Fixing state-government discoms: Reform or privatise

State-government owned distribution utilities (discoms) continue to be plagued by challenges, and thus remain the weakest link in the power sector value chain. As a result, the many discom bailout/relief packages announced over the past two decades are now seen as a periodic phenomenon. The recent liquidity relief package announced by the Centre in May 2020 is the fourth such. Its predecessor, the UDAY scheme (announced in November 2015) mainly enabled a reduction in the interest cost for participating discoms, led by debt refinancing and take-over of debt by their respective state governments. However, slow progress in efficiency improvements by discoms and delays in the tariff-determination process remain areas of concern.