Policy Wise: India’s Power Sector

Policy Wise: India’s Power Sector

[pib] Star Labelling ProgrammePIB


From UPSC perspective, the following things are important :

Prelims level : Voluntary star labelling program, BEE, UDIT


The Bureau of Energy Efficiency (BEE) has included Deep Freezer and Light Commercial Air Conditioners (LCAC) under its Star Rating Programme on a voluntary basis.

What is the news?

  • The program will be initially launched in voluntary mode from 2ndMarch, 2020 to 31st December, 2021.
  • Thereafter, it will be made mandatory after reviewing the degree of market transformation in this particular segment of appliances.
  • In order to cover split ACs beyond the scope of existing BEE star labeling program upto a cooling capacity of 18kW, BEE has prepared a star labeling program for split ACs having cooling capacities in excess of 10.5kW and upto 18.0 kW.
  • This category of Air conditioners is termed as LCAC primarily due to their application in commercial air conditioning.
  • Through this initiative, it is expected to save around 2.8 Billion Units by FY2030, which is equivalent to GHG reduction of 2.4-million-ton Carbon Dioxide.

Why such move?

  • Energy Efficiency has the maximum GHG abatement potential of around 51% followed by renewables (32%), biofuels (1%), nuclear (8%), carbon capture and storage (8%) as per the World Energy Outlook (WEO 2010).
  • India can avoid building 300 GW of new power generation up to 2040 with the implementation of ambitious energy efficiency policies (IEA – India 2020).
  • Successful implementation of Energy Efficiency Measures contributed to electricity savings of 86.60 BUs i.e. 7.14% of total electricity consumption of the country and emission reduction of 108.28 million tonnes of CO2 during 2017-18.

About Star Labeling Programme

  • The programme has been formulated by Bureau of Energy Efficiency, as part of its mandate, under the Energy Conservation Act, 2001.
  • Under this Programme, BEE has covered 24 appliances till date wherein 10 appliances are under the mandatory regime.
  • The existing BEE star labelling program for Air Conditioners is based on Indian Standard IS 1391 part 1, part 2 and covers AC with cooling capacities up to 10.5kW.

Other facts: UDIT

  • Urja Dakshata Information Tool (UDIT) (udit.beeindia.gov.in), a first-ever initiative taken by BEE with the World Resources Institute (WRI), to facilitate a database on energy e­fficiency was also launched.
  • UDIT is a user-friendly platform that explains the energy efficiency landscape of India across industry, appliances, building, transport, municipal and agriculture sectors.
  • UDIT will also showcase the capacity building and new initiatives taken up by the Government across the sectors in the increasing energy efficiency domain.
Policy Wise: India’s Power Sector

[pib] State Energy Efficiency Index 2019DOMRPIB


From UPSC perspective, the following things are important :

Prelims level : State Energy Efficiency Index

Mains level : Various initiatives for promotion of energy efficiency of power sector

The Ministry of Power and New & Renewable Energy has released the ‘State Energy Efficiency Index 2019’.

State Energy Efficiency Index

  • The first such Index, the “State Energy Efficiency Preparedness Index 2018”, was launched on August 1, 2018.
  • The index tracks the progress of Energy Efficiency (EE) initiatives in 36 states and union territories based on 97 significant indicators.
  • It is developed by Bureau of Energy Efficiency (BEE) in association with Alliance for an Energy Efficient Economy (AEEE).
  • It categorizes states as ‘Front Runner’, ‘Achiever’, ‘Contender’ and ‘Aspirant’ based on their efforts and achievements towards energy efficiency implementation.
  • It incorporates qualitative, quantitative and outcome-based indicators to assess energy efficiency initiatives, programs and outcomes in five distinct sectors – buildings, industry, municipalities, transport, agriculture, and DISCOMs.

Performance evaluation

  • For rational comparison, States/UTs are grouped into four groups based on aggregated Total Primary Energy Supply (TPES) required to meet the state’s actual energy demand (electricity, coal, oil, gas, etc.) across sectors.
  • TPES grouping shall help states compare performance and share best practices within their peer group.
  • Under four categories based on TPES, Haryana, Kerala, Karnataka, Maharashtra, Himachal Pradesh, Uttarakhand, Puducherry and Chandigarh have been evaluated as progressive states/UTs in the index.
  • The top performing states Haryana, Kerala and Karnataka – are in the ‘Achiever’ category.
  • Manipur, Jammu & Kashmir, Jharkhand and Rajasthan performed the worst in each of their groups.

Utilities of the index

  • It will help states contribute towards national goals on energy security and climate action by helping drive EE policies and program implementation.
  • It will help tracking progress in managing the states’ and India’s energy footprint and institutionalising the data capture and monitoring of EE activities by states.
Policy Wise: India’s Power Sector

One Nation, One GridPriority 1


From UPSC perspective, the following things are important :

Prelims level : National Grid

Mains level : One Nation, One Grid

One Nation, One Grid

  • In a move to improve India’s connectivity infrastructure, the government in its second term plans to build a model of ‘One Nation, One Grid’ to ensure availability of power to states at ‘affordable’ rates.
  • FM in his budget speech made available a blueprint for developing gas grids, water grids, i-ways, and regional airports.
  • The government is also examining the performance of its Ujjwal DISCOM Assurance Yojana (UDAY), aimed at financial and operational turnaround of power distribution companies.

Power grids in India

  • The Indian Power system for planning and operational purposes is divided into five regional grids.
  • The integration of regional grids, and thereby establishment of National Grid, was conceptualized in early nineties.
  • The initial inter-regional links were planned for exchange of operational surpluses amongst the regions.
  • However, later on when the planning philosophy had graduated from Regional self-sufficiency to National basis, the Inter-regional links were planned associated with the generation projects that had beneficiaries across the regional boundaries.

Evolution of National Grid

  • Grid management on regional basis started in sixties.
  • Initially, State grids were inter-connected to form regional grid and India was demarcated into 5 regions namely Northern, Eastern, Western, North Eastern and Southern region.
  • In October 1991 North Eastern and Eastern grids were connected.
  • In March 2003 WR and ER-NER were interconnected .
  • August 2006 North and East grids were interconnected thereby 4 regional grids Northern, Eastern, Western and North Eastern grids are synchronously connected forming central grid operating at one frequency.
  • On 31st December 2013, Southern Region was connected to Central Grid in Synchronous mode with the commissioning of 765kV Raichur-Solapur Transmission line thereby achieving ‘ONE NATION’-‘ONE GRID’-‘ONE FREQUENCY’.

