India’s power distribution utilities—comprising DISCOMs and state power departments—have collectively reported a positive Profit After Tax (PAT) of ₹2,701 crore in FY 2024–25, marking a historic turnaround after years of sustained losses, the Ministry of Power said.
This is the first time since the unbundling and corporatisation of State Electricity Boards that distribution utilities have posted an overall profit. The performance represents a sharp reversal from a loss of ₹25,553 crore in FY 2023–24 and ₹67,962 crore in FY 2013–14.
Union Minister of Power Shri Manohar Lal termed the development a “new chapter for the distribution sector,” attributing the turnaround to a series of structural and financial reforms implemented over the past decade.
“The achievement reflects the leadership and vision of Prime Minister Shri Narendra Modi, who has emphasised that India is driving not only its own growth but also global growth, with the energy sector playing a critical role,” the Minister said. He reiterated the government’s commitment to continued reforms to ensure the power sector supports India’s growing economy and the vision of Viksit Bharat.
Key Reform Measures Driving the Turnaround
According to the Ministry, several transformative initiatives have contributed to the improved financial health of distribution utilities:
Revamped Distribution Sector Scheme (RDSS): Focused on infrastructure modernisation and accelerated deployment of smart metering to enhance operational efficiency and financial viability.
Additional Prudential Norms: Linking access to finance for power utilities with performance benchmarks to strengthen fiscal and operational discipline.
Amendments to Electricity Rules: Ensuring timely tariff revisions, cost-reflective tariffs, and transparent accounting of subsidies to enable full cost recovery.
Electricity Distribution (Accounts and Additional Disclosure) Rules, 2025: Introducing uniform accounting standards and enhanced disclosures to improve financial governance and transparency.
Late Payment Surcharge Rules: Enforcing timely payments across the power sector, thereby supporting investments in new renewable energy projects.
Performance-linked Borrowing Incentives: Encouraging states to implement critical power sector reforms by linking additional borrowing limits to reform outcomes.
Improved Operational and Financial Indicators
The impact of these reforms is also reflected in key performance metrics. Aggregate Technical and Commercial (AT&C) losses declined from 22.62% in FY 2013–14 to 15.04% in FY 2024–25, indicating improved efficiency in power distribution.
The Average Cost of Supply–Average Revenue Realised (ACS–ARR) gap has narrowed significantly from ₹0.78 per kWh in FY 2013–14 to ₹0.06 per kWh in FY 2024–25, signalling near-full cost recovery.
Further, the implementation of the Electricity (Late Payment Surcharge) Rules has led to a 96% reduction in outstanding dues to power generating companies, from ₹1.39 lakh crore in 2022 to ₹4,927 crore by January 2026. Distribution utilities’ payment cycles have also improved, reducing from 178 days in FY 2020–21 to 113 days in FY 2024–25.
Sustained Engagement with States
The Ministry of Power noted that sustained engagement with states and Union Territories has played a key role in this turnaround. These efforts included regional conferences of Energy Ministers held in 2025 across Gangtok, Mumbai, Bengaluru, Chandigarh, and Patna, led by Union Power Minister Shri Manohar Lal.
Looking ahead, the government expects the momentum to continue through ongoing deliberations of a Group of Ministers, constituted by Shri Manohar Lal and chaired by Union Minister of State for Power and New & Renewable Energy Shri Shripad Naik, focused on further strengthening the financial viability of DISCOMs.
Discover more from SolarQuarter
Subscribe to get the latest posts sent to your email.
