Which one of the following is a purpose of ‘UDAY’, a scheme of the Government?

The correct answer is: Providing for financial turnaround and revival of power distribution companies.

Let us understand this step by step by analyzing the question and each option carefully.

What is UDAY?
UDAY stands for Ujwal DISCOM Assurance Yojana. It was launched by the Government of India in November 2015 by the Ministry of Power. The scheme was specifically designed to address the severe financial crisis faced by DISCOMs (Distribution Companies) — the entities responsible for supplying electricity to end consumers across the country.

Why were DISCOMs in financial trouble?
Over the years, power distribution companies accumulated massive debt and losses due to several structural problems:

• High Aggregate Technical and Commercial (AT&C) losses — meaning a large portion of electricity generated was either lost during transmission or not billed/collected.
• The cost of purchasing power was higher than the tariff (price) at which it was sold to consumers, creating a persistent revenue gap.
• State governments were often reluctant to raise electricity tariffs, leading to growing deficits.
• DISCOMs had borrowed heavily from banks and financial institutions, and their debt burden had become unsustainable.

What did UDAY aim to do?
UDAY provided a structured mechanism for the financial turnaround and operational revival of these distribution companies. Its key features included:

• Debt restructuring: State governments took over a significant portion (around 75%) of the debt of DISCOMs, freeing them from crippling interest payments.
• Reduction of AT&C losses: States committed to bring down transmission and commercial losses to benchmark levels over a fixed timeline.
• Reduction of gap between cost of supply and revenue realized: Tariff rationalization was encouraged so DISCOMs could earn closer to what it costs them to supply power.
• Improved operational efficiency: Upgradation of infrastructure, smart metering, and energy auditing were promoted.

Now let us evaluate why the other options are incorrect:

Option 1 — "Providing technical and financial assistance to start-up entrepreneurs in the field of renewable sources of energy":
This is incorrect. This description aligns more with schemes like the Startup India initiative or solar energy promotion programs. UDAY has nothing to do with start-up entrepreneurs.

Option 2 — "Providing electricity to every household in the country by 2018":
This is incorrect. This goal was the objective of the Pradhan Mantri Sahaj Bijli Har Ghar Yojana (SAUBHAGYA) scheme, launched in 2017. Although UDAY and SAUBHAGYA are both related to the power sector, they serve entirely different purposes.

Option 3 — "Replacing coal-based power plants with natural gas, nuclear, solar, wind and tidal power plants over a period of time":
This is incorrect. This description relates to long-term energy transition and clean energy policy goals, not to UDAY. UDAY does not deal with replacing power generation sources.

Conclusion:
UDAY (Ujwal DISCOM Assurance Yojana) was exclusively focused on the financial restructuring, turnaround, and operational revival of power distribution companies (DISCOMs). It addressed the root cause of the power sector's distribution crisis — the mounting debt and losses of DISCOMs — by involving state governments, enabling debt takeover, promoting efficiency improvements, and encouraging tariff rationalization. Therefore, the correct answer is unambiguously: "Providing for financial turnaround and revival of power distribution companies."