India Reduces AT&C Losses to 16.16% in FY25: Power Ministry

India's power distribution sector has demonstrated improvement in reducing Aggregate Technical and Commercial (AT&C) losses. The Ministry of Power announced that AT&C losses at the national level have been reduced from 21.91 percent in FY 2021 to 16.16 percent in FY 2025, reflecting the effectiveness of targeted reform measures undertaken through the collective effort of the centre and state governments. However, the drop in losses has shown no improvement since the figure of 15.5 percent achieved in 2023. To that extent, the government seems stuck at current levels, with  no clear plan on reducing this further to a level below 12 percent as envisaged.

Key Initiatives for Loss Reduction

The Government of India has been supporting power distribution utilities to improve their AT&C losses through various strategic initiatives. 

The most significant intervention has been the Revamped Distribution Sector Scheme (RDSS), launched with the objective of improving the quality and reliability of power through a financially sustainable and operationally efficient distribution sector. The scheme aims at bringing down AT&C losses to a pan-India level of 12-15 percent and reducing the ACS-ARR gap to zero.

Under the scheme, projects worth INR 2.83 lakh crore have been sanctioned. The distribution infrastructure works account for INR 1.53 lakh crore of this investment, forming the backbone of the modernisation effort.

These distribution infrastructure works include the replacement of old and frayed conductors, laying of Low Tension Aerial Bunched (LT AB) cables, and the upgradation and augmentation of Distribution Transformers (DTs) and sub-stations. Additionally, agricultural feeder segregation has been incorporated as part of the comprehensive infrastructure enhancement strategy.

Prepaid smart metering has been identified as one of the critical interventions envisaged under the RDSS.

State-Level Financial and Regulatory Support

To facilitate state-level participation and reform, the government has provided additional borrowing consent of 0.5 percent of GSDP to state governments. This additional borrowing capacity is conditional on states undertaking specific reforms in the power sector, creating a financial incentive structure for systemic improvements.

Additional prudential norms have been established for sanctioning loans to state-owned power utilities. These norms are contingent on the performance of power distribution utilities against prescribed conditions, ensuring that financial support flows to utilities demonstrating commitment to reform.

Regulatory Framework for Cost Management

The government has implemented rules for the implementation of FPPCA and cost-reflective tariffs to ensure that all prudent costs for the supply of electricity are passed through appropriately. This framework promotes transparent cost management and financial sustainability.

Additionally, rules and Standard Operating Procedures have been issued for proper subsidy accounting and their timely payment, addressing financial uncertainties and ensuring efficient fund flow to distribution utilities.

Achievement and Future Targets

With collective effort from the Centre, states, and UTs, along with reform measures undertaken by distribution utilities, AT&C losses at the national level have reduced from 21.91 percent in FY 2021 to 16.16 percent in FY 2025. Bringing down the losses is considered essential to arresting rising power prices as multiple schemes targeting the sector have failed to make a comprehensive impact on the financial health of discoms. Privatisation, so often billed as a panacea cannot really work other than for dense urban clusters, as beyond that, the bids are not attractive for the government as well.  

The government remains committed to achieving the RDSS target of bringing AT&C losses to the 12-15 percent level at the pan-India level. This information was provided by the Minister of State for Power, Shripad Yesso Naik, in a written reply in the Rajya Sabha.