Lok Sabha Question No. 927 (UNSTARRED), answered on 2026-02-05
Subject: Financial Losses of DISCOMs
Ministry: POWER
Asked by: Dr. Anand Kumar

## GOVERNMENT OF INDIA MINISTRY OF POWER

## LOK SABHA UNSTARRED QUESTION NO.927 ANSWERED ON 05.02.2026

## FINANCIAL LOSSES OF DISCOMs

†927.  DR. ANAND KUMAR:

Will the Minister of POWER be pleased to state:

- (a) whether  the  Ministry  of  Power  has  recently  issued  notices  to  the  Power Distribution  Companies  (DISCOMs)  of  Uttar  Pradesh,  Andhra  Pradesh,  Madhya Pradesh, Maharashtra, Rajasthan and Tamil Nadu regarding reducing their financial losses failing which they would face privatization;
- (b) if so, the current status of the financial losses of these DISCOMs;
- (c) whether the Ministry is planning to restrict central financial assistance to the DISCOMs in these States if they do not adopt measures such as selling twenty six per cent  equity,  transferring  complete  management  control,  or  listing  on  the  stock exchange with an 'A' rating; and
- (d) if so, the steps being taken by the Ministry to prevent any potential increase in electricity  tarrifs  or  deterioration  in  service  quality  as  a  result  of  these  reforms, particularly for farmers and low-income consumers in Uttar Pradesh so that electricity does not become more expensive and services are not disrupted?

## A N S W E R

## THE MINISTER OF STATE IN THE MINISTRY OF POWER

(SHRI SHRIPAD NAIK)

(a)  to  (c)  :  Electricity  is  a  concurrent  subject  and  power  distribution  is  handled  by distribution utilities that function under the administrative control of their respective State Government and regulations of respective Electricity Regulatory Commission (ERC). Hence, privatization of State DISCOMs does not come under the purview of Central Government.

Under the Electricity Act 2003, distribution utilities have a duty to maintain an efficient, coordinated, and economical distribution system. Further, any inefficiency in  this  segment has a cascading impact on the whole value chain, disrupting their operations and adversely affecting financial viability.

The states of Andhra Pradesh, Madhya Pradesh, Maharashtra, Rajasthan, Tamil Nadu, and Uttar Pradesh account for a very large share (48%) of national electricity consumption. However, financial stress is also concentrated in these States and they account  for  69%  of  total  accumulated  loss  and  66%  of  total  outstanding  debt  of distribution utilities. Details of financial losses of State Distribution Utilities of these for FY 2024-25 are attached at Annexure.

The Sixteenth Finance Commission has noted that as public entities, DISCOMs lack  the  necessary  incentive  to  achieve  a  high  degree  of  efficiency  in  plugging leakages through technical losses, theft, under-billing,  and  under-collection.  It  has recommended  that  the  first-best  solution  to  the  problem  is  the  privatization  of DISCOMs. Alternatively, if a solution is sought within the public ownership framework, the States of Gujarat and Haryana provide two examples that are worth emulating.

(d) :    Government of India has been supporting the distribution utilities to improve their financial viability through various initiatives. Some of the key initiatives taken are as under:

- i. RDSS  has  been  launched  with  the  objective  of  improving  the  quality  and reliability of power through a financially sustainable and operationally efficient distribution sector. The release of funds under the scheme is linked to States/ distribution utilities taking necessary measures to improve their performance.
- ii. Additional borrowing space of 0.5% of GSDP to State Governments, which is conditional on them undertaking specific reforms in the power sector.
- iii. Additional  Prudential  Norms  for  sanctioning  of  loans  to  State  owned  power utilities are contingent to the performance of power distribution utilities against prescribed conditions.
- iv. Rules  for  implementation  of  Fuel  and  Power  Purchase  Costs  Adjustment (FPPCA) and cost reflective tariff so as to ensure that all prudent cost for supply of electricity are passed through.
- v. Rules and Standard Operating Procedure have been issued for proper subsidy accounting and their timely payment.

As  a  result  of  the  concerted  efforts  of  the  Ministry  of  Power,  the  State Governments and distribution utilities, Aggregate Technical and Commercial (AT&C) Losses have reduced from 21.91% in FY21 to 15.04% FY25. Reduction in AT&C losses improves the finances of the utilities, which will enable them to better maintain the system and buy power as per requirements, thus benefitting the consumers.

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ANNEXURE ANNEXURE  REFERRED  IN  REPLY  TO  PARTS  (a)  TO  (c)  OF  UNSTARRED QUESTION NO. 927 ANSWERED IN THE LOK SABHA ON 05.02.2026 *************

| 2024-25        | 2024-25                                   | 2024-25                               |
|----------------|-------------------------------------------|---------------------------------------|
| State          | Profit/ (Loss) After Tax (PAT) (Rs crore) | Accumulated Surplus/(Loss) (Rs crore) |
| Andhra Pradesh | 190                                       | (29,420)                              |
| Madhya Pradesh | (2,561)                                   | (71,394)                              |
| Maharashtra    | 1,292                                     | (35,671)                              |
| Rajasthan      | 1,262                                     | (90,303)                              |
| Tamil Nadu     | 2,073                                     | (1,19,153)                            |
| Uttar Pradesh  | (10,796)                                  | (1,00,858)                            |
| National       | 2,701                                     | (6,47,210)                            |

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