Behind the transformation of power distribution sector

India’s power distribution companies (discoms), once the weakest link in the country’s electricity system, achieved a historic milestone — they recently posted a profit of ₹2,701 crore in FY 2024-25.

- Shehzad Poonawalla

This was the first time since Independence that discoms had such a showing. Just a year earlier, they were ₹25,553 crore in the red, and losses stood at a staggering ₹67,962 crore in FY 2013-14.

How has this remarkable turnaround come about? It results from sustained, targeted reforms by the Narendra Modi-led government, routed through the ministry of power. These interventions addressed entrenched problems such as delayed payments, cost mismatches, high losses, and poor metering, creating interlocking improvements across the sector.

Two core metrics highlight the progress: The first is the dramatic narrowing of the “cost-recovery gap” — from a loss of ₹0.78 per unit in FY 2013-14 to just ₹0.06 per unit in FY 2024-25.

The second is the significant reduction in aggregate technical and commercial (AT&C) losses — from 22.62% in FY 2013-14 to 15.04% in FY 2024-25.