) in exchange for strict commitments to reduce power theft, improve operational efficiency, and align tariffs with actual costs.

Topic Indian Economy - Industry
Exam Relevance UPSC Prelims, SSC CGL, Banking
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