Over the past few years, India’s electricity distribution segment has witnessed increased policy attention aimed at addressing structural challenges and improving the performance of discoms. Recognising that the distribution segment forms the backbone of the power value chain, the government launched the Revamped Distribution Sector Scheme (RDSS) in 2021. Broadly, the scheme seeks to create a financially sustainable, operationally efficient and consumer-centric power distribution system.
With a total outlay of Rs 3,037.58 billion over a five-year period from 2021-22 to 2025-26, including government budgetary support (GBS) of Rs 976.31 billion, the RDSS links financial assistance to measurable performance outcomes. Under the scheme, funds are disbursed to discoms only upon their meeting specified targets and operational benchmarks. Notably, the government has proposed extending the scheme till 2028 to facilitate the complete roll-out of smart meters and ensure the timely completion of reforms that faced initial delays in implementation.
The scheme comprises two key components: Part A provides financial support for prepaid smart metering and system metering as well as the upgradation of distribution infrastructure. Part B focuses on training, capacity building and other supporting activities to enhance overall operational efficiency. These measures are directed towards three main objectives: reducing aggregate technical and commercial (AT&C) losses to 12-15 per cent, eliminating the gap between the average cost of supply (ACS) and the average revenue realised (ARR), and improving the overall quality and reliability of power supply for consumers.
Progress so far
So far, progress under the RDSS has been mixed, reflecting both notable improvements and persisting gaps. According to the Ministry of Power (MoP), a robust monitoring system has been put in place under the scheme. This includes weekly meetings with states and nodal agencies, an interministerial committee led by the power secretary, and power ministers’ conferences chaired by the union power minister with state power departments and discoms. These sustained monitoring efforts, coupled with ongoing reforms, have led to measurable financial improvements for utilities, with annual losses declining from Rs 446.14 billion in FY 2021 to Rs 255.53 billion in FY 2024. At the national level, AT&C losses have declined from 21.91 per cent to 16.28 per cent, while the ACS-ARR gap has reduced from Re 0.69 per kWh to Re 0.19 per kWh during the same period. Although challenges remain, these trends indicate the early gains achieved under the RDSS and other concurrent reform measures in the distribution segment.
Sanctions and disbursals
As per the RDSS portal (accessed on October 18, 2025), the total sanctioned cost under the scheme stands at Rs 2,831.82 billion. Of this, Rs 1,311.53 billion has been allocated for smart metering works, while Rs 1,520.29 billion is allocated for loss reduction works. The total GBS under the RDSS amounts to Rs 1,149.99 billion, with Rs 206.52 billion earmarked for smart metering and Rs 943.47 billion for loss reduction works. To date, Rs 291.94 billion of the GBS has been released, with Rs 14.08 billion for smart metering works and Rs 277.86 billion for loss reduction works.
The highest GBS so far has been sanctioned for Uttar Pradesh (Rs 158.9 billion), followed by Rajasthan (Rs 126.89 billion), Maharashtra (Rs 126.73 billion), Tamil Nadu (Rs 86.59 billion) and Madhya Pradesh (Rs 69.76 billion).
The MoP regularly monitors and reviews works sanctioned under the RDSS as well as the utilisation of funds. Notably, as per the Parliamentary Standing Committee on Energy’s Demand for Grants (2025-26) report, the actual expenditure under the scheme has been rising steadily since its inception. There has been a considerable increase in actual expenditure, from Rs 8.14 billion in 2021-22 to Rs 120.48 billion in 2024-25 (as of February 10, 2025). The budgetary allocation for the scheme has also expanded significantly, rising from Rs 75.66 billion in 2022-23 to Rs 125.85 billion in 2024-25. As per the ministry, in 2024-25, fund utilisation under the RDSS was 100 per cent, reflecting an acceleration in scheme implementation.
Loss reduction
There has been moderate progress under loss reduction initiatives, particularly in the installation of high tension (HT) lines, low tension (LT) lines and distribution transformers (DTs). As per the RDSS dashboard (accessed on October 18, 2025), the overall financial and physical progress under the loss reduction component stands at 29.85 per cent and 32.05 per cent respectively. State-wise, Telangana emerged as the frontrunner, achieving 100 per cent physical progress, followed by Goa (77.43 per cent), West Bengal (51.11 per cent) and Bihar (48.79 per cent).
In terms of individual components, a total of 1,054,172 ckt km of LT lines have been sanctioned, of which 934,721 ckt km has been awarded and 411,063 ckt km installed. Goa leads in this segment with 100.08 per cent installation progress. For HT lines, 866,570 ckt km has been sanctioned, 3,972,447 ckt km awarded and 201,376 ckt km installed, with Uttar Pradesh in the lead at 68.91 per cent physical progress. Further, under the DT segment, 590,369 units have been sanctioned, 512,409 units awarded and 133,974 units installed, with Bihar emerging as the leader at 93.26 per cent completion.
Smart metering
As per the RDSS portal (accessed on October 18, 2025), around 198 million smart consumer meters have been sanctioned, of which 122 million (62 per cent) have been awarded. Progress has been slower than expected, with only 29.3 million (15 per cent) installed and communicating smart meters so far. In addition, about 5.3 million DT meters have been sanctioned, with 4.9 million (93 per cent) awarded and 903,906 (17 per cent) installed and communicating. A total of 195,952 feeder meters have been sanctioned, of which 183,781 (94 per cent) have been awarded and 125,144 (64 per cent) installed and communicating.
