Caught in the crossfire

The government set about to address an ailing power-distribution sector. The much-needed reforms have taken the shape of the UDAY scheme. Here's how the sector will get affected and how the scheme may hit power-finance companies. What is UDAY? At its core, the UDAY (Ujwal DISCOM Assurance Yojana) scheme calls upon state governments to take over all of the debt of power-distribution companies - 75 per cent over the next two-three years and the remaining 25 per cent backed by state guarantees. States will also be required to bear any future losses of distribution companies. Why has the government taken this route? Power-distribution companies have racked up losses to the tune of an estimated ₹60,000 crore. What