India’s power distribution sector has recorded a landmark financial turnaround, with state-run DISCOMs and power departments collectively posting a positive profit after tax (PAT) of ₹2,701 crore in FY 2024-25.
This marks the first time in over a decade that the sector has returned to profitability following years of sustained losses after the unbundling of State Electricity Boards.
The FY25 profit represents a sharp reversal from a PAT loss of ₹25,553 crore in FY24 and ₹67,962 crore in FY14.
According to the Ministry of Power, the improvement reflects structural reforms aimed at restoring financial discipline, improving billing efficiency and ensuring cost recovery across distribution utilities.
As per PIB, Union Power Minister Manohar Lal said the achievement marked “a new chapter for the distribution sector” and was the result of sustained corrective measures. He attributed the progress, stating, “India is driving not only its growth but also the growth of the world, with the energy sector playing a significant role in this.”
The turnaround has been supported by a series of policy and regulatory initiatives. Key among them is the Revamped Distribution Sector Scheme (RDSS), which focuses on infrastructure modernisation, loss reduction and accelerated smart meter deployment.
Additional prudential norms have linked access to financing with performance benchmarks, reinforcing fiscal and operational discipline.
Regulatory amendments to electricity rules have strengthened tariff rationalisation, ensured timely cost pass-throughs and improved transparency in subsidy accounting.
The introduction of the Electricity Distribution (Accounts and Additional Disclosure) Rules, 2025 has further standardised accounting practices across utilities, improving financial governance and disclosures.
The impact of these reforms is visible in operational indicators. Aggregate Technical and Commercial (AT&C) losses have declined from 22.62% in FY14 to 15.04% in FY25.
The Average Cost of Supply-Average Revenue Realised (ACS-ARR) gap has narrowed sharply from ₹0.78 per unit to ₹0.06 per unit over the same period, indicating near-complete cost recovery.
Payment discipline has also improved materially. Outstanding dues to power generators have fallen by 96% from ₹1.39 trillion in 2022 to ₹4,927 crore by January 2026, while average payment cycles have reduced from 178 days in FY21 to 113 days in FY25.
The Ministry of Power said sustained engagement with states and Union Territories played a critical role in the sector’s recovery.
Regional energy minister conferences held across Gangtok, Mumbai, Bengaluru, Chandigarh and Patna in 2025 helped align reform priorities and accelerate implementation.
Momentum is expected to continue, with a Group of Ministers constituted under Union Minister of State for Power and New & Renewable Energy Shripad Naik currently deliberating on further measures to strengthen the financial viability of DISCOMs.
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After more than a decade of financial stress, India’s power distribution sector has delivered a decisive turnaround in FY25. With losses shrinking, payment discipline improving and reforms deepening, DISCOMs are increasingly positioned to support the country’s economic growth and energy transition agenda.
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Published on: Jan 19, 2026, 12:15 PM IST
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