Electricity Sector Challenges

DISCOM REFORMS IN INDIA : PERFORMANCE, CHALLENGES & THE ROAD AHEAD

India’s power distribution companies (DISCOMs) have shown notable improvement in recent years, reflected in reduced AT&C losses, a near elimination of the ACS–ARR gap, improved payment discipline, and a return to overall profitability. Government interventions such as the Revamped Distribution Sector Scheme (RDSS) and the Late Payment Surcharge Rules have strengthened operational efficiency and financial management. However, the sector continues to face structural challenges, including high accumulated debt, dependence on State subsidies, non-cost-reflective tariffs, and operational inefficiencies in several States. Sustaining the recent gains will require continued reforms focused on tariff rationalisation, loss reduction, technological adoption, timely subsidy payments, and improved governance to ensure the long-term financial viability of the distribution sector.