UDAY (Ujwal DISCOM Assurance Yojana) for financial turnaround of Power Distribution Companies

UDAY (Ujwal DISCOM Assurance Yojana) for financial turnaround of Power Distribution Companies 

The Union Cabinet chaired by the Hon’ble Prime Minister Shri Narendra Modi, has today given its approval to a new scheme moved by the Ministry of Power - Ujwal DISCOM Assurance Yojna or UDAY. UDAY provides for the financial turnaround and revival of Power Distribution companies (DISCOMs), and importantly also ensures a sustainable permanent solution to the problem.

UDAY is a path breaking reform for realizing the Hon’ble Prime Minister’s vision of affordable and accessible 24x7 Power for All. It is another decisive step furthering the landmark strides made in the Power sector over the past one and a half years, with the sector witnessing a series of historic improvements across the entire value chain, from fuel supply (highest coal production growth in over 2 decades), to generation (highest ever capacity addition), transmission (highest ever increase in transmission lines) and consumption (over 2.3 crore LED bulbs distributed).
The weakest link in the value chain is distribution, wherein DISCOMs in the country have accumulated losses of approximately Rs. 3.8 lakh crore and outstanding debt of approximately Rs. 4.3 lakh crore (as on March, 2015). Financially stressed DISCOMs are not able to supply adequate power at affordable rates, which hampers quality of life and overall economic growth and development. Efforts towards 100% village electrification, 24X7 power supply and clean energy cannot be achieved without performing DISCOMs. Power outages also adversely affect national priorities like “Make in India” and “Digital India”. In addition, default on bank loans by financially stressed DISCOMs has the potential to seriously impact the banking sector and the economy at large.
Due to legacy issues, DISCOMs are trapped in a vicious cycle with operational losses being funded by debt. Outstanding debt of DISCOMs has increased from about Rs. 2.4 lakh crore in 2011-12 to about Rs. 4.3 lakh crore in 2014-15, with interest rates upto14-15%.
UDAY assures the rise of vibrant and efficient DISCOMs through a permanent resolution of past as well as potential future issues of the sector. It empowers DISCOMs with the opportunity to break even in the next 2-3 years. This is through four initiatives (i) Improving operational efficiencies of DISCOMs; (ii) Reduction of cost of power; (iii) Reduction in interest cost of DISCOMs; (iv) Enforcing financial discipline on DISCOMs through alignment with State finances.
Operational efficiency improvements like compulsory smart metering, upgradation of transformers, meters etc., energy efficiency measures like efficient LED bulbs, agricultural pumps, fans & air-conditioners etc. will reduce the average AT&C loss from around 22% to 15% and eliminate the gap between Average Revenue Realized (ARR) & Average Cost of Supply (ACS) by 2018-19.
Reduction in cost of power would be achieved through measures such as increased supply of cheaper domestic coal, coal linkage rationalization, liberal coal swaps from inefficient to efficient plants, coal price rationalization based on GCV (Gross Calorific Value), supply of washed and crushed coal, and faster completion of transmission lines. NTPC alone is expected to save Rs. 0.35 / unit through higher supply of domestic coal and rationalization / swapping of coal which will be passed on to DISCOMs / consumers.
Financial liabilities of DISCOMs are the contingent liabilities of the respective States and need to be recognized as such. Debt of DISCOMs is de facto borrowing of States which is not counted in de jure borrowing. However, credit rating agencies and multilateral agencies are conscious of this de facto debt in their appraisals. In line with the above and similar observations of Fourteenth Finance Commission, States shall take over 75% of DISCOM debt as on 30 September 2015 over two years - 50% of DISCOM debt shall be taken over in 2015-16 and 25% in 2016-17. This will reduce the interest cost on the debt taken over by the States to around 8-9%, from as high as 14-15%; thus improving overall efficiency. Further provisions for spreading the financial burden on States over three years, will give States flexibility in managing the interest payment on the debt taken over, within their available fiscal space in the initial few years. A permanent resolution to the problem of DISCOM losses is achieved by States taking over and funding at least 50% of the future losses (if any) of DISCOMs in a graded manner.
UDAY is a shining example of the utilization of the best principles of cooperative and competitive federalism and has been evolved through discussions at the highest levels with multiple States. Adopting UDAY is optional for States, but provides the fastest, most efficient and financially most feasible way for providing 24X7 Power for All. It will be operationalized through a tri-partite agreement amongst the Ministry of Power, State Government and the DISCOM.
UDAY accelerates the process of reform across the entire power sector and will ensure that power is accessible, affordable and available for all. UDAY truly heralds the uday (rise), of a ‘Power’ful India.
Salient Features of UDAY