About National Grid

  • The National Grid is the high-voltage electricity network in mainland India, connecting power stations and major substations and ensuring that electricity generated anywhere in mainland India can be used to satisfy demand elsewhere.
  • The National Grid is owned, operated, and maintained by state-owned Power Grid Corporation of India.
  • It is one of the largest operational synchronous grids in the world with 334.40 GW of installed power generation capacity as on 31 January 2018.

 Benefits of centralized power grid

  • Synchronization of all regional grids will help in optimal utilization of scarce natural resources by transfer of Power from Resource centric regions to Load centric regions.
  • Further, this shall pave way for establishment of vibrant Electricity market facilitating trading of power across regions.
  • One Nation One Grid shall synchronously connect all the regional grids and there will be one national frequency.
Policy Wise: India’s Power Sector

[op-ed snap]How to achieve 24×7 power for allop-ed snap


From UPSC perspective, the following things are important :

Prelims level : Nothing Much

Mains level : Structural issues in the power sector


The household electrification scheme, Pradhan Mantri Sahaj Bijli Har Ghar Yojana, or Saubhagya, has been implemented at an unprecedented pace. More than 45,000 households were electrified every day over the last 18 months.

Reasons behind the success of Saubhagya

  • The efforts under Saubhagya have come upon decades of hard work preceding it.
    1. The enactment of the Electricity Act, in 2003
    2. The introduction of the Rajiv Gandhi Grameen Vidyutikaran Yojana, in 2005
  • Over the last year, several engineers and managing directors in electricity distribution companies (discoms), their contractors, State- and Central-level bureaucrats, and possibly energy ministers have been working at fever pitch.
  • Discom engineers have evolved in their attitude from one of scepticism to that of determination.
  • CASE STUDY-Their efforts to meet targets even included crossing streams in Bihar on foot with electricity poles, and reaching far-flung areas in Manipur, through Myanmar, to electrify remote habitations with solar home systems.

Challenges Remaining

  • The erection of electricity poles and an extension of wires do not necessarily mean uninterrupted power flow to households.
  • By tracking more than 9,000 rural households, since 2015, across six major States (Bihar, Jharkhand, Madhya Pradesh, Odisha, Uttar Pradesh and West Bengal), the Access to Clean Cooking Energy and Electricity Survey of States (ACCESS) report by the Council on Energy, Environment and Water (CEEW) has highlighted the gap between a connection and reliable power supply. 
  • No 24*7 power supply-While the median hours of supply increased from 12 hours in 2015 to 16 hours a day in 2018, it is still far from the goal of 24×7.
  • Low voltage Issues-Similarly, while instances of low voltage and voltage surges have reduced in the last three years, about a quarter of rural households still report low voltage issues for at least five days in a month.

Vital Step Forward

  • In order to achieve 24×7 power for all, there is need to focus on three frontiers.

1.Monitoring of Supply

  • First, India needs real-time monitoring of supply at the end-user level.
  • While the government is bringing all feeders in the country online, we currently have no provision to monitor supply as experienced by households.
  • Only such granular monitoring can help track the evolving reality of electricity supply on the ground and guide discoms to act in areas with sub-optimal performance.
  • Eventually, smart meters (that the government plans to roll out) should help enable such monitoring.
  • However, in the interim, we could rely on interactive voice response systems (IVRS) and SMS-based reporting by end-users.

2. Quality and maintenance services

  • Second, discoms need to focus on improving the quality of supply as well as maintenance services.
  • Adequate demand estimation and respective power procurement will go a long way in reducing load shedding.
  • Moreover, about half the rural population across the six States reported at least two days of 24-hour-long unpredictable blackouts in a month.
  • Such incidents are indicative of poor maintenance, as opposed to intentional load-shedding.
  • Discoms need to identify novel cost-effective approaches to maintain infrastructure in these far-flung areas.
  • Some States have already taken a lead in this.
  • EXAMPLES-Odisha has outsourced infrastructure maintenance in some of its rural areas to franchisees, while Maharashtra has introduced village-level coordinators to address local-level challenges.

3.Customer Service

  • Finally, the improvement in supply should be complemented with a significant improvement in customer service,
  • which includes billing, metering and collection. Around 27% of the electrified rural households in the six States were not paying anything for their electricity.
  • Despite the subsidies, constant loss of revenue would make it unviable for discoms to continue servicing these households in the long run.
  • Low consumer density along with difficult accessibility mean that conventional approaches involving meter readers and payment collection centres will be unviable for many rural areas.
  • We need radically innovative approaches such as the proposed prepaid smart meters and last-mile rural franchisees to improve customer service and revenue collection.

Way Forward

  • Electricity is the driver for India’s development.
  • As we focus on granular monitoring, high-quality supply, better customer service and greater revenue realisation at the household level,we also need to prioritise electricity access for livelihoods and community services such as education and health care.
  • Only such a comprehensive effort will ensure that rural India reaps the socio-economic benefits of electricity.



Policy Wise: India’s Power Sector

Power ministry mandates use of smart prepaid meters from April 2019Priority 1


Mains Paper 3: Economy | Infrastructure: Energy, Ports, Roads, Airports, Railways etc.

From UPSC perspective, the following things are important:

Prelims level: Saubhagya scheme

Mains level: Utility of smart meters


  • The government has mandated the use of smart prepaid electricity meters in the country beginning April next year, as it looks to complete the transition over the next three years.

Utility of Smart Prepaid Meters

  1. Smart meters are a part of the overall advanced metering infrastructure solutions (AMI) aimed at better demand response designed to reduce energy consumption during peak hours.
  2. Manufacturing of smart prepaid meters will also generate skilled employment for the youth.
  3. Other benefits include:
  • Reduction in AT&C losses
  • Better health of DISCOMs
  • Incentivizing energy conservation
  • Ease of bill payments and doing away with the paper bills

Initiatives so far

  1. The government is procuring smart and prepaid meters to be deployed across the country.
  2. State-owned Energy Efficiency Services Limited (EESL) has floated two global tenders for procuring a total of 10 million smart meters.
  3. The government also plans to install 10 million prepaid meters in Uttar Pradesh as part of the Saubhagya scheme which aims to electrify over four crore households till March 2019.

