UDAY (Ujwal Discom Assurance Yojana) has been launched to improve financial and operational efficiency of power distribution companies (DISCOMs). It envisages to reduce interest burden, cost of power and AT&C losses. Consequently, DISCOM would become sustainable to supply adequate and reliable power enabling 24×7 power supply. The scheme provides that States would take over 75% debt of Discoms, as on 30th September, 2015 in two years.
UDAY has inbuilt incentives encouraging State Governments to voluntarily restructure their debts. These incentives include taking over of DISCOM debt by the States outside the fiscal deficit limits; reduction in the cost of power through various measures such as coal linkage rationalization, liberal coal swaps, coal price rationalization, correction in coal grade slippage, allocation of coal linkages at notified prices; priority/additional funding through schemes of MoP & MNRE; and, reduction in interest burden.