Ten years ago, on November 5, 2015, Prime Minister Narendra Modi’s government unveiled the Ujwal DISCOM Assurance Yojana, a bold intervention designed to rescue India’s debt-laden electricity distribution companies from financial collapse.

Today, as the scheme evolves into UDAY 2.0, the focus has shifted from emergency debt relief to long-term reform through smart prepaid metres, prompt payment mechanisms, enhanced coal availability, and a renewed push for grid modernisation. What began as a financial bailout has matured into a comprehensive framework for making power supply more reliable, affordable, and digitally enabled for consumers across the nation.

By March 2015, India’s state-owned distribution companies faced a dire situation. Accumulated losses stood at approximately Rs 3.8 lakh crore, whilst outstanding debt reached Rs 4.3 lakh crore. The weakest link in the power value chain, these utilities struggled with inefficient operations, widespread theft, poor collection practices, and the political reluctance to adjust tariffs to reflect actual costs. The crisis threatened not only 24×7 power for all citizens but also the banking sector, which held substantial exposure to these failing entities.

The UDAY scheme, announced by then-Power Minister Piyush Goyal and approved by the Cabinet chaired by Prime Minister Modi, offered participating states a structured path forward. The voluntary scheme allowed state governments to take over 75 per cent of DISCOM debt as of 30 September 2015, converting high-cost utility borrowings into lower-cost state bonds. Fifty per cent of this debt would transfer in 2015-16, with the remaining 25% following in 2016-17. Crucially, this debt takeover would not count against states’ fiscal deficit calculations for those two years, providing much-needed breathing room.

Beyond financial........

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