States gearing up

  1. State governments had earlier signed the Power for All documents and had agreed to supply power round the clock to their consumers.
  2. Under this, the distribution licensee shall provide 24×7 power to their consumers by 1st April, 2019 or earlier.
Policy Wise: India’s Power Sector

[op-ed snap] Power politics at playop-ed snap


Mains Paper 3: Economy | Infrastructure: Energy, Ports, Roads, Airports, Railways etc.

From UPSC perspective, the following things are important:

Prelims level: Not much

Mains level: Proposed amendments in electricity act and their implications


Changes in electricity act

  1. The Central government has proposed a set of changes to the Electricity Act 2003
  2. The amendments seek to enable a market transformation in electricity
  3. The idea is that while a single public utility will run the wires through which electricity flows, multiple supply licensees (both public and private) will be allowed to compete for consumers
  4. The intent is that the discipline of competing for customers will lead to improved supply and lower bills

Proposed amendments

  1. The amendment (along with changes in the National Tariff Policy) aims to get the price right — a long-standing aspiration — by capping cross-subsidies at 20% immediately and eliminating them within three years
  2. The cross-subsidy surcharge on open access customers — the fee that holds back customers from leaving the grid — would be eliminated within two years
  3. Subsidies will not be allowed across consumer categories like industry and agriculture, but will be allowed across consumption categories — big consumers can subsidise small ones
  4. The amendments include many other provisions, notably around making the Act more up to date with regard to renewable energy, which is a worthy objective

Effects of the proposals

  1. The discipline of competing for customers will lead to improved supply and lower bills
  2. India could have an electricity distribution sector with pockets of competition for wealthy consumers in a sea of monopoly inhabited by the poorest
  3. Private suppliers could cherry-pick profitable locations and consumers; the state-owned incumbent supplier will be left with the obligation to serve low-paying consumers
  4. This shift could be highly disruptive if the profit-making side is allowed to flee, without devising a transition pathway for the loss-making side of electricity

Onus on states

  1. While an earlier 2014 reform effort proposed mandatory and time-bound implementation of these reforms and therefore was resisted by States, the current amendment allows them discretion on the timing of implementation
  2. The combination of time discretion and the improved presence of the ruling coalition in State governments may facilitate passage this time around

Increased power to centre

  1. The Centre may have access to enhanced tax revenues from electricity because it stands to gain from additional tax revenue from profitable new wires companies and private suppliers
  2. The Centre could become a new fulcrum of redistribution from wealthy areas in wealthy States, to needy customers that are concentrated in a few States
  3. It provides greater control to the Centre and limits the States’ and regional political parties’ capability to make electoral use of electricity pricing
  4. The amendment proposes a re-formulation of the selection committee for State regulators, from a majority of State representatives to a majority of Central representatives
  5. The Centre will also gain more oversight on capacity addition, through the requirement of a detailed project report submission to the Central Electricity Authority

Challenge of low demand

  1. Many generating companies have been in the news recently due to decreasing demand for their power and consequently their stranded assets
  2. The amendments potentially provide comfort to them at the expense of distribution companies
  3. They mandate that suppliers sign power purchase agreements (PPAs) to meet the annual average demand, ostensibly to ensure 24×7 power for all, which will be subject to review and compliance measures
  4. The gain to generators could come at the cost of customers, who, through the PPAs signed by supply companies, have to ultimately bear the risk of uncertain load growth, prices and migration

Way forward

  1. India’s electricity sector remains beset with problems
  2. Disruptive change in Indian electricity may be needed, even inevitable
  3. But the amendments risk placing the cost of disruption on the backs of the poorest and shifts the potential for ameliorative measures to the hands of the Centre, rather than the States
Policy Wise: India’s Power Sector

Power Ministry may make 24°C as default setting air conditioners


Mains Paper 3: Environment | Conservation, environmental pollution and degradation, environmental impact assessment

From UPSC perspective, the following things are important:

Prelims level: Not much

Mains level: Various initiatives by the government to tackle increasing energy demand and to counter climate change


Promoting energy efficiency

  1. The government will consider making 24°C as a mandatory default setting for air conditioners (ACs)
  2. The temperatures settings in ACs will be in the range of 24°C to 26°C
  3. AC makers have also been advised to have labelling indicating the optimum temperature setting for the benefit of consumers both from financial and health points of view

Why such move?

  1. Every 1°C increase in the air conditioner temperature setting results in saving of 6% of electricity consumed
  2. Normal human body temperature is approximately 36-37°C, but large number of commercial establishments, hotels and offices maintain temperature around 18-21°C
  3. This is not only uncomfortable but is actually unhealthy
  4. Some countries like Japan have put in place regulation to keep the temperature at 28°C

Impact of the campaign

  1. Total connected load in India due to air conditioning will be 200 GW by 2030 and this may further increase as today only about 6% of households use ACs
  2. Considering this huge demand, India can save about 40 million units of electricity usage every day
  3. The new campaign will result in substantial energy savings and also reduce greenhouse gas emission
  4. Power Ministry estimates indicate that if all the consumers adopt the norm, this will result in savings of 20 billion units of electricity in one year alone
Policy Wise: India’s Power Sector

Govt plans ‘Pariwartan’ scheme for power sector revivalGovt. SchemesPriority 1


Mains Paper 3: Economy | Infrastructure: Energy, Ports, Roads, Airports, Railways etc.

From UPSC perspective, the following things are important:

Prelims level: SAMADHAN, Pariwartan Schemes

Mains level: Read the attached story


Stressed Power Projects

  1. Stressed projects have drawn bids for around Rs 1-2 crore per MW under the insolvency and bankruptcy code, a fraction of the Rs 5 crore per MW needed to build them.
  2. Issues faced by the stressed projects include a paucity of funds, lack of power purchase agreements and fuel shortages.


  1. The government plans to warehouse stressed power projects totaling 25,000 MW under an asset management firm to protect the value of the assets (Similar to SAMADHAN Scheme)
  2. This will prevent their distress sale under the insolvency and bankruptcy code until the demand for power picks up.
  3. State-run Rural Electrification Corp. Ltd (REC) has identified projects with a total debt of around Rs 1.8 trillion as part of the scheme, which is under government consideration
  4. It has been tentatively named Power Asset Revival through Warehousing and Rehabilitation, or ‘Pariwartan’.
  5. The ‘Pariwartan’ scheme is inspired by the Troubled Asset Relief Programme, or TARP, which was introduced in the US during the 2008 financial crisis.
  6. The proposed plan also aims to stem the rise in bad loans in the power sector.

