Critical Analysis of Indian Electric Distribution Utilities Using DEA with Sensitivity Analysis

India is presently the world’s fifth-largest economy and is also one of the fastest-growing. This rapid growth trajectory positions India on track to become the third-largest economy globally by 2030. Electricity is a critical component of the nation’s economic and human development, whose growth is directly or indirectly dependent on the growth of other sectors. Currently. India is the third-largest electricity producer in the world after China and the United States. However, its per capita electricity consumption is relatively low, ranking around 106th globally. This indicates that while India generates a significant amount of electricity, the consumption per person is still modest. The development of the electricity sector in India has occurred in multiple stages, with significant legislative changes implemented in 1991, 1998, 2003 and 2020 in which it aimed to modernize and improve various aspects of the sector, including generation, transmission, and distribution. Though, there have been notable challenges persisting with poor performance, especially in the distribution segment. Owing to this, in the present manuscript, investigations are focused on fifty-five distribution utilities that provide electricity to a significant portion of India’s population across twenty-eight states. In this study, evaluation of the relative performance efficiencies and classification of fifty-five Indian Electric Distribution Utilities (IEDUs) is performed. For this, Data Envelopment Analysis is employed to analyze and identify the underlying reasons for the deficiencies in sector performance. The Charnes-Cooper-Rhodes (CCR) and Banker-Charnes-Cooper (BCC) models have been employed, and overall and pure technical efficiencies have been computed and compared the inefficient with efficient IEDUs for the period of 2016–2019. The outcome specifies performance efficiency scores and classification of IEDUs as decision-making units (DMUs) by sensitivity analysis. The sensitivity analysis reveals that 40 out of 55 DMUs, i.e., 72.72%, come under the category of significantly inefficient and distinctly inefficient with a base technical efficiency score of less than 90%.