8. Financial Turnaround of DISCOMs

Background India’s power distribution sector has shown signs of recovery after years of chronic losses. Key Achievements • DISCOMs reported net profits after prolonged financial stress. • AT&C losses reduced from ~22% to ~15%. • ACS-ARR gap (cost-revenue gap) nearly eliminated. • Key reform measures: o Revamped Distribution Sector Scheme (RDSS) o Late Payment Surcharge Rules • Continued reliance on State subsidies for viability. Value Addition • Feeder segregation enhances accountability and loss tracking. • Smart metering improves billing efficiency and demand management. • Political populism (free power promises) remains a structural risk. Key Definition • AT&C Losses: Aggregate Technical and Commercial losses due to theft, inefficiency, and billing gaps. Constitutional Provision • Concurrent List: Electricity is a shared responsibility of Centre and States. Conclusion DISCOM sustainability depends on tariff rationalisation, political discipline, and technology-driven governance. UPSC Relevance • GS-3: Infrastructure, power sector reforms