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J&K govt pays over Rs 300 crore in interest under UDAY scheme, records reveal

Last Updated on February 21, 2021 at 10:08 pm

The Jammu and Kashmir administration has paid over 300 crore rupees to cover the interest on bonds issued under Ujwal DISCOM Assurance Yojana (UDAY) scheme so far.

According to the data available, in March 2016, the Ministry of Power, Government of India and Government of Jammu and Kashmir signed a Memorandum of Understanding (MOU) under the scheme UDAY and borrowed Rs 3,537.55 crore (Rs 2,140 crore in 2015-16 and Rs 1,397.55 crore in 2016-17) from RBI by issuing Non-Statutory Liquidity Ratio (SLR) bond at the rates ranging between 7.07 per cent to 8.72 per cent with maturity date from March 2022 to October 2031.

The state manages the function of providing electricity supply to consumers so, this money was used by the State Government to clear liabilities of the Central Public Sector Undertakings (CPSU). The State Government has to pay interest on the bonds. These bonds which are a sum of Rs 353.755 crore will also be maturing every year from 2021-22 to 2031-32.

During the time period of 2017-18, the government received Rs 3,151 crore through sale of power while a target of Rs 4,841 crore was set. The revenue which was received from sale of power was less than even the cost of purchase in all the years. The government had set its revenue collection targets even lower than the cost of purchase. This whole exercise of receiving fewer revenues even than the cost of power purchase consistently proved to be a burden on the State.

During 2017-18, the government purchased power worth Rs 5,709 crore for which it paid only Rs 3,036 crore to the producers causing liabilities. The department had liabilities of Rs 7,018 crore for unpaid power purchase bills.

In 2018, the State Government was having a revenue surplus of Rs 7,595 crore but the deferred liability for outstanding power bills amounting to Rs 7,018 crore, the revenue surplus will be reduced to just around 500 crores. The Ministry of Power, Government of India (GoI) introduced the UDAY scheme in November 2015 to enhance financial conditions of Power Distribution Companies (DISCOM) and to improve their operational and financial efficiency.