Key Propositions

  1. These stressed power projects will be housed under an asset management and rehabilitation company (AMRC) that will be owned by financial institutions.
  2. While the promoter’s equity will be reduced to facilitate a transfer of management control to the financial institutions, the lenders will convert their debt into equity.
  3. The AMRC will manage the projects and may ask utilities such as NTPC Ltd to operate and maintain them. The AMRC will charge a fee and help complete projects that are stranded for lack of funds.
  4. These projects will be transferred to the AMRC at net book value, wherein it will own a 51% stake in the projects and the balance 49% will be held by the lenders,” said the government official cited above.


Scheme of Asset Management and Debt Change Structure (SAMADHAN)

  1. Under Samadhan, the bankers’ consortium shortlisted 11 power plants with an overall capacity of over 12 gigawatts, which are either complete or nearing completion.
  2. The debt order will be reduced to a manageable level and converted into equities which are held by banks.
  3. That equity would be bid out to any players who want to buy those assets.
Policy Wise: India’s Power Sector

Govt. launches Pilot scheme Procurement of Aggregate Power of 2500 MW for three years


Mains Paper 3: Economy | Infrastructure: Energy, Ports, Roads, Airports, Railways etc.

From UPSC perspective, the following things are important:

Prelims level: Nodal agency

Mains level: Expectations from the pilot scheme.


Pilot Scheme for Procurement of Power

  1. The Government has kicked off a Pilot Scheme for Procurement of Aggregate Power of 2500 MW on competitive basis for 3 years under medium term
  2. i.e. from generators with commissioned projects but without Power Purchase Agreement
  3. The Ministry of Power had recently issued the model bid documents on 6th April, 2018
  4. The Guidelines for the said scheme were issued on 10th April, 2018
  5. Under the scheme a single entity can be allotted maximum capacity of 600 MW
  6. The Tariff will be fixed for three years without any escalation

Nodal agency for the pilot scheme

  1. PFC Consulting Limited (A wholly owned subsidiary of PFC Ltd) has been appointed as Nodal Agency and PTC India Limited as the Aggregator

Expectations from the scheme

  1. This scheme is expected to revive the power demand which has affected the generators not having Power Purchase Agreements
Policy Wise: India’s Power Sector

[op-ed snap] Meeting India’s electricity needsop-ed snap


Mains Paper 3: Economy | Infrastructure: Energy, Ports, Roads, Airports, Railways etc.

From UPSC perspective, the following things are important:

Prelims level: Not much

Mains level: The newscard talks about the importance of grid system(including the micro-grid system). And suggest ways to deploy these systems effectively.


  1. One often comes across news about variable renewable energy sources like solar photovoltaic and wind having reached ‘grid parity’
  2. The article primarily talks about the importance of the ‘grid parity’

What is the concept of grid parity? 

  1. Electricity grid is a very complex system
  2. It involves long-distance transmission of electricity at high voltage, step-up and step-down transformers, and a distribution network at load centres
  3. Various electricity generators and consumers are connected to it

Solar and wind energy sources are suitable for isolated deployment

  1. Appropriate ways to deploy solar and wind can be decided by recognising their three characteristics — zero fuelling cost, low capacity factors and intermittency
  2. Solar and wind are eminently suitable for isolated deployment such as for powering irrigation pumps
  3. An irrigation pump directly connected to a solar panel can be useful for a farmer as he doesn’t have to depend on the grid. In this application, intermittency of solar is of no consequence

The concept of Micro-grid

  1. In India, there are still communities that have no access to the central electricity grid, or the supply from the central grid is unreliable
  2. A microgrid getting electricity supply from solar and wind, and connected to consumers in an isolated remote community, is helpful in providing electricity for lighting, in charging mobile phones, and small livelihood applications
  3. A storage battery is an integral part of such an isolated microgrid and this increases the cost of electricity
  4. Experience from such installations indicates that consumers are willing to pay for it in return for reliable electric supply
  5. Consumers connected to a community managed microgrid can meet their minimum needs
  6. Until the reliability of the central grid can be assured, solar- and wind-powered microgrid is the way forward for rural and remote communities

We can hope for better cirumstances

  1. Hopefully, ongoing research in battery technologies will bring down the cost of electricity storage and improve safety of storage, thereby paving the way for a large deployment of solar and wind
  2. One can expect the International Solar Alliance to direct technology development towards the needs of all developing countries

But solar and wind cannot meet even a quarter of India’s projected electricity requirements

  1. A major share has to come from large hydro, nuclear and coal. Out of these three technologies, one has to prefer low-carbon technologies that is hydro and nuclear
  2. Along with investment in solar and wind, the government must plan for increased investment in both hydro and nuclear
Policy Wise: India’s Power Sector

NTPC reports record electricity generation in December quarter


Mains Paper 3: Economy | Infrastructure: Energy, Ports, Roads, Airports, Railways etc.

From UPSC perspective, the following things are important:

Prelims level: Discoms, DBT, etc.

Mains level: It is important to know about country’s energy capacity. Also, the newscard discusses some of the possible benefits which we can get by increasing India’s electricity demand


Why in news?

  1.  India’s largest power generation utility NTPC Ltd recorded its highest ever quarterly generation in the three months ended 31 December, indicating a recovery in electricity demand

Data on electricity generation

  1. NTPC with installed capacity of 51,383MW (megawatt), has recorded its highest ever quarterly generation of 67,781MUs (million units) during Q3 of FY 2017-18
  2. It is 10.39% more than the generation of 61,400MUs recorded during the corresponding period of last year


  1.  The development assumes significance given that India’s largest power generator accounts for 16% or 51,635MW of the country’s installed power generation capacity of 331,117.58MW

Possible benefit of the development

  1. Government is trying to revive electricity demand in the country
  2. Any fresh demand for electricity(the lack of which is weighing down the entire power sector) will also help in resolving the stressed assets conundrum and improve their financial viability

Other future plans of the government

  1. The other power sector reforms in the works include a plan to implement the direct benefit transfer (DBT) scheme in the electricity sector for better targeting of subsidies and the proposed tariff slabs rationalization.
  2. Also, to make discoms more responsive, any disruption in electricity supplies post March 2019 will be penalized and the cross-subsidy will be limited to 20% to help usher in efficiency
Policy Wise: India’s Power Sector

Centre, states to implement direct benefit transfer scheme in power sector


Mains Paper 2: Governance | Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

From UPSC perspective, the following things are important:

Prelims level: Discoms, Click2read

Mains level: Steps taken by the government


Direct benefit transfer (DBT) scheme in Power Sector

  1. The Union and state governments have agreed to implement the DBT scheme in the electricity sector for better targeting of subsidies

