Which one of the following is a purpose of UDAY, a scheme of the Government?

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Q: 82 (IAS/2016)

Which one of the following is a purpose of UDAY, a scheme of the Government?

question_subject: 

Geography

question_exam: 

IAS

stats: 

0,129,100,43,38,19,129

keywords: 

{'uday': [0, 0, 0, 1], 'power plants': [0, 0, 0, 7], 'tidal power plants': [0, 0, 0, 1], 'power distribution companies': [0, 0, 0, 2], 'government': [5, 0, 0, 1], 'renewable sources': [0, 0, 1, 2], 'purpose': [1, 0, 7, 13], 'natural gas': [2, 0, 2, 3], 'electricity': [0, 0, 1, 3], 'energy': [0, 0, 1, 2], 'financial assistance': [0, 1, 1, 4], 'scheme': [0, 0, 1, 0], 'financial turnaround': [0, 0, 0, 1], 'entrepreneurs': [0, 0, 0, 5]}

The correct answer to the question is Option 4: Providing for financial turnaround and revival of power distribution companies.

UDAY stands for "Ujwal DISCOM Assurance Yojana" and was launched by the Government of India in November 2015. The scheme was aimed at improving the financial health of power distribution companies (DISCOMs) in India. The DISCOMs were struggling with huge debts, losses, and operational inefficiencies, which were affecting the power sector`s overall growth and development.

Under UDAY, the state governments take over 75% of the DISCOMs` outstanding debt as of September 30, 2015, and issue bonds to clear the liabilities. The remaining 25% is either converted to discom bonds or equity, depending on the states` agreement with the banks.

The scheme also has provisions for reducing the interest burden of the DISCOMs, improving their operational efficiencies, and reducing the cost of power generation. The objective is to enable DISCOMs to supply power to consumers at affordable rates while also ensuring that they operate in a financially sustainable manner.

Therefore, the primary purpose of UDAY is to provide financial assistance to power distribution companies and turn around their financial health, which in turn, helps to provide electricity to consumers at affordable rates. It is not related to providing technical and financial assistance to start-up entrepreneurs in the field of renewable sources of energy (Option 1). It is also not aimed at providing electricity to every household in the country by 2018 (Option 2), as the target date has already passed. Moreover, UDAY is not directly related to replacing the coal-based power plants with natural gas, nuclear, solar, wind, and tidal power plants over a period of time (Option 3), although the scheme may indirectly contribute to the shift towards renewable sources of energy by making power distribution companies more financially stable and incentivizing them to procure power from renewable sources.