India's power distribution utilities (DISCOMs) have reported a positive Profit After Tax of Rs 2,701 crore in FY 2024-25, a major turnaround after years of consistent losses, credited to significant government reforms and policies.
The country's power distribution utilities (DISCOMs and power departments) have collectively recorded a positive Profit After Tax (PAT) of Rs 2,701 crore in the financial year 2024-25, marking a significant turning point for the sector.
The distribution utilities as a whole have been reporting PAT losses for the past several years since the unbundling and corporatisation of State Electricity Boards. As per the Ministry of Power, "The positive PAT of Rs 2,701 crore returned in FY 2024-25 compares to a loss of Rs 25,553 crore in FY 2023-24 and a loss of Rs 67,962 crore in FY 2013-14."
Government Credits Reforms for Turnaround
While commenting on this, Manohar Lal, Union Minister of Power, said that this marks a new chapter for the distribution sector and is the result of several steps taken to address its concerns. The Minister said this achievement was possible due to the leadership and vision of Prime Minister Narendra Modi, captured in his words that "India is driving not only its growth but also the growth of the world, with the energy sector playing a significant role in this."
Manohar Lal said the government is committed to the required reforms in the sector so that the power sector can support our growing economy and play its part in the journey towards Viksit Bharat.
Key Reforms Driving Financial Viability
Some of the transformative initiatives in the distribution sector include the Revamped Distribution Sector Scheme (RDSS), which enhances financial viability through infrastructure modernisation and accelerated smart metering. One of the initiatives is the introduction of additional prudential norms linking access to finance for power sector utilities to performance benchmarks, thereby promoting fiscal and operational discipline.
There have been amendments to electricity rules, enforcing timely cost adjustments, prudent tariff structures, and transparent subsidy accounting to ensure full cost recovery. According to the Electricity Distribution (Accounts and Additional Disclosure) Rules, 2025, there has been an introduction of a uniform accounting and enhanced transparency across Distribution utilities for improved financial governance.
According to the Late Payment Surcharge Rules, legal contracts have been enforced through timely payments in the power sector, thereby supporting investment in new RE projects. There have been incentives for states to implement critical power sector reforms, with borrowing limits tied to performance metrics under the Additional Borrowing Scheme.
Positive Outcomes and Reduced Losses
"The result of these reforms is evident not just in the positive PAT posted by the Distribution Utilities after so many years, but also in other performance indicators," the Ministry of Power added. The Aggregate Technical & Commercial (AT&C) losses have reduced over the years, signalling a transformation.
The AT&C losses have reduced from 22.62 per cent in FY 2013-14 to 15.04 per cent in FY 2024-25. Further, signalling much improved cost recovery, the Average Cost of Supply-Average Revenue Realised (ACS-ARR) gap has narrowed from Rs 0.78/kWh in FY 2013-14 to Rs 0.06/kWh in FY 2024-25.
Reforms such as the Electricity (Late Payment Surcharge) Rules have led to a 96 per cent reduction in outstanding dues to generating companies, from Rs 1,39,947 crore in 2022 to just Rs 4,927 crore by January 2026, while bringing down distribution utility payment cycles from 178 days in FY 2020-21 to 113 days in FY 2024-25," the Ministry added.
Ongoing Efforts to Sustain Momentum
The Ministry of Power has put in concerted efforts over the past decade to improve the performance of distribution utilities across the country. In addition to the different policy initiatives, extensive engagements with States and UTs have emphasised reforms in the distribution sector.
These include discussions led by Manohar Lal, Union Power Minister, during the Regional Conferences of Energy Ministers of States/UTs in 2025: Gangtok (Northeastern Region), Mumbai (Western Region), Bengaluru (Southern Region), Chandigarh (Northern Region), and Patna (Eastern Region). Regular interactions and reviews have played an important role in DISCOMs accomplishing this remarkable turnaround.
This momentum is expected to be sustained as a result of the deliberations underway in the Group of Ministers, constituted by S Manohar Lal under the chairmanship of Union Minister of State for Power and New & Renewable Energy, Shripad Naik, on improving the financial viability of the DISCOMs. (ANI)
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