Steps taken by the government to improve services of the Power Sector

  1. To make discoms more responsive, any disruption in electricity supplies post March 2019 will be penalized
  2. Also, the discoms won’t be allowed to recoup more than 15% of their losses through any tariff increase post March 2019
  3. To improve efficiency and reduce losses, the Union and the state governments will be leveraging technology for 100% metering
  4. And doing away with any human interface in consumer facing functions such as metering, billing and collections

Electricity tariff slab rationalization 

  1. The proposed tariff slabs rationalization and limiting cross-subsidy to 20% will usher in efficiency
  2. And help improve India’s per capita power consumption of around 1,200 kilowatt hour (kWh), which is among the lowest in the world
  3. Electricity tariff slab rationalization to make them uniform across the country will help in reduction of cross-subsidies borne by the industry
  4. And make tariffs more competitive for businesses, thereby pushing the government’s Make in India drive
Policy Wise: India’s Power Sector

[op-ed snap] Rethinking open access in electricityop-ed snap


Mains Paper 3: Economy | Infrastructure: Energy, Ports, Roads, Airports, Railways etc.

The following things are important from UPSC perspective:

Prelims Level: Not much

Mains level: Energy related topics are specially mentioned in the mains syllabus. The article explains the reasons behind limited success of open access of electricity



  1. The article talks about open access of electricity and related concerns

Government advise to the Central Electricity Authority (CEA) 

  1. The government has advised the CEA to set up a committee to look into issues related to open access and brought out a consultation paper based on the committee’s findings

Why is open access necessary?

  1. Open access is one of the key measures to bring about competition in electricity, whereby large consumers have access to the transmission and distribution (T&D) network to obtain electricity from suppliers other than the local distribution company (discom)
  2. Open access was expected to encourage investment by private players in electricity supply

Why was the success of open access very limited?

  1. Unfortunately, the success of open access has been very limited in spite of numerous attempts to facilitate it
  2. Instead of being an avenue to allow large consumers choice of supplier on a sustained basis
  3. The open access has become a way to allow such consumers to move back and forth between the discom and the market as and when they want
  4. Not only is this phenomenon unfair to discoms, it also does not allow competitive suppliers to develop a stable customer base, defeating the purpose of open access

How can open access help to counter the burden of cross-subsidization?

  1. The current approach to open access may relieve, to some extent, the burden of cross-subsidization that falls on large consumers, by allowing them access to the market to get lower prices when they can
  2. The high degree of cross-subsidization certainly needs to be addressed
  3. But tariff rationalization is a political problem and, therefore, is best solved at the political level

Why should open access requests only come from suppliers, not consumers?

  1. Open access to the T&D network is required by generators and suppliers, but not by consumers
  2. Consumers need only to shop around for the best deal from competitive suppliers, and it should be the responsibility of the suppliers to obtain access so that the power can be transferred to consumers

How to re-conceptualize the open access?

  1. The first step in re-conceptualizing open access is to recognize that service to consumers exercising choice is a distinct service, and not an extension of regulated supply
  2. Large consumers should not be able to treat the discom as a mothership to which they can return whenever market prices rise
  3. In addition, consumers exercising choice should be required to get all their electricity from the supplier of their choice, not just part of it
  4. Otherwise the discom has to handle all the variability of load, and that increases the discom’s planning burden and cost, and is unfair

Other concerns related to the open access

  1. Open access for end-consumers should not be a short-term option. Discom tariffs are regulated and fixed for the entire year and thus represent an average over the year
  2. Even an efficient discom will have tariffs that are above the prevailing market price at some times and below it at other times
  3. If a very large consumer is able to cherry-pick the periods when it can get supply from the market, it would result in higher and higher costs for the discom
  4. These additional costs would have to be borne by non-open-access consumers, many of whom are small consumers

The way forward

  1. It is time to move beyond efforts to increase the volume of open access transactions by tinkering with how various open access charges are calculated
  2. Instead, the initiative by the power ministry should be taken as an opportunity to re-conceptualize open access along the lines discussed here, so that its objectives are achieved


What is open access– simple- open to access electricity from any seller i.e. consumers being able to purchase directly from power producers rather than distribution companies.

Advantage– As it allows generators to sell power to the highest bidders while consumers can source their needs from the most economic seller, it promotes competition and efficiency

Open Access (OA) policy introduced under Electricity Act 2003, allows consumers with electricity load above 1 MW to procure electricity directly from electricity markets

Policy Wise: India’s Power Sector

Toxic sulphur dioxide norms: 90% coal power plants not compliant


Mains Paper 3: Economy | Infrastructure: Energy, Ports, Roads, Airports, Railways etc.

From UPSC perspective, the following things are important:

Prelims level: Flue Gas Desulphurisation (FGD) systems, Emission Norms

Mains level: Rising air pollution and its effect on health as well as economy

Non Compliance to norms

  1. Nearly 90 percent of the country’s coal-fired power generation capacity is in violation of Sulphur Dioxide (SO2) emission limits notified two years ago.
  2. These norms will kick in December this year.

What is Power ministry doing?

  1. Power Ministry has asked the Environment Ministry to defer implementing the NOX emission limits by three years (for coal-based units installed before December 2003).
  2. For units installed after December 2003, it has requested that it be allowed to operate them at higher NOX emission limit of 600 mg/Nm3 (milligrams per cubic metre) for three years.
  3. This is because the state-run NTPC Ltd is currently conducting a “pilot study” to test if “NOX control technology” will work for “Indian coal” that has “high ash content”.

Is compliance possible by December?

  1. The Power Ministry stated that it will take seven years to “retro-fit” Flue Gas Desulphurisation (FGD) systems — which remove SO2 from exhaust flue gases — in the existing capacity.

Effect of SO2 and NOX emissions

  1. Short-term exposures to SO2 can harm the human respiratory system and make breathing difficult.
  2. Children, the elderly, and those who suffer from asthma are particularly sensitive to effects of SO2.
  3. NOX, too, can trigger “serious respiratory problems”.
  4. Both SO2 and NOX can be easily oxidised within airborne water droplets to form acid precipitation or ‘acid rain’.


