Union Budget 2026 allocates ₹18,000cr for power distribution reforms
What's the story
Finance Minister Nirmala Sitharaman has announced an allocation of ₹18,000 crore for the Power Revamped Distribution Sector Scheme (RDSS) in Union Budget 2026. The amount is higher than the revised estimate of ₹15,671 crore for FY 25-26. The RDSS was launched by the Indian government to cut down on Aggregate Technical and Commercial (AT&C) losses in power distribution.
Scheme details
RDSS is a 5-year scheme
The RDSS is a five-year scheme (FY 2021-22 to FY 2025-26) with an outlay of ₹3,03,758 crore and a central grant of ₹97,631 crore. Under this scheme, over 20.33 crore smart meters have been approved based on state proposals. As of December 8, around 4.76 crore smart meters have been installed across India under different schemes.
Components
Scheme has 2 parts
The RDSS has two main parts: Part A and Part B. Part A deals with financial assistance for prepaid smart metering, system metering, and upgrading distribution infrastructure. Meanwhile, Part B focuses on training/capacity building and other enabling/supporting activities. Discoms are given financial support for upgrading distribution infrastructure as well as prepaid smart consumer/system metering, based on pre-qualifying criteria and achieving a basic minimum benchmark in reforms.
Loss reduction
AT&C losses in India
The government is also looking to cut down on distribution losses to make discoms and businesses profitable. AT&C losses, or power lost during transmission/distribution of electricity, fell from around 27% in FY 2013-14 to 15.4% in FY 2022-23, but rose again to 17.6% in FY 2023-24. The rise prompted states to calculate technical/commercial losses separately for improved efficiency.
Scheme evaluation
Key features of RDSS
The RDSS permits discoms to avail funds under the scheme for prepaid smart metering, system metering, as well as distribution infrastructure works aimed at loss reduction/modernization. Financial assistance for distribution infrastructure works is subject to the pre-qualifying criteria and minimum benchmarks set for discoms. The scheme also offers an annual appraisal of discom performance against the predefined/agreed-upon performance trajectories including AT&C losses, ACS-ARR gaps, and infrastructure upgrades among others.