Power distribution utilities: Challenges remain

Going forward, there is a need to reform tariffs and the tariff-setting mechanism

A healthy and viable electricity distribution sector is vital for India’s economic growth and for achieving the Prime Minister’s vision of Viksit Bharat. The sector must ensure cost-effective and reliable supply to consumers, while sustaining liquidity throughout the electricity value chain. 

The distribution sector has seen tremendous expansion in the past decade with notable achievements in rural electrification and universalisation of access. The average supply has increased from around 12.5 hours in rural areas in 2014-15 to around 21 hours in 2022.

However, the financial performance of discoms had been under pressure with high aggregate technical and commercial (AT&C) losses and burgeoning