The Revamped Distribution Sector Scheme (RDSS), with a massive investment of Rs 3 trillion, has been a key reform initiative in the power distribution segment. After its launch in 2021, it has made steady progress in improving the quality and reliability of power, as well as creating a more financially and operationally sustainable and efficient sector.
The aggregate technical and commercial (AT&C) losses of discoms at the national level reduced from around 22 per cent in FY2021 to about 16.28 per cent in FY2024, although it has grown marginally since FY2023. Notably, the average cost of supply-average revenue realised (ACS-ARR) reduced substantially from Rs 0.71 per kWh to Re 0.19 per kWh during the same period. On the regulatory front, most utilities are now publishing their annual accounts on time. Similarly, most states are now making timely payments for subsidies and government department dues. The publishing of tariff and true-up orders by utilities has also been streamlined to a large extent.
Progress on the smart metering front has been slower than expected, with only 11 per cent (23.9 million) of sanctioned smart meters installed. According to the government, this was primarily due to initial challenges in the transition from post-paid to prepaid metering, particularly related to technical issues, testing, approvals, etc.
However, the government has intensified efforts to accelerate execution. January 2025 marked a milestone as installed smart meters surpassed the 20 million mark. The daily pace of installation has also been ramped up. From about 11,000-12,000 meters installed per day about a year ago, the pace has now surged to 80,000 smart meters per day. This number is expected to increase to 100,000 meters per day, as recently reported by the Ministry of Power (MoP) to the Lok Sabha’s Standing Committee.
With the deadline of the RDSS set for 2025-26, an extension is expected to ensure the completion of work under the scheme. The MoP has proposed extending the scheme by two years, until 2027-28, to achieve the envisaged targets.
Power Line takes a look at the progress of the RDSS and recent efforts to accelerate its execution…
Progress so far
The government launched the RDSS in June 2021 with a total outlay of Rs 3,037.58 billion and a gross budgetary support of Rs 976.31 billion over a period of five years, from 2021-22 to 2025-26. The aim was to reduce AT&C losses to 12-15 per cent at the pan-Indian level and gradually narrow the ACS-ARR gap by March 2026.
So far, smart metering works with an outlay of Rs 1,306.71 billion have been sanctioned for 45 discoms across 28 states/union territories. This includes provision of smart metering connections to 197.9 million consumers, 525.3 million distribution transformers and 211,000 feeders, for which more than 58 per cent of the works have been awarded and are at different stages of execution.
To be self-financed, smart metering is being implemented through advanced metering infrastructure service providers (AMISPs) under the total expenditure mode, where distribution utilities are not required to pay upfront capex and instead pay monthly costs per meter to the AMISP. The government has also been providing grants to enhance the uptake of smart meters – up to Rs 900 per consumer meter (Rs 1,350 for special category states). Additionally, an incentive of Rs 450 (Rs 675 for special category states) per consumer meter is provided for prepaid smart meters installed within the targeted timelines.
Pace picks up
Continuous review meetings are being held at the nodal agency and ministry levels, as well as with discoms, to monitor the progress of work. The nodal agencies of the scheme, REC Limited and PFC Limited, are assisting utilities in resolving any issues that arise.
As of March 28, 2025, under the RDSS, Bihar and Assam have the highest number of smart meters installed at close to 6.3 million and 3.2 million respectively. At a pan-Indian level, around 23.9 million smart meters have been installed so far under the RDSS and other schemes, of which 13.4 million were installed in FY2025.
While budget utilisation was low in the past, utilities have utilised nearly 96 per cent of the funds released in 2024-25 (till February 2025), and around Rs 126 billion has been allocated for the scheme in 2025-26.
Regarding challenges in smart meter implementation, the MoP cited delays in the issue of tenders, the establishment of the direct debit facility, the obtaining of approvals, and testing, including field installation and integration tests and factory acceptance tests, all of which have impacted the pace of smart metering.
Until February 2024, smart meter installations were progressing at a rate of 11,000-12,000 per day. This gradually increased to around 38,000 in April 2024. The pace slowed slightly during the elections but picked up again thereafter. By September 2024, installations reached 32,000, increasing to 55,000 in October 2024. At present, approximately 80,000 smart meters are being installed daily, with the rate expected to reach 100,000 per day in the near future.
Regarding the impact of supply chain issues on the installation pace, the MoP stated that the country’s smart meter manufacturing capacity stands at around 100 million meters per year. This is sufficient to meet the installation requirements within the RDSS timeline.
What lies ahead
With the sunset date for the scheme set for 2025-26, an extension is likely. In response to queries from the Standing Committee on Energy, the MoP stated that it intends to request a two-year extension to the deadline. The ministry noted that, given the current implementation status, a lot of work remains to be done, especially in the case of smart meters, which will take approximately two years.
The MoP is conducting regular follow ups with the states and distribution utilities through coordination meetings, conferences, etc., to monitor the progress of tendering, project awards and the implementation of smart meter installations.
Several other policy actions are also being taken up to scale implementation. For instance, advisories and standard operating procedures (SoPs) have been issued to prioritise smart meter installation for government establishments, government colonies, commercial and industrial consumers, and other high-load consumers. These SoPs mandate regular consumer engagement exercises for smart meters and their benefits to foster consumer confidence. Further, advisories have been issued for the installation of check meters for up to 5 per cent of the smart meters installed and mandatorily in cases of complaints related to smart meters.
The way forward
A key priority is to strengthen the distribution segment’s health and push for reforms. Discom financial losses have increased substantially, with accumulated losses reaching Rs 6.92 trillion in FY2024, up from Rs 6.47 trillion in FY2023. In the recent budget, a key announcement pertained to states being allowed an additional borrowing space of 0.5 per cent of gross state domestic product if the distribution utility implements performance improvement measures.
According to experts, smart metering installations are expected to pick up pace in the next one to two years, which will improve the segment’s key metrics going forward.