The decision to subsidise power tariff, which will involve a cash outgo of Rs 61 crores in the next three months, was announced by Chief Minister Arvind Kejriwal after a meeting of the cabinet.
The subsidy, one of the major promises of AAP during the Assembly elections, will benefit 28 lakh consumers.
The cut in the electricity tariff came a day after Kejriwal announced supply of 20 kilolitres of water free of cost, another key election promise made by AAP.