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1-min read

Soon, Your Power Bill Will Have LPG-like Direct Benefit Transfer. Here’s What You Need to Know

Once the government institutionalises DBT, the cash payment would be equal to the level of subsidy announced by the respective state governments for per unit consumption of electricity wired into their accounts.

Rounak Kumar Gunjan | News18.com@Rounak_T

Updated:December 8, 2017, 7:59 PM IST
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Soon, Your Power Bill Will Have LPG-like Direct Benefit Transfer. Here’s What You Need to Know
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New Delhi: In an effort to provide targeted subsidies to the poor and weed out rich recipients of electricity subsidy, ministry of power is planning to introduce direct benefit transfer (DBT) scheme for transfer of cash straight into bank accounts of the eligible consumers.

“There is no such thing as free electricity. Any subsidy you want to give to any category of consumers, it has to be direct benefit transfer. That is something which we have agreed. We will bring it into a law,” said R K Singh, minister for power and new and renewable energy.

Earlier, subsidies were given to discoms for selling power to select customers below tariff fixed by regulators. The electricity bill that consumers receive has a separate column for subsidy.

electricity

Henceforth, once the government institutionalises DBT, this cash payment would be equal to the level of subsidy announced by the respective state government for per unit consumption of electricity wired into their accounts.

Financial losses of discoms of states, which have joined the UDAY scheme, have fallen by 21.5 per cent in the last financial year to Rs 40,295 crore. But they remain heavily indebted and continue to incur losses. The gap between their cost of supplying electricity and average revenue is still high at Rs 0.45 paisa per unit.

Research and ratings firm ICRA has said in one of its reports that though UDAY would reduce annual losses of discoms from Rs 60,000 crore in FY16 to about Rs 35,000 crore in FY18, the overall subsidy dependence of the state-owned power discoms for current financial year would increase annually by about 7-8 per cent to around Rs 81,000 crore.

| Edited by: Aakarshuk Sarna
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