Power ministry floats Cabinet note to relax discoms’ borrowing limit
New Delhi: With some state electricity distribution companies (discoms) unable to avail India’s ₹1.25 trillion reform-linked loan package for clearing outstanding dues, the union power ministry has moved a cabinet note for increasing their borrowing limits, said two people aware of the development.
With some fund-starved discoms neither having the headroom for borrowing more working capital, nor the requisite state receivables to clear their dues, the power ministry has circulated a draft cabinet note seeking a one-time exemption on working capital limits placed under the Ujwal DISCOM Assurance Yojana (UDAY).
As part of its stimulus package to bring India’s battered economy back on track after the coronavirus lockdowns, the government announced this liquidity injection for discoms as part of the Atmanirbhar Bharat Abhiyan, backed by state governments’ guarantees. The money is to be raised by state-owned Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) from the market against the receivables of discoms.
