Raje’s Rajasthan Fares Better in UDAY Execution, State Overcomes a Major Part of Fiscal Debt

power electricity conditions in rajasthan UDAY

In 2015-2016, Rajasthan Government Covered DISCOM Losses Under the Formula of 50%.

Rajasthan, which saw its power debts leap three folds in 2013, becomes the first Indian state where DISCOMs are likely to make abundant profits in energy sector by 2019. It was reported by Union Power Minister Peeyush Goel, who lauded current Chief Minister Vasundhara Raje for this remarkable success. According to CRISIL’s Risk Analyst Gurpreet Chhatwal, Rajasthan is expected to be among the biggest beneficiaries of UDAY in future, compared to other big states like UP, J&K and Bihar. Subsequently, the state is poised for a striking change as government turns to wind and solar energy projects, in an attempt to wipe out losses incurred by Jaipur Vidyut Vitran Nigam Ltd and its counterparts in Ajmer and Jodhpur.

Rajasthan Ended Up with a Debt of Rs. 80,500 Crores, Resulting From Gehlot Government’s Monetary Loopholes

ashok gehlot

Rajasthan’s three major power distributors contributed to more than 18% of the colossal Rs. 4.3 trillion fiscal deficit collectively sustained by all power utilities in India. In 2013, Rajasthan was the most indebted state in energy sector with a pending loan of Rs. 80,500 crores, resulting from previous government’s poor fiscal management. Due to debt takeover burden, Rajasthan’s economic crisis was estimated at 9.9% of GSDP in 2015-2016. In case the state hadn’t acquired this debt, the economic deficiency would’ve amounted to just 3.62%. Nevertheless, the succeeding BJP government was determined to get rid of energy sector’s stubborn bottleneck. The authorities aimed to bring down this debt to Rs. 11,000 crores.

In 2015, Rajasthan Became the Third Indian State to Implement UDAY

CM Vasundhara Raje

To break from this vicious cycle, Rajasthan government decided to join Centre’s Ujwal Discom Assurance Yojana (UDAY) in December 2015. UDAY aims at revival of indebted power distributors. The scheme invites debt-burdened states to relinquish 3% of their GSDP credit limit to overcome existing financial obligations.

Accordingly, the policy makers predicted Rajasthan government could take over 75% of outstanding debts by 2017. This way, DISCOMS would generate adequate power to enable 24×7 supply across the state, in future.

Since December 2015, Rajasthan has been successfully executing the initiatives set by union government, in accordance with the schemes-

  • Reduction in power theft and losses,
  • Improving operation and distribution efficiencies,
  • Sculpt commercial and technical losses from uncollected bills,
  • Drop in power cost, interest burden and AT&C losses,
  • Alignment of state finances to enforce financial discipline on DISCOMs.

Pointers Implemented by Raje In Last 2 Years

  • Considering that Rajasthan is a desert state, it can generate up to 14,000MW solar energy from sunlight during summer months. Due to plunge in photovoltaic cell prices last year, the cost of solar power generation trimmed down to Rs. 6 per unit. The government sprung into action, signing important MoUs with leading power developers like Azure, Reliance Power, SunEdison and Adani to set up solar power plants. Today, with annual capacity of 1,294 megawatt, Rajasthan, ranks first in solar energy production, as mentioned by Union Ministry of New and Renewable Energy in July, 2015.
  • The CM took drastic measures to prevent T&D losses, which includes removal of worn-out electric meters and faulty feeders, repairing loose/broken/malfunctioning cables and poles, appointing junior level engineers to preside over monthly billing etc. ‘Urja Mitras’ were appointed in villages to generate awareness regarding energy consumption. With these efforts, authorities could recover up to 40% of power loss.
  • The hike in power tariff, for which Vasundhara government faced severe protests and criticism by the opposition can generate up to Rs. 1,500 crores annually. With this extra amount, the state can easily trim down remaining debts before 2020. Despite power hike in Rajasthan, domestic rate/unit is quite low, in comparison to other states.
  • Last year, Raje invited private firms to look over power distribution in Kota and Bharatpur for next 20 years to end slack-spine monopoly of state-run enterprises. Moreover, a pilot project was set up at Bithur, where T&D losses amounted to 40% in the state.

Owing to these precautionary measures, Rajasthan witnessed regression in fiscal loss on DISCOM from Rs. 15,645 crores (2013-14) to Rs. 12,500 (2014-2015) to Rs. 11,000 crores (2015-2016). This was possible due to effective power management and reduction in unnecessary expenditures. In a span of just 2 years, state government absorbed 75% losses, by paying annual interest of Rs. 6,500 crores, which is a powerful number for a state as big as Rajasthan. Having debts in control now, Rajasthan looks forward to a bright and debit-free future!


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