DISCOM Reforms Take Centre Stage: Shripad Naik Chairs 6th GoM Meeting at Bharat Electricity Summit 2026

Union Minister of State for Power and New & Renewable Energy, Shri Shripad Yesso Naik, chaired the sixth meeting of the Group of Ministers (GoM) on improving the viability of electricity distribution utilities (DISCOMs) during the Bharat Electricity Summit 2026 held in New Delhi. The meeting brought together key state energy ministers, senior government officials, and representatives from power sector institutions to deliberate on urgent reforms needed to strengthen India's power distribution segment.

Among those present were Shri A. K. Sharma (Uttar Pradesh Energy Minister), Shri Pradyuman Singh Tomar (Madhya Pradesh Energy Minister), Shri Hiralal Nagar (Rajasthan Minister of State for Energy), and Smt. Meghana Bordikar (Minister of State for Energy), along with senior officials from the Central Government, State Governments, State power utilities, and Power Finance Corporation (PFC) Ltd.

DISCOM Challenges: Structural Weaknesses Persist Despite Gains

In her welcome address, CMD, PFC Limited, highlighted the deep-rooted structural, financial, and operational inefficiencies that continue to challenge DISCOMs. While acknowledging progress in certain areas, she noted that these gains remain uneven and insufficient for ensuring long-term sustainability.

She emphasized that the power sector's overall efficiency depends heavily on the health of the distribution segment. Even if generation and transmission operate optimally, weak DISCOMs can undermine the entire value chain. Past reform schemes, she pointed out, have often delivered short-term improvements rather than lasting transformation. Sustainable progress, therefore, hinges on building financially robust and creditworthy utilities capable of attracting long-term investment.

Sector-Wide Profit: A Milestone, But Fragile

In his opening remarks, Shri Shripad Naik highlighted a significant milestone—India's power distribution sector has, for the first time, recorded an overall profit. This improvement has been driven by reductions in Aggregate Technical & Commercial (AT&C) losses and narrowing of the gap between Average Cost of Supply (ACS) and Average Revenue Realized (ARR).

However, he cautioned that these gains remain fragile and unevenly distributed. Nearly half of India's DISCOMs continue to operate at a loss, burdened by heavy debt and recurring financial deficits. While the sector has moved in the right direction, it is still far from achieving long-term financial stability.

Key Issues: Tariffs, Subsidies, and Revenue Erosion

The Minister outlined critical structural issues affecting DISCOM viability. Non-cost-reflective tariffs, combined with delays in subsidy disbursements, force utilities to rely on expensive short-term borrowing to sustain operations. Additionally, distorted cross-subsidy structures are driving industrial and commercial consumers toward open access, weakening DISCOM revenue streams.

These trends, he warned, risk creating a vicious cycle—declining revenues leading to deteriorating service quality, which in turn further erodes consumer confidence and financial health.

Three-Pillar Reform Strategy

Shri Naik proposed a comprehensive reform framework based on three key pillars:

• Regulatory Discipline: Ensuring timely, cost-reflective tariffs with automatic Fuel & Power Purchase Cost Adjustment (FPPCA) pass-through and a clear roadmap to reduce cross-subsidies.

• Government Action: Undertaking comprehensive restructuring of DISCOM debt and establishing professional, arm's-length management of utilities.

• Utility-Led Excellence: Driving operational efficiency through smart metering, digitalisation, and data-driven loss reduction strategies.

He stressed that financial viability is not optional but foundational for the success of India's energy transition and the broader vision of Viksit Bharat. He urged states to adopt a time-bound and committed approach, treating DISCOM reforms as a shared national mission rather than a centrally driven initiative.

Policy Insights and GoM Recommendations

During the meeting, the Joint Secretary (Distribution), Ministry of Power, presented an overview of the financial status of state DISCOMs and highlighted key challenges affecting their sustainability. The presentation also incorporated recommendations from the 16th Finance Commission aimed at improving the financial health of the distribution sector.

The findings and recommendations emerging from the previous five GoM meetings were discussed in detail, providing a consolidated framework for future reforms.

States Back Reform Agenda, Seek Central Support

A key outcome of the meeting was the broad endorsement by states of the GoM's recommendations, indicating a collective willingness to advance the next phase of power sector reforms.

States urged the central government to introduce policy mandates or regulatory frameworks that ensure timely implementation of cost-reflective tariffs. They also highlighted the significant economic burden posed by inefficient DISCOMs, noting that cumulative losses over recent years have reached multiple lakh crore rupees.

Importantly, states requested central support for restructuring DISCOM debt, emphasizing that such assistance should be linked to measurable reform outcomes. They also called for a follow-up meeting to define clear action points and establish time-bound implementation mechanisms.

Way Forward: From Challenge to Leadership

In his closing remarks, Shri Naik appreciated the active participation and constructive inputs from all stakeholders. He noted that the GoM's work over the past year has been guided by a strong sense of purpose and will significantly influence the future direction of distribution sector reforms.

He urged states to take the lead in implementing structural improvements, transforming themselves from being part of the problem into drivers of solutions in the power sector.

The Group of Ministers reaffirmed its collective commitment to undertaking necessary measures to improve the financial viability of electricity distribution utilities, recognizing that a strong and sustainable distribution sector is essential for India's economic growth and energy security.