In a major turnaround for India's energy sector, power distribution utilities across the country have collectively recorded a profit of ₹2,701 crore for the financial year 2024-25. This marks a significant shift after these utilities reported losses for many consecutive years.
A Historic Shift After Persistent Losses
The official statement from the Power Ministry highlights a dramatic reversal. Distribution utilities, often called discoms, had been consistently losing money for several years following the unbundling and corporatization of State Electricity Boards. The sector posted a substantial loss of ₹25,553 crore in FY24 and an even larger loss of ₹67,962 crore a decade earlier in FY14.
Minister Hails a New Chapter
Power Minister Manohar Lal commented on this positive development. He stated that the profit marks a new chapter for the distribution sector. Lal attributed this success to several proactive steps taken by the ministry to address the longstanding concerns of distribution companies.
"India is driving not only its own growth but also contributing to global growth, with the energy sector playing a pivotal role," the Minister said. He reaffirmed the government's commitment to implementing necessary reforms. The goal is to ensure the power sector can robustly support India's expanding economy and contribute meaningfully to the vision of a developed nation, Viksit Bharat.
Reforms Deliver Tangible Results
The ministry emphasized that the impact of reforms extends beyond just the profit after tax (PAT) figure. Other key performance indicators show marked improvement, signaling a broader transformation.
Reduction in Technical and Commercial Losses
A critical metric, the Aggregate Technical & Commercial (AT&C) losses, has shown a steady decline. These losses have reduced from 22.62 percent in the financial year 2013-14 to 15.04 percent in FY 2024-25. This reduction indicates better operational efficiency and reduced power theft.
Improved Cost Recovery
Another positive sign is the narrowing gap between the cost of supplying power and the revenue collected. The Average Cost of Supply–Average Revenue Realized (ACS–ARR) gap has shrunk dramatically. It has decreased from ₹0.78 per kilowatt-hour in FY14 to just ₹0.06 per kilowatt-hour in FY25. This shows discoms are recovering their costs much more effectively.
Key Policy Initiatives Driving Change
Specific policy interventions have been instrumental in this turnaround. The implementation of the Electricity (Late Payment Surcharge) Rules has led to a staggering 96 percent reduction in outstanding dues owed to power generating companies.
The outstanding dues plummeted from ₹1,39,947 crore in 2022 to a mere ₹4,927 crore by January 2026. Furthermore, payment cycles for distribution utilities have improved significantly. The cycle duration has been reduced from 178 days in FY21 to 113 days in FY25.
Revamped Distribution Sector Scheme (RDSS)
A flagship initiative, the Revamped Distribution Sector Scheme (RDSS), focuses on enhancing financial viability. It aims to achieve this through large-scale infrastructure modernization and the accelerated rollout of smart metering across the country.
Collaborative Efforts with States
Beyond policy frameworks, the central government has engaged extensively with states and union territories to push for reforms. These efforts included high-level discussions led by Power Minister Manohar Lal during the Regional Conferences of Energy Ministers in 2025. Key meetings were held in Gangtok, Mumbai, Bengaluru, Chandigarh, and Patna to align strategies and accelerate progress.
The collective profit for discoms in FY25 stands as a testament to these sustained and multi-pronged efforts to revitalize India's critical power distribution infrastructure.