Among states, Tamil Nadu, Uttar Pradesh and Maharashtra account for the highest number of sanctioned smart consumer meters. In terms of communicating consumer meters, the leading states are Maharashtra, Uttar Pradesh and Assam. These three states together contribute nearly 53 per cent of all communicating consumer meters across the country.
Key concerns
Despite progress, several underlying issues continue to impede the scheme’s implementation. The operational and financial losses of utilities stem from a combination of regulatory, financial and institutional factors. A key concern is the presence of non-cost-reflective tariffs, primarily due to the regulatory disallowance of certain expenses incurred by distribution utilities. These often include unrealised gains or losses recorded under other comprehensive income, which do not reflect actual operating costs and distort tariff determination. Another major issue is the persistent ACS-ARR gap due to the incomplete recovery of power purchase costs. This is largely attributed to delays in implementing the fuel and power purchase cost adjustment mechanism, which restricts the timely pass-through of expenses to consumers. Further, delayed subsidy payments from state governments continue to disrupt cash flows and strain discom finances. In addition, outstanding electricity bill dues from state government departments add to liquidity pressures and weaken utilities’ overall financial position.
Besides this, utilities face several challenges in implementing sanctioned infrastructure and smart meter projects. Delays in administrative approvals, including technical and financial evaluations, government clearances and agreement signing, have slowed sanctioned works and created uncertainties in project timelines. For smart meters, the newness of the technology has led to delays in tendering, setting up direct debit facilities, and testing and approval processes such as field installation checks and factory acceptance tests. As per industry reports, these execution delays could adversely impact project returns for advanced metering infrastructure service providers.
Additionally, smart meter roll-out has encountered resistance from consumers in some regions, particularly in areas where the shift to prepaid metering is being introduced. Financial and institutional capacity gaps further compound these problems. Several discoms remain under financial strain, limiting their ability to undertake large-scale capital-intensive projects in a timely manner. The sector is also grappling with a shortage of skilled manpower needed to manage new technologies and meet emerging cybersecurity and data protection requirements.
IT-OT integration
In recent years, IT-OT integration under the RDSS has emerged as a major focus area to leverage smart meter data for analytics-based decision-making. Under the RDSS, enterprise resource planning (ERP) implementation covers modules such as finance, supply chain, asset and inventory management, and energy audit. ERP works worth about Rs 18 billion are currently under way across several states, including Andhra Pradesh, Assam, Bihar, Gujarat and Haryana. Similarly, supervisory control and data acquisition (SCADA) projects totalling about Rs 26 billion are at various stages of execution in Bihar, Delhi, Gujarat, Haryana and Himachal Pradesh. GIS works are also progressing in Jharkhand, Uttarakhand and Uttar Pradesh to map network assets and enhance visibility of distribution infrastructure. Collectively, these initiatives are contributing to better outage management, real-time monitoring, asset tracking and network planning. However, while such digital systems mark significant progress, they continue to function largely in silos. To address this, efforts are now being directed towards developing unified data platforms and enabling automation through the India Energy Stack (IES) initiative, which seeks to facilitate seamless data exchange and interoperability across applications.
In line with the ongoing digitalisation efforts, the MoP established a steering committee and a sub-working group of domain experts in September 2025. These bodies have been tasked with developing standardised training modules and guidelines on advanced metering infrastructure, billing and prepaid analytics, outage and tamper events, reliability indices, theft detection, automatic energy accounting, demand forecasting, consumer grievance analytics, and cybersecurity. The initiative is expected to help discoms make more effective use of smart meter data for operational and planning decisions.
To support this, the MoP has also rolled out several training programmes on smart metering, IT/OT technologies and data analytics. Initiatives such as the “Digital Utility Manager” programme and senior management courses on digitalisation and analytics at IIMs are enabling capacity scale-up within discoms. Additionally, a national SCADA resource centre is being established by the Power Finance Corporation at the National Power Training Institute to provide simulator-based training on automation and control systems.
Outlook
With the RDSS now progressing to an advanced stage of implementation, the MoP is focusing on consolidating reforms and sustaining momentum. Over the next 6-12 months, a mid-term evaluation of the scheme is planned to take stock of progress across states, identify challenges and fine-tune operational strategies. The immediate focus areas include strengthening cybersecurity and interoperability standards, optimising fund utilisation, and improving monitoring and reporting processes through digital platforms such as the RDSS portal and the National Feeder Monitoring System. Discoms, in turn, are expected to make greater use of smart meter data for analytics-based planning, while gradually integrating their digital systems with the IES to enable better coordination and operational efficiency.
Recognising the scale of work still under way, the MoP has sought a two-year extension of the scheme till 2027-28 to ensure the timely completion of ongoing initiatives. The next phase of the scheme will continue to build on the existing framework, focusing on network modernisation, substation upgradation, transmission strengthening and underground cabling. It is also expected to place stronger emphasis on automation, digitalisation and consumer-centric service delivery to enhance reliability and efficiency in power distribution. Going forward, these collective efforts are expected to contribute to the modernisation of the distribution sector and enable the RDSS to achieve its targets within the extended timeline.
