IIM Lucknow Study Evaluates Impact of UDAY Debt Restructuring on Power Sector
Lucknow : A faculty-led research team from IIM Lucknow has assessed the effectiveness of the Ujwal DISCOM Assurance Yojana (UDAY) in reducing financial distress among India’s power distribution companies (DISCOMs). The study, published in the journal Energy Policy, is co-authored by Prof. D. Tripati Rao, Prof. Himadri Shekhar Chakrabarty, and research scholar Pratik Biswas.
Using a Difference-in-Difference (DiD) model, the study analysed DISCOM performance before and after UDAY implementation. The findings show significant improvements in key financial indicators:
- Debt levels reduced after liabilities were transferred to state governments.
- Profitability improved, with stabilised cash flows and lower dependence on high-cost borrowing.
- Older, larger DISCOMs benefited more than smaller ones due to size and infrastructure advantages.
Prof. D. Tripati Rao noted that while UDAY successfully broke the cycle of unsustainable borrowing, long-term reforms—including grid digitalisation, renewable energy integration, cost-reflective tariffs, and stronger regulatory oversight—are essential to ensure sustained financial discipline.
The study provides valuable insights for policymakers and strengthens the national conversation on future power sector reforms, highlighting UDAY’s role in stabilising DISCOM finances while emphasising the need for deeper structural improvements.