·        States shall take over 75% of DISCOM debt as on 30 September 2015 over two years - 50% of DISCOM debt shall be taken over in 2015-16 and 25% in 2016-17.
·        Government of India will not include the debt taken over by the States as per the above scheme in the calculation of fiscal deficit of respective States in the financial years 2015-16 and 2016-17.
·        States will issue non-SLR including SDL bonds in the market or directly to the respective banks / Financial Institutions (FIs) holding the DISCOM debt to the appropriate extent.
·        DISCOM debt not taken over by the State shall be converted by the Banks / FIs into loans or bonds with interest rate not more than the bank’s base rate plus 0.1%. Alternately, this debt may be fully or partly issued by the DISCOM as State guaranteed DISCOM bonds at the prevailing market rates which shall be equal to or less than bank base rate plus 0.1%.
·        States shall take over the future losses of DISCOMs in a graded manner and shall fund them as follows:

Previous Year’s DISCOM loss to be taken over by State
0% of the loss of 2014-15
0% of the loss of 2015-16
5% of the loss of 2016-17
10% of the loss of 2017-18
25% of the loss of 2018-19
50% of the previous year loss

·        State DISCOMs will comply with the Renewable Purchase Obligation (RPO) outstanding since 1st April, 2012, within a period to be decided in consultation with Ministry of Power.
·        States accepting UDAY and performing as per operational milestones will be given additional / priority funding through Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY),Integrated Power Development Scheme (IPDS), Power Sector Development Fund (PSDF) or other such schemes of Ministry of Power and Ministry of New and Renewable Energy.
·        Such States shall also be supported with additional coal at notified prices and, in case of availability through higher capacity utilization, low cost power from NTPC and other Central Public Sector Undertakings (CPSUs).
·        States not meeting operational milestones will be liable to forfeit their claim on IPDS and DDUGJY grants.
·        UDAY is optional for all States. However, States are encouraged to take the benefit at the earliest as benefits are dependent on the performance.


Proposal of M/s. Mylan Laboratories Limited for increase in FDI up to US $ 750 million in MLL by Mylan Luxembourg S.a.r.l. Luxembourg and / or Mylan Group B.V. Netherlands through subscription of equity shares and / or compulsorily convertible debentures for providing MLL part of the funds required for the acquisition of the entire shareholding of JPL post the demerger from its then shareholders 
The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has approved the proposal of the Department of Economic Affairs for increase in FDI up to US $ 750 million in Mylan Laboratories Limited (MLL) by Mylan Luxembourg S.a.r.l. Luxembourg and / or Mylan Group B.V. Netherlands through subscription of equity shares and / or compulsorily convertible debentures for providing MLL part of the funds required for the acquisition of the entire shareholding of JPL, post the demerger from its then shareholders (including Orizaba and resident Indian shareholders).

With this approval, FDI of US dollar 750 million will be received in the country.

The approval has been accorded subject to following conditions:

(i) The production level of consumables and NLEM drugs and their supply to the domestic market at the time of induction of FDI, be maintained over the next five years at an absolute quantitative level. The benchmark for this level would be decided with reference to the level of production of consumables and/or NLEM drugs in the immediately preceding three financial years to the year of induction of FDI. Of these, the highest level of production in any of these three years would be taken as the level.

(ii) R&D expenses be maintained in value terms for five years at an absolute quantitative level at the time of induction of FDI. The benchmark for this level would be decided with reference to the highest level of R&D expenses which has been incurred in any of the three financial years immediately preceding to the year of induction of FDI.

(iii) The administrative ministries concerned and the FIPB secretariat will provide complete information pertaining to the transfer of technology, if any, along with induction of foreign investment into the investee company.

(iv) The company receiving FDI will continue to produce medicines under the NLEM for the domestic tariff areas at the level which would be the highest quantity of production in the previous three financial years for the next five years.

(v) The company will also be required to maintain the R&D expenditure at the maximum level incurred in any of the three financial years immediately preceding the year of induction of FDI. This absolute level should be maintained for the next five years.