Revised standards for coal-based Thermal Power Plants

  1. The Ministry of Environment, Forest & Climate Change had notified the revised standards for coal-based Thermal Power Plants on 22-December-2015.
  2. The new standards are aimed at reducing emission of PM10, sulphur dioxide and Oxide of nitrogen.
  3. The technology employed for the control of the proposed limit of Sulfur Dioxide – SO2 & Nitrogen Oxide – NOx will also help in control of mercury emission (at about 70-90%) as a co-benefit.
  4. These standards are based on the recommendation of the Central Pollution Control Board (CPCB) after consultations with stakeholders.

Flue Gas Desulphurisation (FGD) systems

  1. Flue-gas desulfurization (FGD) is a set of technologies used to remove sulfur dioxide (SO2) from exhaust flue gases of fossil-fuel power plants, and from the emissions of other sulfur oxide emitting processes.
  2. Most FGD systems employ two stages: one for fly ash removal and the other for SO2 removal.
  3. For a typical coal-fired power station, flue-gas desulfurization (FGD) may remove 90 percent or more of the SO
    2 in the flue gases.
Policy Wise: India’s Power Sector

[op-ed snap] A half-done reform: On LPG subsidyop-ed snap

Image result for subsidy cooking gas india

Image source 


Mains Paper 2: Governance | Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Op-ed discusses about governments new decision to do away with the subsidy for cooking gas and subsidy burden on government.

Once you are done reading this op-ed, you will be able to attempt the below.

Direct cash transfers have the potential to improve the economic lives of the poor by transferring benefits to households quickly and directly. Achieving these benefits requires thoughtful design of schemes, and careful, rigorous analysis of ongoing programmes is an important input to the design process. Discuss

From UPSC perspective, the following things are important:

Prelims level: DBT

 Mains level: Wasteful subsidies in India, Direct benefit transfer



  1. The government decided to completely do away with the subsidy offered to cooking gas used for household purposes
  2. Public sector oil companies were authorised to incrementally hike the “effective price” of LPG cylinders until the entire subsidy is wiped off by March next year.

Burden of government

  1. Fall in global crude oil prices, has already eased the burden on the government.
  2. In the latest Union budget, the government allocated about ₹25,000 crore towards oil subsidy, which is a fourth of the total oil subsidy bill (of almost ₹1 lakh crore) incurred in fiscal year 2013.
  3. The implementation of the direct transfer of cash benefits has already helped in the better targeting of subsidies to the poor, thus substantially reducing wasteful spending.

How cut in subsidies will help?

  • The cut in subsidy would further strengthen fiscal discipline.

Way forward?

  1. Sustainably lower the price of cooking gas once and for all, getting the government out of the business of managing subsidies.
  2. Deregulating the market for cooking gas, thus opening it up to more widespread market competition, would also help.


Direct benefit transfer 

Refer : Civilsdaily


Policy Wise: India’s Power Sector

[pib] 4 Objectives of New Energy Policy & its difference from the old oneGovt. SchemesPIB

  1. The 4 key objectives of the NEP are: Access at affordable prices,
  2. Improved energy security and independence,
  3. Greater sustainability and
  4. Economic growth
  5. Previous Policy = Integrated Energy Policy (IEP). What’s the difference?
  6. NEP includes the issues related to sharp decline of crude oil prices, change in solar energy technology, heightened concern of climate change issues, ambitious target of Renewable energy and rural electrification agenda
  7. The policy is being discussed by NITI Aayog with different stake holders
Policy Wise: India’s Power Sector

India to light up IEA’s global LED programme

  1. International Energy Agency: India, through its company Energy Efficiency Services Limited (EESL), has performed exceedingly well in terms of vastly improving access to LED lighting while reducing their cost drastically
  2. The LED programme by EESL has been so successful that IEA is partnering with it to take the programme global
  3. The price at which EESL has been purchasing LED lights to distribute under the government’s Unnat Jyoti by Affordable LEDs for All (Ujala) scheme has been consistently falling over the last couple of years
  4. The company purchased LEDs at Rs.310 per piece in 2014, and the price fell to Rs.55 as of March 2016
  5. Along with this, production has also been ramped up to about four crore per month from the 10 lakh a month that were produced two years ago

Discuss: Remember the UJALA scheme? What is it about?

Policy Wise: India’s Power Sector

Less light on subsidised LED bulbs: survey

  1. Context: Ujala, Govt’s LED distribution scheme, under which electricity board customers are eligible to buy LED bulbs at a subsidised rate
  2. Source: A survey conducted by citizen engagement platform LocalCircles
  3. 64% consumers still don’t know how to get the subsidised LED bulbs being made available by the Govt
  4. The situation was worst in West Bengal and Tamil Nadu, where around 96% of the respondents were not aware of this scheme
  5. Poor communication: One of the prime reasons for the lack of awareness about this scheme
  6. Every State Electricity Board communicates to customers by sending them bills via the post but not many have chosen to use the bills to communicate this offer to the consumer
Policy Wise: India’s Power Sector

Discoms turn to smart meters to manage power demand in Delhi

  1. Context: Rising energy consumption in cities is making power distribution companies change the way they manage energy demand
  2. Solar: Tata Power Delhi Distribution Ltd (TPDDL) is getting into solar power generation for large customers which will help address rising peak demand
  3. Smart meters: Will be installed for all its residential consumers & will facilitate billing of customers based on the time at which power is consumed
Policy Wise: India’s Power Sector

Grant for R&D project for AUSC technology

  1. News: Cabinet Committee on Economic Affairs approved a one-time grant of Rs.900 crores spread over three years
  2. For: An R&D project for the development of Advanced Ultra Super Critical (AUSC) technology for thermal power plants (TPPs)
  3. The Rs.900 crore, commencing from 2017-18, is to be provided as plan gross budgetary support to Bharat Heavy Electricals (BHEL) for the implementation of the R&D project
Policy Wise: India’s Power Sector

India’s power paradox- 2

  1. Power cuts: Though we have surplus power, there are power cuts because the State discoms are unable to buy electricity due to poor financial health, leading to unused power lying idle in the grid
  2. Transmission and distribution constraints are also responsible for power cuts – the government launched the Ujjawal Discom Assurance Yojana (UDAY) to solve this
  3. UDAY is expected to facilitate reliable, adequate and sufficient power supply to consumers through operational and financial turnaround of discoms
  4. Per capita consumption: India’s per capita consumption was 1,070 kWh in 2015-16, less than the world average and was the lowest among BRICS nations
  5. This is due to a large population, a low per capita income and a huge population not having access to electricity
  6. There are 6 States in India out of the 17 States expected to be in power-surplus in 2016-17, with per capita availability lower than the national average
Policy Wise: India’s Power Sector

India’s power paradox- 1

  1. Central Electricity Authority (CEA), under the Power Ministry, had earlier released the Load Generation and Balance Report (LGBR) 2016-17
  2. The report stated that India is likely to experience the energy surplus of 1.1% in 2016-17
  3. Paradox: Though there are 300 million people without access to electricity, rampant power cuts and one of the lowest per capita power consumption in the world, India’s Power Ministry says India is power-surplus
  4. Demand problem: Surplus or deficit is determined by calculating the difference between the demand for power and availability, and the demand definition lies at the base of this paradox
  5. While calculating power demand, only people who are connected to the grid and have access to electricity at present are taken into consideration
  6. Thus those who do not have access to electricity and the demand from them – latent demand – is not included in demand calculations
  7. The ‘real demand’ that encompasses all citizens would be known only when India achieves the goal of ‘Power for All’
Policy Wise: India’s Power Sector

What more does LGBR say?

