Sp issue on 16th Fin Commission-wl-5005-Electricity Distribution Companies: Present Challenges and Shaping Future Opportunities

This working paper highlights the financial challenges of state-owned electricity distribution companies which supply about 80% of power in India. It also presents the fiscal implications of rising losses and subsidies, especially given the magnitude of state government support provided to these companies. The main thrust of this piece is on how technological advancements and market structure changes will further adversely impact DISCOMs’ business unless timely actions are taken. Such impacts will increase the dependence of DISCOMs on fiscal support, thereby intensifying the public finance challenge. The paper also highlights changes that must be made to the role of DISCOMs to help them adapt to the future energy landscape. The aim of such changes is to ensure DISCOM viability, ease the burden on the state exchequer, and protect small consumers who rely on publicly owned DISCOMs for their electricity needs