The Indian government launched the Revamped Distribution Sector Scheme (RDSS) with the objective of enhancing the operational efficiency and financial sustainability of discoms. The scheme provides result-linked financial assistance to discoms, and is contingent upon meeting predefined eligibility criteria and achieving basic minimum benchmarks. It entails an outlay of approximately Rs 3.04 trillion over a five-year period, from 2021-22 to 2025-26. Physical infrastructure upgrades under the RDSS have accelerated across key states, focusing on replacing ageing assets, deploying feeders, installing automation systems and developing digital substations. Over 200,000 ckt km of lines and 300,000 transformers are being modernised, and feeder metering has reached 98 per cent coverage nationally.
Progress so far
Sanctions and disbursal
As per the RDSS portal (accessed on June 24, 2025), the total sanctioned cost under the RDSS stands at Rs 2,814.39 billion. Of this, the total gross budgetary support (GBS) committed is Rs 1,158.1 billion, while the GBS released so far stands at Rs 229.48 billion. For smart metering projects under the scheme, the sanctioned cost is Rs 1,306.39 billion. The GBS sanctioned for these projects is Rs 241.23 billion, out of which Rs 4.95 billion has been released. Meanwhile, the loss reduction component of the RDSS has a sanctioned cost of Rs 1,483.69 billion, with a GBS of Rs 224.53 billion, which has been fully sanctioned and released.
Loss reduction
The RDSS has made notable progress under its loss reduction initiatives, particularly in the installation of low tension (LT) lines, high tension (HT) lines and distribution transformers (DTs), although significant work remains to be done to achieve full implementation. For LT lines, a total of 1,029,591 ckt km has been sanctioned, with 88.2 per cent awarded and 37.6 per cent installed. In the case of HT lines, 852,316 ckt km has been sanctioned, with 71.52 per cent awarded and 22.17 per cent installed. For DT installations, 575,981 units have been sanctioned, with 85 per cent (490,527) awarded and 18.42 per cent (106,109) installed. Under loss reduction, the financial and physical progress stands at 24.82 per cent and 28.82 per cent respectively.
Smart metering
As per the RDSS portal, approximately 198 million smart consumer meters, 5.25 million DT meters and 1.95 million feeder meters have been sanctioned across participating states. Of these, over 115 million consumer smart meters, representing 58.11 per cent of the sanctioned quantity, have been awarded. In comparison, about 4.8 million DT meters (91.45 per cent of the sanctioned) and 172,017 feeder meters (87.8 per cent of the sanctioned) have been awarded.
In terms of active communication, 20,022,238 consumer meters, 620,805 DT meters and 116,545 feeder meters are currently transmitting data. Under the smart metering component of the RDSS, the financial progress stands at 2.05 per cent, while physical progress is at 10.21 per cent.
Key priorities under the RDSS
During a series of regional review conferences and state visits, the Ministry of Power (MoP) urged states and union territories (UTs) to accelerate the implementation of the RDSS, focusing on infrastructure upgrades and prepaid smart metering. Emphasis has been laid on the timely settlement of government department dues and subsidies, which remain a pressing challenge impacting the financial health of discoms. States have been directed to ensure the saturation of prepaid smart meters in all government establishments, including colonies, by August 2025, and to complete installation for commercial, industrial and high-load consumers by November 2025. The MoP has also stressed the need to resolve operational bottlenecks, such as right-of-way issues, and to adopt compensation mechanisms to fast-track transmission projects.
The MoP plans to expedite the annual evaluation process under the RDSS to ensure timely and efficient fund disbursals by closely monitoring performance quality and result evaluation framework parameters across states. To build momentum, early achievements under the programme will be showcased through impact assessments, sharing best practices and success stories to promote wider adoption. Special attention will be given to supporting lagging states via handholding initiatives such as workshops and field visits. Technology will play a pivotal role in accelerating progress, with platforms such as the RDSS portal and the National Feeder Monitoring System leveraged for streamlined data collection, monitoring, evaluation, gap analysis and document verification.
RDSS 2.0
While the current RDSS largely focuses on distribution system upgrades and smart metering, there is a growing case for an extended and enhanced version – RDSS 2.0 – which could bridge critical infrastructure and technology gaps. The proposed extension aims to unlock the full potential of smart meters and facilitate broader, sector-wide improvements. RDSS 2.0 is expected to prioritise modernisation and system augmentation, including the upgrade of substations, transmission infrastructure, underground cabling and other assets not currently covered under the existing framework. It would also incorporate advanced technologies such as artificial intelligence and machine learning to improve load forecasting, peak load management and demand response optimisation.
Another key area of focus would be promoting consumer-centric solutions by enabling smart home technologies, efficient appliances and intelligent energy consumption tools. The scheme could also facilitate peer-to-peer energy trading through smart meter integration, supporting decentralised transactions and greater consumer participation. Strengthening core distribution infrastructure to meet rising power demand would be a foundational element of RDSS 2.0.
Given the persistent operational and financial challenges in the sector, continued modernisation of the distribution network is essential, particularly to accommodate growing automation needs, large-scale renewable energy integration and electric vehicle infrastructure. In this context, rolling out a comprehensive RDSS 2.0 would serve the long-term interests of the power sector and the nation, enhancing the scheme’s effectiveness, sustainability and resilience.
The way forward
With the RDSS scheme currently set to conclude by 2025-26, an extension appears imminent. In its response to the Standing Committee on Energy, the MoP indicated plans to seek a two-year extension, citing the substantial work still pending, particularly the roll-out of smart meters, which alone is expected to require at least two more years. Despite initial delays in project award and implementation, which hindered early budget utilisation, the ministry affirmed that the pace of physical progress has now picked up, paving the way for improved fund absorption moving forward.
The committee, however, expressed concern over the continuing financial stress in the distribution segment, with discoms’ accumulated losses rising from Rs 5.45 trillion in 2021-22 to Rs 6.92 trillion in 2023-24. Key operational inefficiencies persist, including suboptimal billing and collection performance, as well as a sustained gap between the average cost of supply and average revenue realised.
As a reform-linked, results-based initiative, the RDSS mandates that most of the funds be disbursed only upon meeting predefined annual evaluation criteria and demonstrating tangible progress. To ensure timely execution, the MoP is actively engaging with state governments and discoms through regular coordination meetings and review forums, with a strong focus on expediting tendering, project awards and smart meter deployment. An extension of the RDSS would be crucial to realising its full potential and ensuring the long-term financial and operational sustainability of India’s power distribution sector.
Aastha Sharma
