The Revamped Distribution Sector Scheme (RDSS) marks a shift towards outcome-linked reforms in the distribution segment, with a focus on addressing persistent financial stress and operational inefficiencies at the discom level. The scheme aims to improve the quality, reliability and affordability of power supply, while strengthening the financial health of the distribution segment. Key objectives include reducing aggregate technical and commercial (AT&C) losses to 12-15 per cent on a pan-India level and eliminating the average cost of supply (ACS)-average revenue realised (ARR) gap through operational efficiency and targeted reforms. Despite earlier reform efforts, losses of around 68 paise per unit of electricity sold continue to weigh on discom finances, underscoring the need for tighter implementation and accountability mechanisms.
Progress so far
In FY 2024, national AT&C losses declined to about 16.1 per cent, supported by improvements in billing efficiency to 86.9 per cent and collection efficiency to 96.5 per cent, with 38 discoms reporting lower losses compared to FY 2021. The cash-adjusted ACS-ARR gap stood at Re 0.39 per kWh, with 29 discoms recording improved cost recovery compared to FY 2021 levels. Subsidy realisation remained robust, with subsidies received at about Rs 2,053 billion, close to the subsidy billed of Rs 2,108 billion, reflecting improved fiscal discipline post-RDSS. Operational indicators also strengthened, with digital payments rising to 41 per cent, non-manual meter readings reaching 37 per cent and working capital metrics improving, as payable days declined to 132 and receivable days to 115. While structural and execution challenges persist, these trends point to early operational and financial gains under the RDSS and other concurrent distribution sector reforms.
In terms of sanctions and disbursals, as per the RDSS portal (accessed on January 13, 2026), the total sanctioned cost under the RDSS stands at Rs 2,830.16 billion. Of this, Rs 1,306.36 billion has been allocated for smart metering works, while Rs 1,498.25 billion has been earmarked for loss reduction works. The total gross budgetary support (GBS) under the scheme amounts to Rs 1,209.64 billion, with Rs 243.66 billion allocated for smart metering and Rs 952.95 billion for loss reduction works. So far, Rs 324.65 billion of the GBS has been released, comprising Rs 14.91 billion for smart metering works and Rs 309.74 billion for loss reduction works.
Loss reduction
There has been moderate progress under the loss reduction component of the RDSS, particularly in the installation of high tension (HT) lines, low tension (LT) lines and distribution transformers (DTs). As per the RDSS dashboard (accessed on January 13, 2026), the overall financial and physical progress under this component stands at 32.5 per cent and 36.4 per cent respectively. State-wise, Telangana emerged as the front runner, achieving 100 per cent physical progress, followed by Goa at 82.16 per cent, West Bengal at 56.52 per cent and Assam at 52.73 per cent.
Component-wise progress indicates that a total of 982,658 ckt km of LT lines have been sanctioned, of which 908,346 ckt km has been awarded and 497,039 ckt km installed. For HT lines, 814,408 ckt km has been sanctioned, 720,834 ckt km awarded and 337,007 ckt km installed. Under the DT segment, 591,127 units have been sanctioned, 539,833 units awarded and 148,270 units installed. Further, under the substation segment, 2,010 units have been sanctioned, 1,795 units awarded and 901 units installed.
Smart metering
As per the RDSS portal (accessed on January 13, 2026), 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 37.08 million (18.75 per cent) installed and communicating so far.
In addition, about 5.3 million DT meters have been sanctioned, with 4.9 million (93 per cent) awarded and 1.2 million (23.37 per cent) installed and communicating. A total of 195,952 feeder meters have been sanctioned, of which 183,801 (94 per cent) have been awarded and 138,976 (71 per cent) installed and communicating.
Initial implementation challenges, largely linked to low consumer awareness, are being addressed through ministry-issued advisories and standard operating procedures. These include consumer incentives for prepaid meter installation, relaxation of penalties linked to maximum demand, structured recovery of past arrears, provision of check meters to build confidence, mobile applications for consumption tracking and recharges, and advance alerts for low balance and emergency credit.
The smart metering ecosystem is being shaped by rapid advancements in digital technologies and evolving utility requirements. Artificial intelligence and machine learning are enabling predictive analytics, demand forecasting and anomaly detection, while edge computing, combined with 5G and low-power wide area network connectivity, is supporting faster, decentralised data processing. Cloud-based and software-as-a-service meter data management (MDM) platforms are gaining traction as scalable and cost-efficient tools to improve grid responsiveness and operational efficiency.
Growing emphasis on smart grid integration and real-time data is expanding the role of MDM systems in demand response, load management and renewable energy integration. At the same time, greater system connectivity has increased the focus on cybersecurity and data privacy.
Key issues
The pace and quality of implementation under the RDSS vary significantly across states, reflecting a combination of institutional, financial and execution-related constraints. Many discoms continue to face capacity limitations, particularly the absence of in-house IT and OT teams to manage advanced metering infrastructure (AMI) service provider contracts, backend system integration and smart metering operations, leading to heavy reliance on nodal agencies and coordination challenges. Procurement delays, prolonged tendering cycles and bankability concerns have further affected contract finalisation and execution timelines, resulting in wide interstate cost variations.
Financial stress at the discom level continues to limit execution capacity, with high AT&C losses and persistent ACS-ARR gaps contributing to the underutilisation of RDSS funds in several states. Regulatory and data readiness challenges, including variations in prepaid metering regulations, grievance redressal mechanisms and interoperability standards, have slowed operationalisation, with a large share of installed meters yet to transition to prepaid or communicating mode.
Monitoring data indicates that physical progress has not consistently translated into consumer-level outcomes, particularly in prepaid metering adoption and loss reduction. Field-level constraints, such as a shortage of trained installers and integration engineers, along with connectivity limitations in rural pockets, continue to affect AMI performance.
Outlook
Over the next 6-12 months, the focus under the RDSS is expected to shift towards a mid-term evaluation of the scheme to assess on-ground impact, identify implementation gaps and enable course correction to meet targeted outcomes. Emphasis will be placed on optimising fund utilisation through streamlined disbursal processes, closer monitoring of qualifying parameters and the de-sanctioning of unawarded works to improve allocation efficiency.
Technology will play a central role in strengthening oversight, with wider use of the RDSS and National Feeder Monitoring System portals to support data collection, monitoring, evaluation and document verification. Greater focus on data analytics is also expected to identify and scale smart metering use cases, while aligning system capabilities with the broader India Energy Stack. In parallel, efforts will be directed towards strengthening cybersecurity and interoperability frameworks for smart metering and related digital systems.
Aastha Sharma
