Fixing the power sector

The financial health of the power sector is causing anxiety, with even the Reserve Bank of India drawing attention to the risk it poses to state government finances. The last bailout package, UDAY (Ujjwal Discom Assurance Yojana), was put in place by the central government in 2015. Under it, the state governments took over 75 per cent of the debt of the distribution companies (or discoms), and the rest they could service with lower-interest bonds. The states’ ratio of gross fiscal deficit to gross domestic product went up by as much as 0.7 percentage points, as a result. There were.....

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