3 months ago
1
Story truthful far:
‘The country’s powerfulness organisation utilities (DISCOMs and Power Departments) have recorded a affirmative Profit After Tax (PAT) of ₹2,701 crore successful FY25’, announced the Economic Survey 2025-26 connected Thursday (January 29, 2026). The stated reasons for this turnaround are — DISCOMs’ losses have reduced by 80% successful past 3 years, automatic substance and powerfulness acquisition outgo adjustment on a monthly basis, late payment surcharges, timely recovery of costs for generators arsenic per adjusted tariffs and the revamped organisation assemblage scheme.
The Survey also highlighted the simplification successful Aggregate Technical and Commercial (AT&C) losses, from 22.62% successful 2014-2015 to 15.04% and improved outgo recovery. With India’s Transformation capableness touching 60,260 MVA successful 2025-26 and installed capableness astatine 509.74 GW, the spread betwixt vigor request and proviso has declined from 4.2% successful 2014-15 to nil by November 2025. In the ongoing Budget Session, Centre is slated to array the Electricity (Amendment) Bill, 2026 to beforehand efficiency, competition, and fiscal subject successful the powerfulness sector.
How much losses have DISCOMs accrued?
As per the Power Finance Corporation’s (PFC) report of Distribution utilities, State DISCOMs have accrued losses ranging from ₹25,000 crore to ₹63,000 crore betwixt 2014-15 and 2024-2025. The losses follow a highest and dip pattern through these years earlier dropping to its lowest ₹9,437 crore in 2024-25. The nett of ₹2,701 crore, registered by Distribution sector arsenic a whole is accounting private distribution companies’ profit of ₹12,138 crore.
Over the years, the losses accrued have been attributed to depreciation of e-valued assets of DISCOMs and increased subsidies to consumers. Improvement of accrued losses successful immoderate years have been because improved gross realization, tariff subsidy enactment from State Governments, reduced interest on Ujwal DISCOM Assurance Yojana (UDAY) scheme and narrowed spread connected tariff subsidy billed.
Through the years, States which person been top loss-makers are Madhya Pradesh, Telangana, Tamil Nadu, Uttar Pradesh, Rajasthan, Andhra Pradesh. Between 2014-2015 and 2024-2025, Uttar Pradesh has accrued losses ranging from ₹3,866 crores to ₹21,291 crores, consistently appearing arsenic a loss-maker successful the past 10 years. Similar performances person been displayed by Tamil Nadu – whose losses scope from ₹4,349 crore to ₹13,407 crores, Telangana (losses ranging betwixt ₹2,462 crore and 11,103) and Madhya Pradesh with accrued losses ranging from ₹2,561 crore and ₹6,065.
Maharashtra, which accrued heavy losses of ₹14,979 crores in 2015-16 has bettered its finances, registering a nett of ₹1,292 crore in 2024-25. Rajasthan bettered its finances by 2015-16, reducing its losses from ₹10,631 crore to registry a profit of ₹1,262 crore by 2024-25. Bihar has consistently registered losses ranging betwixt ₹1,000 - ₹2,500 crores earlier turning profitable in the past 2 years.
Centre’s changed approach; RDSS and its effect
In a bid to apprehension the losses of DISCOMs, the Centre launched the Revamped Distribution Sector Scheme (RDSS) in 2021, with an wide outlay of ₹3.03 lakh crore implicit the play of five years till FY25-26. It aimed astatine reducing Aggregate Technical & Commercial (AT&C) losses – vigor mislaid during Transmission and Distribution and owed to theft, faulty metering and non-payment of dues, from 21-22% successful 2021 to 12-15% by FY25-26. It besides acceptable a people of reducing the Average Cost of Supply–Average Revenue Realized ACS-ARR spread – the nonaccomplishment incurred by DISCOMs per portion of electricity, to zero.
Under the scheme, State DISCOMs which achieve a minimum 60% connected valuation of parameters specified as AT&C losses, ACS-ARR gaps, infrastructure upgrade performance, user services, hours of supply, firm governance etc., volition be eligible for funding. RDSS besides laid instauration for installing prepaid Smart metering units successful Public-Private-Partnership (PPP) mode and separating Agriculture feeders and person them to star supply.
With the advent of RDSS, AT&C losses steadily dropped from 22.25% successful 2020-2021 to 15.04% ACS-ARR spread reduced from 0.55 ₹/kWh successful 2020-2021 to 0.06 ₹/kWh successful 2024-25. Meanwhile, 22,42,79,749 powerfulness connections person been sanctioned to power implicit to astute meters (as of February 20, 2026) of which 5,66,77,412 connections person completed the process, with 20,07,535 connections switching to astute meters in this month, according to National Smart Grid Mission.
Additional borrowing
In 2021, the Fifteenth Finance Commission granted States to additionally get 0.5% of the Gross State Domestic Product (GSDP) to undertake sectorial reforms successful power. States’ performance was evaluated connected their ability to undertake reforms specified arsenic – assuming work of losses incurred by DISCOMs, transparency and timely audit of fiscal records of DISCOMs and compliance with ineligible requirements.
Based connected outcomes specified as subsidy payments via nonstop payment transportation (DBT), reduced AT&C losses and ARR gap, payment of energy bills by authorities departments, installation of prepaid meters, thirteen states were allowed to rise fiscal resources of ₹1,48,361 crore through additional borrowing from 2021-22 to 2024-25. Similarly, for 2025-26, states are eligible for additional borrowing of 0.5% of GSDP (Approx ₹1,71,612 crore) linked to their show in power sector.
Late Payment Surcharge
In 2022, the Centre also amended the Electricity (Late Payment Surcharge) Rules, 2021 mounting a deadline for DISCOMs to wide their dues payable to Generating and Transmission Companies. As per the rules, DISCOMs with outstanding dues upto ₹500 crores were fixed a twelvemonth to wide them on with a Late Surcharge Payment of 0.5% for each period they defaulted on the payment. DISCOMs which had amassed dues exceeding ₹10,000 crores were fixed 4 years for the same. The alteration successful these rules led to simplification of dues from ₹1.4 lakh crore (June 2022) to ₹4,927 crore (January 2026).
What is the road ahead?
Tabled successful Parliament connected February 2, 2026, the sixteenth Financial commission (16th FC) report, recommended the privatisation of State-owned DISCOMs. It advised states to create a special intent conveyance (SPV) to takeover the debt of these DISCOMs portion allowing a backstage capitalist to takeover the utility. Debt of these SPVs tin either beryllium negotiated for closure/prepayment or taken over by the State government. To incentivise States to privatise, the 16th FC recommends that the repayment of this indebtedness tin beryllium made eligible for financial assistance under the peculiar inducement strategy for superior concern (SASCI) of the Centre. However, the assistance could beryllium made disposable lone aft the DISCOM has been privatised.
The proposal has argumentation heft arsenic the Ministry of Power has formulated a model for privatisation of State DISCOMs. With an outlay of ₹1 trillion, the Ministry has provided States with 2 options nether which it tin avail loans to wage disconnected its debts.
As recommended by the 16th FC, the State can create a caller organisation company and divest 51% of the equity. With entree to a 50-year interest-free indebtedness for the debt i.e. SASCI and low-interest loans from the Centre for 5 years, the State tin wage for the indebtedness and retain minority stake. Otherwise, States can privatise up to 26% of equity of a DISCOM and avail low-interest loans from the Centre for 5 years. Those States which bash not privation to privatise must database their utilities connected a recognised stock speech wrong 3 years and upon listing volition receive the above-mentioned Central loan.
