The fate of state electricity distribution companies (discoms) bailout package will work?

They are owned by almost bankrupt state governments. They are loaded with losses running into billions. They owe a staggering Rs 2 trillion to banks and financial institutions in the country. They are servicing the interest on existing loans through fresh borrowings. The bailout package that was designed exclusively for them now hangs in the air! Yes, the fate of state electricity distribution companies (discoms) in India seems to be more precarious now than ever before. Way back in 2003, the Electricity Act did manage to restructure these entities. It also laid down targets for reducing transmission and distribution losses. But huge rise in power costs and inability to raise tariffs for several years, bled the discoms back into ill health. The political compulsion to provide free power to farmers has also taken a heavy toll. So much so that they are now in dire need of bailout. Having already accumulated huge NPAs (non performing assets) by lending to them, banks are in no mood to lend more to the discoms. The only remedy was to transfer their short term loans to the state governments that own them. However, it now seems that the Fiscal Responsibility and Budget Management (FRBM) Act will stall the prospects of even that. Inability to breach the borrowing limits as per FRBM Act could prevent the state governments from being the final saviors for the discoms.