(vi) The administrative Ministry concerned and the FIPB secretariat will be provided complete information pertaining to the transfer of technology, if any, along with induction of foreign investment into the investee company.

(vii) No non-compete clause in respect of 'prospective investor', and 'prospective recipient entity.

(viii) Second leg of transaction involves infusion of fresh foreign funds by Mylan group for acquiring shares of M/s. Jai Pharma Ltd. The taxability of capital gains arising out of the said transaction shall be examined by the field formation.

(ix) The taxation of dividend, future capital gains on alienation of shares by the foreign investor, interest income and income of any other nature shall be examined by the field formation in accordance with the provisions of Income-tax Act, 1961 and the DTAA as applicable to the facts of this case.

(x) Claim of any tax relief under the Income Tax Act or the relevant DTAA will be examined independently by the tax authorities to determine the eligibility and extent of such relief and the approval will not amount to any recognition of eligibility for giving such relief.

(xi) Approval will not provide any immunity from tax investigations to determine whether specific or general anti-avoidance Rule apply.

(xii) The fair market value of various payments, services, assets, shares etc. determined in accordance with FIPB guidelines shall be examined by the tax authorities under the tax laws and rules in force and may be varied accordingly for tax purpose. 


MSP for Rabi Crops of 2015-16 season 
The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi, has given its approval for the Minimum Support Prices (MSPs) for Rabi Crops of 2015-16 Season to be Marketed in 2016-17. The decision is based on recommendations of Commission for Agricultural Costs and Prices (CACP) for the Price Policy for Rabi Crops for the Marketing Season 2016-17.  CACP, which is an expert body,  takes into account the cost of production, overall demand-supply, domestic and international prices, inter-crop price parity, terms of trade between agricultural and non-agricultural sectors, the likely effect of the Price Policy on the rest of economy, besides ensuring rational utilization of production resources like land and water, while recommending MSPs.
The CACP being the expert body, its recommendations are generally accepted as such.  However, in view of the gap in the demand and  domestic supply  of pulses, the Cabinet has decided to give a bonus of Rs.75/- per quintal for rabi pulses over and above the recommendations of the CACP.  This is expected to give a strong price signal to farmers to increase acreage and invest for increase in productivity of pulses.
 The Minimum Support Prices (MSPs) for all Rabi Crops of 2015-16 season to be marketed in 2016-17 have been increased and are given in table below: 

MSP for 2014-15 season
MSP for 2015-16 season

Increase in MSP over 2014-15
Bonus  *

(Rs per  quintal)
(Rs per  quintal)
(Rs per  quintal)
Masur (Lentil)
Rapeseed/ Mustard
    Note * Bonus on Rabi pulses is payable over and above the MSP                
The prices would be effective from the Rabi marketing season 2016-17. The higher MSPs would increase investment and production through assured remunerative prices to farmers.

The Cabinet also directed that in order to strengthen the procurement mechanism for pulses and oilseeds, Food Corporation of India (FCI) will be the Central Nodal Agency for procurement of pulses and oilseeds.  To supplement the efforts of FCI, the National Agricultural Cooperative Marketing Federation of India Limited (NAFED), National Cooperative Consumers’ Federation (NCCF), Central Warehousing Corporation (CWC) and Small Farmers Agri – Business Consortium (SFAC) may also undertake procurement of oilseeds and pulses as per their capacity.

 Besides increase in Minimum Support Prices (MSP) of Rabi crops, Government has taken several other farmer friendly initiatives over the last one year.  These, inter-alia, include the following :

·         In the Kharif the Government of India had declared a bonus of Rs 200 per quintal over and above the MSPs of Kharif pulses for 2015-16 season.

·         A Scheme to issue Soil Health Card to every farmer has been introduced.  Soil health management in the country is being promoted through setting up of soil & fertilizer testing laboratories and implementation of organic farming.
·         Government has also framed guidelines under Paramparagat Krishi Vikas Yojna (PKVY) to promote organic farming and develop potential market for organic products.

·         The Pradhan Mantri Krishi Sinchai Yojana, has been launched with the objective of creating sources of assured irrigation.

·         A dedicated Kisan Channel has been started by the Doordarshan to address various issues concerning farmers.
·         Government has also created portal on crops insurance in order to keep farmers better informed.

