The power distribution segment continues to remain under severe financial stress, burdened with cumulative losses exceeding Rs 7 trillion. In recent months, several policy overhauls have been proposed to revive the sector, which has long been plagued by deep-rooted structural challenges.
In early October 2025, the Ministry of Power released the draft Electricity (Amendment) Bill, 2025, focusing primarily on distribution reforms. The bill seeks to pave the way for the privatisation of discom operations by allowing distribution licensees to supply power through their own or shared networks.
It also lays strong emphasis on cost-reflective tariff determination. To ensure timely implementation, the bill empowers state commissions to determine tariffs suo motu in case of delays.
Further, the central government is reportedly considering a bailout package of over Rs 1 trillion (around $12 billion) for state-owned discoms. The financial support, however, will be conditional on states undertaking structural reforms, such as partial or full privatisation of their utilities or listing them on stock exchanges.
While the proposed privatisation of the distribution sector is a welcome step, it is essential to ensure genuine competition and avoid cherry-picking or selective privatisation. Structural measures, such as the separation of carriage and content, could foster greater competition by allowing multiple suppliers to use the same network, giving consumers the freedom to choose their electricity provider. Equally crucial are tariff reforms, timely subsidy disbursal and transparent financial accounting.
There is also a pressing need to enhance operational efficiency and reduce network losses through wider technology deployment. On this front, the smart metering programme has gained significant momentum in recent years, with over 43 million smart consumer meters installed across the country so far. Overall, the distribution segment continues to warrant focused attention, and the recent policy proposals mark an important step towards a holistic overhaul of this ailing segment. Power Line will be closely tracking these developments in the coming months.