  1. A generating capacity above 16,654.5 mw has been considered in the LGBR for 2016-17
  2. These measures are expected to help the deficit states reduce their shortfall.
  3. Surplus: Anticipated at 3.3% and 6.9% in the southern and western regions, respectively
  4. Shortage: Anticipated in Northern, eastern and northeastern regions at 1.8%, 10.3% & 8.3%, respectively
  5. Peaking shortages: Likely to prevail mainly in the northern, southern and northeastern regions at around 1.6%, 10.0% and 3.8%, respectively
  6. Power shortage: At 2.1% (last fiscal), it is the lowest level in a single year
  7. Surplus states (expected): Delhi, Madhya Pradesh, Maharashtra & Tamil Nadu
  8. Deficit states (expected): Jammu and Kashmir, Uttar Pradesh, Uttarakhand, Bihar and Jharkhand
Policy Wise: India’s Power Sector

India plans to be power surplus in 2016-17

  1. Context: Load Generation Balance Report (LGBR) for 2016-17
  2. The Govt is planning to make India an energy surplus country
  3. Target: Generating 1,178 billion units, leading to a 1.1% overall electricity surplus this fiscal & a peak surplus of 2.6%
  4. Earlier: The Govt used to plan generation with deficit of power in the past in its LGBRs
  5. Imports from power projects in Bhutan and availability from non-conventional and renewable energy sources in the country are also factored into the report
  6. With the commissioning of these transmission lines, the inter-State and intra-State capabilities of power transfer in the country enhanced considerably
  7. Rigorous monitoring is being done to add capacity in the 12th plan period
Policy Wise: India’s Power Sector

Delhi is the biggest power guzzler

  1. Context: Delhi recorded the highest power demands of electricity during peak hours among the capital cities
  2. It has become India’s biggest power consumer city
  3. Demand has increased by 20% compared to last year
  4. Delhi has also beaten Bihar who has population around 10 crore
  5. Demand may go up in July
  6. Reason: Delhi’s weather conditions and increase in humidity in July
Policy Wise: India’s Power Sector

National Led Bulbs Scheme Gets a New Face in UJALA

  1. Context: UJALA for the LED based Domestic Efficient Lighting Programme (DELP), which is currently running successfully in over 120 cities
  2. UJALA: an acronym for Unnat Jyoti by Affordable LEDs for All
  3. Agency: Energy Efficiency Services Limited (EESL)
  4. Background: National LED programme was launched by Hon’ble Prime Minister on January 2015
  5. Target: Replacing 77 crore incandescent lamps with LED bulbs
  6. Ujala States: Rajasthan, Maharashtra, Karnataka, Kerala, UP, Himachal Pradesh, Delhi, Andhra Pradesh, Puducherry, Jharkhand, Bihar and Uttarakhand
Policy Wise: India’s Power Sector

Our aim is to electrify every home, says Goyal

  1. Background: Prior to 2014, there was Rajiv Gandhi Rural Electrification Scheme, which provided power to villages that were easy to access
  2. Criticism: About 18,000 villages in dense forests and at the top of mountains remained un-electrified
  3. New Initiative: Deen Dayal Upadhyaya Rural Electrification Scheme
  4. Objective: To electrify every Indian home by May, 2018
Policy Wise: India’s Power Sector

Panel for Hydro Power Policy

  1. Context: Power ministry has set up a 10-member panel chaired by Ashwin B. Pandya, former chairman of the Central Water Commission
  2. Purpose: To advise on framing a new hydropower policy that will help turn around stalled projects and attract fresh investments into the sector
  3. Terms of reference: Suggest policy measures on technical, financial, environmental and commercial aspects of the hydropower sector
  4. Why delay? Delays in environment and forest clearances, inter-state water-sharing disputes, technical and geological uncertainties and difficulties in securing financing due to long gestation periods
Policy Wise: India’s Power Sector

Drones for power sector from Finland

  1. Context: Finland’s Sharper Shape will provide UAV solutions for the power transmission sector in partnership with Sterlite Grid Ventures
  2. Sterlite Grid: India’s largest private developer of independent transmission systems
  3. Benefits: Business solutions to transmission line operators and help reduce delivery time of projects, and increase the uptime of power systems
  4. Background: Transmission companies had sought permission for using drones in monitoring project construction
  5. Why? Usually have to build infrastructure in inaccessible areas, thus to reduce its maintenance cost
Policy Wise: India’s Power Sector

Govt asks states to Increase power tariff, cut theft

In states such as Rajasthan, Haryana, Jharkhand, Punjab, Tamil Nadu, Madhya Pradesh and Uttar Pradesh, power is provided below the cost of generation and delivery.

  1. Centre has urged state electricity regulators to increase power tariffs and ensure that power distribution companies cut power theft and operational costs.
  2. This is to prevent utilities being bailed out by state governments from slipping back into losses.
  3. Tariff revisions and steps to boost efficiency in power distribution are covered by the tripartite agreements.
  4. These are signed by states, power utilities and Union Ministry of Power under UDAY.
Policy Wise: India’s Power Sector

Cabinet nod for power tariff policy

In a major shift, power companies are allowed to pass costs on to consumers arising out of any changes in taxes, cesses and levies levied on them.

The amended policy said that the power regulator has to come up with a clear action plan to ensure 24x7 power supply to all consumers by 2021-22 or earlier.
The amended policy said that the power regulator has to come up with a clear action plan to ensure 24×7 power supply to all consumers by 2021-22 or earlier.