·         An initiative is being taken to set up a National Agriculture Market (NAM).  This would enable farmers to overcome the impediments in marketing of agricultural produce and get better price discovery.  A common e-market platform is being created and would be provided free of cost to the States/UTs.

·         Government has taken steps to introduce electronic trading which will facilitate single license for trading in the whole States/country as well as single point levy of market fee.

·         Government is also encouraging formation of Farmer Producer Organisations.

·         To stabilize prices of pulses and onions, Government has imported pulses and onions under the Price Stabilisation Fund.


Accession to the Council of Europe Convention on Transfer of Sentenced Persons 
The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has given its approval for:

(i) Formally requesting the Council of Europe for India’s accession to the Council of Europe Convention on the transfer of Sentenced Persons through a letter; and

(ii) upon receiving the formal invitation from the Council of Europe to become a party to the Convention, to accede to the Convention on Transfer of Sentenced Persons.

Acceding to a multilateral convention of the Council of Europe on the Transfer of Sentenced Persons, to which 64 States are Parties, would obviate the need to enter into bilateral arrangements with each one of them. Accession to the Convention will help Indian Prisoners imprisoned in the Council of Europe Countries or vice-versa, to be near their families for serving the remaining part of their sentence. This would facilitate the process of their social rehabilitation.


The Council of Europe Convention on transfer of Sentenced Persons came into being on 12th April, 1983 and is effective since 1 July 1985. So far, a total of 64 countries have ratified the convention.

Prior to 2004 there was no legal provision either in the Code of Criminal Procedure or any other law under which foreign prisoners could be transferred to the country of their origin to serve the remaining part of their sentence nor was there a provision for the transfer of prisoners of Indian origin convicted by a foreign court to serve their sentence in India. From the humanitarian angle it was felt that if foreign convicted nationals were transferred to their home countries and prisoners of Indian origin brought to India to serve the remaining part of their sentence, it would enable them to be near their families and would help in the process of their rehabilitation.

Hence the Repatriation of Prisoners Act, 2003 was enacted for achieving the above purpose. For achieving the objectives of the Act, a Treaty/Agreement is required to be signed with countries having mutual interest with us on this matter.

So far, we have signed bilateral Agreements with 27 countries and we have also acceded to one multilateral treaty that is the Inter-American Convention on Swerving Criminal sentences Abroad (IAC) - which is signed by Member States of the Organisation of American States (OAS) but is also open to accession by non-OAS countries.

Currently, India has functional arrangements with 36 countries; (20 countries under bilateral agreement and 16 countries under Inter-American Convention on Serving Criminal Sentences Abroad) for transfer of sentenced persons. These countries are the United Kingdom, Mauritius, France, Bulgaria, Egypt, South Korea, Saudi Arabia, Bangladesh, Sri Lanka, Cambodia, Israel, UAE, Iran, Italy, Maldives, Turkey, Thailand, the Russian Federation, Kuwait, Hong Kong Special Administrative Region, Argentina, Belize, Canada, Czech Republic, Chile, Costa Rica, Ecuador, El Salvador, Guatemala, Mexico, Nicaragua, Panama, Paraguay, United States, Uruguay and Venezuela. 


Additional allocation of foodgrains to the States/UTs for the Below Poverty Line (BPL) and Above Poverty Line (APL) families in the States/UTs for the period October, 2015 to March, 2016 
The National Food Security Act (NFSA) has come into force w.e.f. 5.7.2013 under which 2/3rd population of the country will be provided foodgrains at highly subsidized rates of Rs. 2/- per kg for wheat and Rs. 3/- per kg for rice. The coverage under the Act is based on 2011 population estimates. It was expected that the Act will be implemented in all the States/UTs latest by September, 2015 and beneficiaries will start receiving highly subsidized wheat and rice under the PDS System. Accordingly, additional allocation for APL and BPL families during the current financial year was made to non NFSA States/UTs only upto September, 2015. 20 States/UTs have begun implementing the NFSA while the rest of the States/UTs are still under existing TPDS. These States are, however, under active preparation to implement the NFSA within the next few months. Hence the Government has decided to continue the monthly additional APL and BPL allocation to the non-NFSA States/UTs from October, 2015 to March, 2016 or till implementation of the Act in these States/UTs, whichever is earlier, at APL and BPL rates. The expectation is that more and more States/UTs will shift as early as possible to NFSA implementation from the older TPDS pattern. 


