Cabinet nod to Rs 3.03 lakh cr scheme to strengthen power discoms

The Cabinet Committee on Economic Affairs (CCEA) on Wednesday gave its nod to a five-year-long power distribution scheme worth Rs 3.03 lakh crore. Briefing reporters following the CCEA meet, Power and New and Renewable Energy Minister R K Singh said, "We have done a lot for power distribution reforms. It needs to be strengthened. Today, the Cabinet has approved the new scheme worth Rs 3.03 lakh crore, including Rs 97,000 crore central outlay."

He added that the funds would be provided to discoms (power distribution companies) to strengthen their system. The reform-based result-linked Power Distribution Scheme was announced in the budget earlier this year.

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On Monday, Finance Minister Nirmala Sitharaman again announced the scheme as part of the stimulus package post the second wave of COVID-19, to boost the economy.

The revamped reforms-based result-linked power distribution scheme will provide financial assistance to discoms for infrastructure creation, up-gradation of system, capacity building, and process improvement.

It provides state-specific intervention in place of ''one size fits all''.

For availing this scheme, the states will have to form a pre-qualify criteria like the publication of audited financial reports, upfront liquidation of state government's dues/subsidy to discoms, and non-creation of additional regulatory assets.

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The scheme envisages 25 crore smart meters, 10,000 feeders, four lakh km of low-tension overhead lines planned under the ongoing works under central government schemes.

The central schemes, Integrated Power Development Scheme, Deen Dayal Upadhyaya Gram Jyoti Yojana and Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya), will be merged, the minister said. The total allocation for the scheme will be Rs 3,03,058 crore, including the central government's share of Rs 97,631 crore.

Sitharaman also said on Monday that states have already been allowed an additional borrowing for four years, up to 0.5 per cent of gross state domestic product annually (Rs 1,05,864 crore for 2021-22), subject to carrying out specified power sector reforms.