A moderate approach to the discom sector might be the answer

Contact Counsellor

Last Updated19/08/2022

Losses exceed Headline Number: DISCOM bear true losses of Rs 3 lakh crore while headline number is Rs 78,000 crore.
Poor financial status of PFC/REC: Unsustainable discom operations are financed by Power Finance Corporation/Rural Electrification Corporation (PFC/REC) which increases the burden.
Budgetary constraints: Ministry of Power monitors quantity targets for DISCOMs but its increasing dependence on PFC/REC compells MoP to take hard budgetary measures.
Steps for Financial Strengthening: Under RDSS, government has provisioned for Regular Tariff revision, smart metering and reducing AT&C losses.

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Ensure Effective Regulation: RBI regulates PFC/REC as NBFCs which isn’t effective thus, need to regulate them as PSBs.
Discourage freebee culture: Offering free electricity during election undermines DISCOM’s financial viability
Make RDSS more effective: Include institutional changes and financial performance in the RDSS scheme along with amendments to the electricity law
Brining transparency in DISCOM: Discom losses and debts must be reflected in state government deficits and debt.
Brining simplicity in power tariffs: Government needs to regulate and limit tariff schedules to not more than 5-6 rates defined for different sectors.
Adopting of advance technology: Smart metering and smart grid have the potential long-run payoffs for financial performance and reducing inefficiency and corruption.