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According to a report UDAY scheme improves performance of discoms in FY17

The financial and operation performance of the distribution companies ( discoms which have joined the Ujwal Discom Assurance Yojana (UDAY) scheme have improved on an average during the last fiscal, said India Ratings (Ind-Ra).

However, it said the aggregate performance of the scheme masks wide inter-state variations.

“Our initial assessment of UDAY scheme suggests that both financial outcome and operational efficiency of reduction in AT&C losses have improved at an aggregate level,” Ind-Ra said in a study.

Since different states joined UDAY at a different point of time, with the majority (17 states) of them joining in FY17, the time elapsed by then until now is too short to assess the success of the scheme.

 The rating agency believes the reduction in interest cost has benefitted discoms’ finances.

“This is estimated to have freed up Rs 22,000 crore capital of the banking sector. However, in the medium-to-long- term, an improvement in operational performance such as increased billing efficiency through feeder metering and feeder audit leading to a higher collection will be crucial for keeping the discoms’ finances healthy,” it said.

The agency said tighter monitoring of action plan, the appointment of nodal officers and state level monitoring committee are also equally important for achieving the desired results.

Source: www.moneycontrol.com

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