Signing of a Memorandum of Understanding between India and Colombia in the field of Tourism 
The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has given its approval for signing a Memorandum of Understanding between the Ministry of Tourism of India and the Ministry of Trade Industry and Tourism of Colombia for strengthening cooperation in the field of Tourism.

The main objectives of the Memorandum of Understanding are:

a) To expand bilateral cooperation in the tourism sector.

b) To exchange information and data related to tourism.

c) To encourage cooperation between tourism stakeholders including Hotels and Tour operators.

d) To establish an exchange programme for cooperation in Human Resource Development.

e) To exchange visits of Tour Operators / Media /Opinion Makers for promotion of two way tourism

f) To exchange experiences in the areas of promotion, marketing, destination development and management.

g) To participate in travel fairs /exhibitions in each other's country.

Colombia is an emerging tourism source market for India. The Ministry of Tourism organized a Road Show in Bogota, Colombia in October 2014 which elicited good response from travel trade of both countries.

Similarly, India is a Potential source market for Colombia considering the huge outbound tourism market of India. The outbound tourist traffic from India during 2013 was 16.63 million. Considering the mutual benefits, signing of a Memorandum of Understanding in the field of tourism would enable both countries to enter into a constructive dialogue for development and promotion of tourism in each other's country for the economic development of the two nations.

Both countries enjoy warm and cordial relations, which can be ascribed to considerable coincidence of views on global issues and close collaboration in various multilateral forums. A Memorandum of Understanding in the field of Tourism Cooperation would be one institutional mechanism to further bilateral relations between the two countries to further deepen India’s relationship in the field of tourism. 

MoU between India and Belgium for Energy 
The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has approved a Memorandum of Understanding which has been signed between Indian and Belgian government authorities at the Federal and regional level for energy.

The objective of this Memorandum of Understanding is to establish the basis for a cooperative institutional relationship to encourage and promote technical bilateral cooperation on new and renewable energy issues on the basis of mutual benefit, equality and reciprocity. The areas of cooperation will focus on development of new and renewable energy technologies in the field of Wind energy, Biomass, Solar (thermal and photovoltaic), Smart grids, Geothermal energy, Marine energy, contribution of renewables to diversification of supply and energy security, and any other mutually agreed areas.

The Memorandum of Understanding will help in strengthening bilateral cooperation between the two countries. 

Protocol amending the Convention between India and Turkmenistan for the avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income and on capital 
The Union Cabinet chaired by the Prime Minister Shri Narendra Modi, has given its approval today for amending the Double Taxation Avoidance Convention (DTAC) signed between India and Turkmenistan in 1997 for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income and on capital, through a Protocol.

The Protocol provides for internationally accepted standards for effective exchange of information on tax matters including bank information and information without domestic tax interest. It is further provided that the information received from Turkmenistan in respect of a resident of India can be shared with other law enforcement agencies with authorisation of the Competent Authority of Turkmenistan and vice versa.

The Protocol further provides for 'Limitation of Benefits' Article as an anti-abuse provision aimed at preventing misuse of the Convention. The provisions of this Article enable use of the provisions of domestic law and measures concerning tax avoidance or evasion in the event of misuse of the Convention. 

Return of 803 acres of land under possession of Nepa Limited at Hempur, Distt. Kashipur (Uttarakhand) to Government of Uttarakhand 

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, today has given its approval to return of 803 acres of land at Hempur, Distt. Kashipur (Uttarakhand) under possession of Nepa Limited, Nepanagar to Government of Uttarkhand. Nepa Limited, Nepanagar is a Public Sector Enterprise (PSE) of Government of India.


The land at Hempur was allotted in February, 1987 on lease for 90 years, by the then Uttar Pradesh State Industrial Development Corporation to Nepa Limited, Nepanagar for setting up a bagasse based newsprint mill after remitting payment of Rs. 149.23 lakh at the then prevailing circle rate. However, lease deed could not be executed due to non-clearance from the Central Pollution Control Board on environmental grounds and the newsprint mill could not be established.

The Government of Uttarakhand (GoUK) has, therefore, sought return of the land for alternate use, and has agreed to pay current circle rate (which is substantially higher). Returning this land to the State Government is also justified as a large tract of land in an area short of this vital factor of production, is lying idle and can be put to productive public use by the State. 

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