As the energy transition accelerates and power demand surges, India’s power distribution sector is undergoing rapid transformation. Utilities are gearing up to integrate rising renewable energy, enable the electrification of transport, and
ensure reliable and affordable power supply. The coming years will be transformational for discom operations and business models.
However, the operational and financial performance of state utilities continues to be an area of concern. According to the latest Power Finance Corporation report on the performance of state utilities, AT&C losses worsened from 15.36 per
cent in 2022-23 to 16.12 per cent in 2023-24. During the same period, outstanding debt increased from Rs 6.72 trillion to Rs 7.53 trillion, while accumulated losses rose from Rs 6.59 trillion to Rs 6.92 trillion.
Currently, the government’s flagship Revamped Distribution Sector Scheme (RDSS) is at the centre of reform initiatives in the segment. The scheme aims to reduce AT&C losses to 12-15 per cent and eliminate the ACS-ARR gap by 2024-25.
Smart metering has been one of its most significant interventions. Over 32 million smart meters had been installed by mid-June 2025, with 14.7 million added in the past year alone. However, progress remains uneven across states, and the target of replacing 250 million meters by 2025 appears increasingly ambitious.
In this context, the proposal for RDSS 2.0 is timely. The next phase of reforms must build on the current gains while addressing gaps in technology, resilience and execution. Priorities such as AI-based load forecasting and advanced substation automation will be critical for creating a future-ready distribution system.
Alongside, a broader set of reform measures is being actively discussed. These include the public listing of profit-making discoms and utilities, separating technical and commercial losses for more precise intervention, and a renewed
push for privatisation of discoms in select states and union territories.
This edition of Power Line’s In Focus section examines the key recent developments in the distribution segment, emerging trends, persistent challenges and the road ahead.