Mumbai: Eight states have issued bonds worth over Rs 98,959.96 crore under UDAY Bonds scheme in 2015-16, which is aimed at improving operational and financial efficiency of state power distribution companies.


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As part of the scheme, Reserve Bank had issued the special bonds (non-SLR special securities) on behalf of eight state governments in the last fiscal, RBI said in a release today.


The Power Ministry had launched UDAY (Ujwal DISCOM Assurance Yojana) on November 20, 2015.


The scheme is expected to help discoms save around Rs 1.8 lakh crore in the next three years. The cumulative debt of discoms is Rs 4.37 lakh crore.


These securities have been issued by the state governments under the Government Securities Act, 2006 and are eligible for market repo, RBI added.


In March, RBI had invited market participants interested in subscribing to the special securities under UDAY through private placement route.


However, in a report on state finances earlier this month, RBI said UDAY may have adverse implications for state finances on account of burgeoning liabilities.


"This would considerably reduce the fiscal space of states which might lead to curtailment of capital expenditure with an adverse impact on growth," the report had said.


Furthermore, interest burden of states would inflate with immediate effect, destabilising fiscal outcomes and resulting in a deviation from fiscal consolidation path as well as the targets set by the 14th Finance Commission, it added.


With improvement in the financial health of state discoms, counter party risk for banks may also come down, it had said.


The state-wise issuance of UDAY Bonds during 2015-16 is as: Uttar Pradesh (Rs 24,332.47 crore); Rajasthan (Rs 37,349.77 crore); Chhattisgarh (Rs 870.12 crore); Punjab (Rs 9,859.72 crore); Jammu & Kashmir (Rs 2,140 crore); Bihar (Rs 1,554.52 crore); Jharkhand (Rs 5,553.37 crore) and Haryana (Rs 17,300 crore).