In a major development for India’s power sector, the Union Budget 2023 has announced an innovative approach for state-owned power distribution companies (Discoms). The government’s aim is to bring about significant improvements in the financial performance of these Discoms and enhance their operational efficiency.
Finance Minister Nirmala Sitharaman, while presenting the budget in Parliament, stated that the government will provide Rs. 50,000 crore over the next three years to state Discoms for operational and financial improvement. This will be done through a new scheme called “Debt Service Coverage Ratio (DSCR) Based Financing.”
Under the new scheme, Discoms will receive financial assistance based on their operational and financial performance, which will be evaluated through various parameters, including the DSCR. This will incentivize the Discoms to improve their performance and attract private investment to the sector.
In addition to the DSCR-based financing, the budget has also proposed a comprehensive plan for power distribution sector reforms, including the adoption of smart meters, improvement of electricity supply and distribution, and strengthening of the distribution network.
The power sector experts have welcomed the government’s move and have praised it as a positive step towards improving the financial health of the Discoms and the power sector as a whole.
The budget proposal is expected to go a long way in addressing the issues faced by the power sector and ensuring a stable and reliable power supply to the citizens of India. The innovative approach for state Discoms is expected to attract private investment and bring about significant improvements in the power distribution sector.