  1. To promote renewable energy and improve the ease of doing business for developers in the sector.
  2. By allowing power generators to sell their surplus power on the power exchange and sharing the proceeds with state government.
  3. The amendments are based on 4 Es — electricity for all, efficiency that will ensure affordable tariffs, the environment, and ease of doing business to attract greater investment in the sector.
  4. The new policy also mandates that no inter-state transmission charges will be levied until a time to be specified by the government.
  5. This automatic approval was earlier limited to 50 per cent capacity expansions.
  6. Towards the power for all initiative, the policy enables the creation of micro-grids in remote villages as yet unconnected to the grid.
Policy Wise: India’s Power Sector

The Future of Electricity in Fast Growing Economies: World Economic Forum

The WEF report is titled: The Future of Electricity in Fast-Growing Economies Attracting Investment to Provide Affordable, Accessible and Sustainable Power.

  1. India’s power sector is at an inflection point & it called for developing an integrated outlook for the country’s energy sector.
  2. Most of its electricity demand in the next 2 decades will be met by burning fossil fuels despite huge investments in renewables.
  3. Tariffs and rates for fuel pricing, costs that are passed through to customers, and peak power policies and pricing should all be transparent and consistent across states.
  4. Alignment between federal and state government objectives is critical, as India devolves significant power to the states.
  5. India’s plan to add 175 GW of capacity from renewables by 2022 can succeed only if the relevant stakeholders act in ways that encourage investment in this part of the sector.
  6. Critically, regulators should ensure long-term tariff consistency with no retroactive changes or flip-flops
Policy Wise: India’s Power Sector

Power sector’s demands from upcoming budget

The overall impact of present taxation regime at both Central and state levels leads to higher price of power.

  1. The inclusion of power and coal sectors in GST regime will result in lowering of bulk power, retail tariff and support the Make In India.
  2. Inclusion of power, coal and natural gas in GST regime to subsume multiple taxes and thereby reduce the cost of power projects and the per-unit tariff.
  3. Infrastructure industry status to the T&D sector so that all related tax benefits can be availed.
  4. Even though generation is exempt from CENVAT, excise and VAT, taxes on power generation equipment and other inputs remain embedded in the cost of power.
Policy Wise: India’s Power Sector

The Perspective Transmission Plan for 20 years

  1. Use of HVDC technology for large distance power transmission, made possible through large trunk transmission lines, technologically most advanced in the world.
  2. In around 3 years, India will see some 34,000 Mw of power being transported over long distances, primarily to the northern and the southern regions.
  3. The plan is in sync with the general network access (GNA).
  4. This is form of transmission network planning which aims at developing a transmission system such that available power can be smoothly transmitted.
Policy Wise: India’s Power Sector

Government electrifies 20% more villages

  1. Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY) has revealed that the government has electrified 20% of the villages that were without power at the start of this financial year under this scheme.
  2. DDUGJY has electrified 3,656 or 20% of the 18,452 villages without power at the start of this financial year.
  3. In July last year, the DDUGJY said it aimed to provide round-the-clock power to rural households and adequate electricity to agricultural consumers.
  4. Of the remaining 14,796 villages that still had to get electricity, work has been started in only 1,843 (12%) of them.
Policy Wise: India’s Power Sector

New coal linkage, tariff policies coming soon

  1. Govt. will soon come out with a coal linkage policy to ensure supply of fossil fuel.
  2. It will also bring out a new tariff policy to boost regulatory mechanism for discoms and attract investments.
  3. The policy will reflect a concern to environment and encourage renewable energy.
  4. It will strengthen the regulatory mechanism so that discoms become more efficient and conscious towards their duties to consumers.
  5. The central govt. in 2006 had approved the Tariff Policy under the provisions of Electricity Act, 2003.
Policy Wise: India’s Power Sector

Rajasthan Joins UDAY Scheme

Rajasthan Government has conveyed its in-principle approval to Ministry of Power (MoP) for joining UDAY Scheme (Ujwal Discom Assurance Yojana).

  1. UDAY has been launched to improve financial and operational efficiencies of power distribution companies (DISCOMs).
  2. The scheme provides that States would take over 75% debt of Discoms, as on 30th September, 2015 in 2 years.
  3. UDAY has inbuilt incentives encouraging State Governments to voluntarily restructure their debts.
  4. UDAY also provides for measures that will reduce the cost of power generation, which would ultimately benefit consumers.
Policy Wise: India’s Power Sector

Bailouts galore in power sector: Where’s the plug

The new scheme hinges on the premise that with loans off their books and improved balance sheets, SEBs will be able to sell the rest of their outstanding debt as bonds backed by state govt. guarantee.

  1. The good thing about UDAY is that it promises no grants or upfront write down of losses for distribution utilities.
  2. The biggest question is that, whether the new scheme has enough incentives built in to draw state govt’s.
  3. These taken-over loans will not be counted for the states’ FRBM limits for the current fiscal year and the next.
  4. It is unclear whether there will be a substantial number of states that would actually come forward for taking up this scheme, as long as it remains a voluntary one.
Policy Wise: India’s Power Sector

Are there any side effects of the discom revival plan launched?

  1. Discoms = State electricity boards. We are talking about the latest plan launched, remember?
  2. Even though it is a center sponsored bailout, states will have to pay the interest, which could be interpreted as something eating into their finances.
  3. What will happen if the state governments continue to fund losses without rationalizing tariffs?
  4. This is another burden on the state govs. and they have failed last time when such a bailout was launched in 2012.
Policy Wise: India’s Power Sector

Cabinet clears financial reform package for discoms

  1. The Union Cabinet has approved a reform package for loss-making electricity utilities.
  2. This will allow for the transfer of 75% of the about Rs 4.3 lakh crore outstanding debt incurred by stressed discoms to States’ debt.
  3. The Centre aims to help states in wiping out the discoms’ losses by 2019.
  4. The decision is also expected to help the banks in managing their bad loans.
  5. The scheme is named Ujwal Discom Assurance Yojana and it will be optional for States.
Policy Wise: India’s Power Sector

Centre to sell 5% stake in Rural Electrification Corporation (REC)

  1. Taking the offer for sale (OFS) route, government will sell over 4.93 crore REC shares & make around Rs.1,600 crore.
  2. What is OFS?
  3. OFS or Offer For Sale = window provided by stock exchanges to the promoters/ non-promoters of listed entities to help them dilute holdings in a transparent way.
  4. Sebi had created 2 new routes for sale of shares – Institutional placement programme (IPP) & the Offer for sale (OFS) through stock exchanges.

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