Prime Highlight
- Power distribution companies in India posted a combined profit of over ₹2,700 crore in FY25, marking a sharp turnaround from large losses a year earlier.
- The recovery was driven mainly by improved performance at state-run discoms, supported by government-led reforms and better subsidy management.
Key Facts
- The sector recorded losses of ₹25,553 crore in FY24, highlighting the scale of improvement in FY25.
- Aggregate technical and commercial (AT&C) losses fell to 15% in FY25 from 22.6% in 2013–14, reflecting gains in efficiency and bill collection.
Background
Power distribution companies in India, including both public and private players, have reported a sharp turnaround in their financial performance, posting a combined profit of more than ₹2,700 crore in the 2024–25 financial year, the government said on Sunday. This marks a major improvement from the losses of ₹25,553 crore recorded in the previous year.
Officials from the power ministry said the improvement was mainly driven by stronger performance from state-run power distribution companies. Private sector discoms have remained profitable for the last three financial years, and their earnings rose further in FY25. The return to profit across the sector reflects a sharp fall in losses at government-owned utilities, a senior ministry official said.
The Centre attributed the improvement to a series of reforms, including infrastructure upgrades, faster rollout of smart meters and more balanced tariff structures. Transparent accounting of subsidies also played a key role. Officials said timely budget support for subsidies is critical, especially as many states offer free or subsidised electricity to consumers.
The government also highlighted other steps, such as uniform accounting practices, better financial transparency, and timely payments under power purchase agreements. Linking states’ borrowing limits to reform performance under the additional borrowing scheme helped push states to improve governance, the ministry said.
These measures have also improved operational efficiency. Aggregate technical and commercial (AT&C) losses declined from 22.6 per cent in 2013–14 to 15 per cent in 2024–25. People and companies paid most of their electricity bills, so dues to power companies dropped 96%, from ₹1.4 lakh crore in 2022 to ₹4,927 crore by January 2026. Payment cycles also improved, dropping to 113 days in FY25.
Experts said the shift signals a bigger structural change. PwC India partner Sambitosh Mohapatra said better billing efficiency, tighter subsidy discipline, and selective tariff reforms have helped some state discoms return to profit. However, challenges remain. Discoms had accumulated losses of ₹6.8 lakh crore by FY23, while regulatory assets exceeded ₹3 lakh crore in several large states.
Deloitte India partner Anujwsh Dwivedi said resolving the heavy debt burden of state-owned discoms remains the sector’s biggest long-term challenge.