Lok Sabha Question No. 4535 (UNSTARRED), answered on 2025-03-27
Subject: Reforms in Power Sector
Ministry: POWER
Asked by: Shri Eatala Rajender, Smt. D K Aruna

## GOVERNMENT OF INDIA MINISTRY OF POWER

## LOK SABHA UNSTARRED QUESTION NO.4535 ANSWERED ON 27.03.2025

## REFORMS IN POWER SECTOR

4535.  SMT. D K ARUNA:

SHRI EATALA RAJENDER:

Will the Minister of POWER be pleased to state:

- (a) whether the Government is working on the power sector reforms in consultation with States and would incentivize electricity distribution reforms and augmentation of intra-state transmission capacity by States and if so, the details thereof;
- (b) whether  the  Government  would  improve  the  financial  health  and  capacity  of electricity  companies  and  also  additional  borrowing  of  0.5  per  cent  of  Gross  State Domestic Product would be allowed to States contingent on these reforms; and
- (c) if so, the details thereof and the progress made along with the funds sanctioned and utilized, district and State-wise including Telangana?

## A N S W E R

## THE MINISTER OF STATE IN THE MINISTRY OF POWER

(SHRI SHRIPAD NAIK)

- (a) : Government  of  India  (GoI)  has  been  supplementing  the  efforts  of  States/ distribution  utilities  through  various  reform  measures  with  the  objective  of  having  a financially viable and sustainable power sector (distribution segment in particular).

In line with the recommendation of the Fifteenth Finance Commission (15 th  FC), GoI  launched  the  scheme  of  allowing  additional  borrowing  space  of  0.50  per  cent  of Gross State Domestic product (GSDP) to States for a four-year period from FY 2021-22 to FY 2024-25, conditional on them undertaking financial and operational reform measures. Key reforms undertaken by the participating States under the scheme are as follows:

- i. Publication of audited annual & quarterly financial accounts.
- ii. Non-creation  of  Regulatory  Assets  (or  uncovered  losses  or  any  other  similar provisions).
- iii. Tariff subsidy accounting and payment as per Section 65 of the Electricity Act, 2003.
- iv. Subsidy disbursal by State Govt. against loss incurred by distribution utilities in graded manner.
- v. Issuance of tariff & true-up orders.
- vi. Preparation and submission of Energy Accounts to Ministry of Power.

Other  initiatives  taken  to  improve  financial  and  operational  efficiencies  of  the distribution utilities:

- i. Revamped Distribution Sector Scheme (RDSS): Government of India launched the scheme in 2021 to help Distribution Utilities improve quality of supply of power through operational efficient and financial viable distribution sector. The scheme is  designed  to  nudge  the  States/UTs  and  their  utilities  to  undertake  necessary reforms for desired results. Based on performance of the utility against various parameters, the funds are released under the scheme.
- ii. Late Payment Surcharge Rules notified in 2022: Since the implementation of the Rules, the total legacy dues of Central Sector utilities have reduced from around Rs. 1.4 lakh crores in Jun'22 to around Rs. 18,857 crores in March'25. The current dues  are  also,  generally,  being  paid  regularly.  This  has  helped  reduce  late payment surcharges levied on Utilities.
- iii. Effective Subsidy Accounting: Rules and Standard Operating Procedure issued for proper Subsidy Accounting and their timely payment.
- iv. Tariff  Rationalization  &  Automatic  Fuel  Cost  Pass-Through:  To  ensure  that  all prudent cost for supply of electricity is passed through, rules have been notified.
- v. The Electricity Distribution (Accounts and Additional Disclosure) Rules, 2024, to improve transparency in accounting.
- vi. Additional prudential norms for lending by Power Finance Corporation Limited and REC Limited.

(b) : Owing to the positive impact of the scheme and its scheduled completion by FY 25, the need for its continuation and scale-up has been recognized in the Union Budget, FY 26. The scheme of allowing additional borrowing to States has been extended so as to incentivise the States for adoption of electricity distribution reforms and augmentation of intra-state transmission capacity.

- (c) : The funds  are  not  sanctioned  under  the  scheme  but  based  on  GoI  allowing  for additional borrowing space of 0.5% of GSDP, the States raise necessary borrowing so as to meet their financial requirements.

Details of additional borrowing allowed under the scheme as on 24.03.25 are as under:

| Sl.   | Name of the State   | Amount (in Rs. Cr)   | Amount (in Rs. Cr)   | Amount (in Rs. Cr)   | Amount (in Rs. Cr)   |
|-------|---------------------|----------------------|----------------------|----------------------|----------------------|
| No.   |                     | 2021-22              | 2022-23              | 2023-24              | 2024-25              |
| 1     | Andhra Pradesh      | 3,716                | 5,858                | 6,709                | 7,986                |
| 2     | Assam               | 1,886                | 2,473                | 2,702                | -                    |
| 3     | Himachal Pradesh    | 251                  | -                    | -                    | -                    |
| 4     | Kerala              | 4,060                | 4,263                | 4,866                | 6149                 |
| 5     | Manipur             | 180                  | -                    | 213                  | -                    |
| 6     | Meghalaya           | 192                  | -                    | -                    | -                    |
| 7     | Odisha              | 2,725                | -                    | -                    | -                    |
| 8     | Punjab              | -                    | -                    | -                    | 1976                 |
| 9     | Rajasthan           | 5,186                | 6,122                | 7,996                | 7,088                |
| 10    | Sikkim              | 191                  | 170                  | 156                  | -                    |
| 11    | Tamil Nadu          | 7,054                | 5,775                | 9,656                | -                    |
| 12    | Uttar Pradesh       | 6,823                | -                    | -                    | -                    |
| 13    | West Bengal         | 6,911                | 8,352                | 7,276                | -                    |
|       | Total               | 39,175               | 33,013               | 39,574               | 23199                |

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