India’s Power Sector and DISCOM Reforms

Your home gets power from a company, not from the plant. That company is called a DISCOM. By 2015 many DISCOMs were deep in debt.

1.1 What does a DISCOM do?

A DISCOM is a distribution company. It buys power and sells it to homes, shops and farms. It sits at the last step of the chain.

Electricity is a concurrent subject. The Ministry of Power says distribution falls under each utility. The utility works under its State Government and State Electricity Regulatory Commission.

1.2 How deep was the hole in 2015?

The Union Cabinet approved UDAY on 5 November 2015. The release said DISCOMs had accumulated losses of about Rs 3.8 lakh crore. Their outstanding debt was about Rs 4.3 lakh crore as of March 2015.

Debt had grown from about Rs 2.4 lakh crore in 2011-12 to about Rs 4.3 lakh crore in 2014-15. Interest rates ran up to 14-15%.

1.3 What are AT&C losses?

AT&C stands for Aggregate Technical and Commercial losses. The draft National Electricity Policy 2026 asks states to cut technical losses and theft and to collect dues on time.

In 2015 the average AT&C loss was around 22%. The Cabinet release set a target of 15% by 2018-19.

UDAY stands for Ujwal DISCOM Assurance Yojana. It was a rescue plan for state-owned DISCOMs.

2.1 How did UDAY cut the debt?

States agreed to take over 75% of DISCOM debt as on 30 September 2015. They would take over 50% in 2015-16 and 25% in 2016-17.

This moved the debt from the DISCOM to the state. The release said it would cut the interest cost.

2.2 What did the DISCOMs promise in return?

The scheme aimed to cut the average AT&C loss from around 22% to 15%. It also aimed to close the gap between the average cost of supply and the average revenue realised by 2018-19.

States also agreed to fund a growing share of DISCOM losses. The share starts at 0% and rises through 5%, 10% and 25% to 50% of the previous year’s loss.

2.3 Is UDAY the same as an electricity connection scheme?

No. UDAY did not connect homes. It repaired the finances of the companies that supply them.

This is the point UPSC tested in 2016. The question asked what UDAY is for. The key is the financial turnaround and revival of power distribution companies.

The Centre also ran other schemes for the distribution network. Two of them have now closed.

3.1 What were IPDS and NSGM?

The Integrated Power Development Scheme (IPDS) was launched in December 2014. Works worth Rs 58,686 crore were executed under it. It covered IT systems, SCADA and smart meters. It closed in March 2022.

The National Smart Grid Mission (NSGM) was set up in 2015. It closed in March 2024.

The Revamped Distribution Sector Scheme (RDSS) is the current central scheme for DISCOMs. It pays for results, not just spending.

4.1 When did RDSS start and what does it cost?

The Government launched RDSS on 20 July 2021. The outlay is Rs 3,03,758 crore. The estimated central Gross Budgetary Support is Rs 97,631 crore.

The aim is better and more reliable supply through a financially sustainable and efficient distribution sector.

4.2 What are its targets?

RDSS aims to cut AT&C losses to pan-India levels of 12-15%. It also aims to remove the gap between the average cost of supply and the average revenue realised.

The scheme funds loss-reduction works and smart metering. Sanctioned works are worth Rs 1.53 lakh crore for loss reduction and Rs 1.31 lakh crore for smart metering.

4.3 When does RDSS end?

The Ministry of Power told the Lok Sabha that the sunset date for RDSS is 31 March 2028. Both answers are from March 2026.

Sanction is not the same as delivery. The latest replies give both numbers.

5.1 How many smart meters are installed?

The smart-metering sanction covers 19.79 crore consumer meters, 52.53 lakh distribution transformer meters and 2.05 lakh feeder meters. That totals 20.33 crore smart meters.

Till 3 August 2026, 5.73 crore had been installed under RDSS. Across all schemes, 7.24 crore were installed. Installation is well short of the sanction.

5.2 How much money has been released?

Rs 47,124 crore has been released under RDSS since FY2023. This includes Rs 2,733 crore for smart metering.

The scheme also trains DISCOM staff. Rs 100.9 crore was set aside, and 14,853 people have been trained.

The Government’s replies in August 2026 point to better supply and smaller losses. Read them as official claims.

6.1 Do homes get more hours of power?

The Minister of State for Power replied in the Rajya Sabha on 10 August 2026. Average supply in rural areas rose from 12.5 hours in FY14 to 22.6 hours in FY26. Urban supply rose from 22.1 hours to 23.4 hours.

An earlier reply, on 3 August 2026, used other year labels and gave urban supply as 23.6 hours. Check the year label before you quote these numbers.

6.2 Did losses fall and did DISCOMs earn a profit?

AT&C losses fell from 21.91% in FY21 to 15.04% in FY25. In FY25 DISCOMs together made a profit after tax of Rs 2,701 crore.

The Government said this is the first time since the Electricity Act, 2003 came into force.

6.3 Is more power being generated?

Total generation, including renewables, rose each year. It was 1,624.465 billion units in 2022-23. It was 1,739.091 BU in 2023-24 and 1,829.698 BU in 2024-25.

The Ministry table gives 1,847.913 BU for 2025-26, a rise of about 1%.

The Ministry of Power released a Draft National Electricity Policy 2026 for public consultation on 21 January 2026. Once final, it will replace the policy notified in 2005. It is still a draft.

7.1 How would tariffs change?

The draft says State Commissions must make tariffs fully reflect costs from FY 2026-27. They must not create regulatory assets. A regulatory asset is a cost the DISCOM is allowed to recover later.

Tariffs would be linked to an index for automatic annual revision when no tariff order is passed. Rises in power purchase cost would be passed to consumers every month. Stabilisation funds may smooth sharp swings. The PIB release of 10 August 2026 says tariffs should progressively reflect the cost of supply.

7.2 Who would pay less?

The draft says State Commissions should exempt manufacturing enterprises, Railways and Metro Railways from cross-subsidies and surcharges. It argues that high cross-subsidies raise industrial tariffs.

Cross-subsidies must come down step by step. No tariff should fall below 50% of the average cost of supply. States must aim for single-digit AT&C losses.

7.3 What are the demand targets?

The draft aims for per capita electricity consumption of 2,000 kWh by 2030. It aims for over 4,000 kWh by 2047. Consumption was 1,460 kWh in 2024-25.

Exam questions on this topic mix up the schemes and the dates. These pointers keep them apart.

8.1 How do UDAY and RDSS differ?

• UDAY (2015) moved DISCOM debt to the states. Its core step was a 75% debt takeover.
• RDSS (2021) gives central money for loss reduction and smart metering.
• RDSS runs to 31 March 2028. IPDS and NSGM have closed.

8.2 Which traps do examiners set?

• A draft policy is not law. The 2026 policy is still a draft.
• Sanctioned smart meters (20.33 crore) are not installed meters (5.73 crore under RDSS).
• UDAY is about DISCOM finances, not about connecting households.

What did CAPF ask in 2026?

CAPF (ACs) 2026 gave two statements. Generation rose over four years. Rural and urban availability rose over 12 years.

Both statements are correct. Section 6 gives the supply-hours and generation figures.

What did UPSC ask in 2016?

UPSC CSP 2016 Q7 asked what UDAY is for.

The right answer is the financial turnaround and revival of power distribution companies.

The other options name start-up aid, household electrification and a shift away from coal. UDAY does none of these.