Power distribution scheme to be extended by 2 years amid slow progress, Parliament panel raises concern

New Delhi: The government scheme aimed at strengthening India’s power distribution infrastructure and installing smart meters across the country is set to be extended for two years beyond March 2026 due to its slow progress.

The Parliament’s standing committee on energy has raised concerns over under-achievement of the scheme known as Revamped Distribution Sector Scheme (RDSS), and the resultant increase in losses suffered by power distribution companies (discoms).

In its report on demand for grants for the power ministry, the panel noted that out of the total of ₹30,065 crore allocated for RDSS during the first four years of the scheme—FY22 to FY25—about ₹25,664 crore had been utilized as of 10 February, 2025.

The physical achievement with respect to loss reduction works is only 25.3% and against 997,680 households sanctioned for electrification, 180,070 households could be electrified till 9 February, 2025,” the report said, adding that the ministry has informed the panel that it would extend the timeline of the scheme beyond the original deadline of March 2026.

Also read | Government working on national scheme for power distribution as demand rises

“It was submitted before the committee during the evidence that the deadline for implementation of the Revamped Distribution Sector Scheme will be extended by two years,” it said. Mint had first reported in December 2023 that the government may extend the scheme beyond FY26.

The accumulated losses of discoms have been increasing and at the end of FY24 they stood at ₹6.92 trillion compared with ₹5.45 trillion in FY21, the panel said, adding that the billing and collection efficiencies of discoms are not very impressive and the gap between average cost of supply and average revenue realized has been fluctuating and is far from zero.

In view of the slow progress, the committee has recommended that the ministry conduct a compresuhensive review of the scheme on the basis of its experience of the past four years “in order to remove the bottlenecks so that intended targets are achieved at least by the proposed extended deadline and Distribution Sector becomes operationally efficient at the earliest”.

The Centre launched the reforms-based and results-linked scheme in 2021 with total outlay of ₹3.03 trillion and gross budgetary support of ₹97,631 crore. It aims to improve operational efficiencies and ensure financial sustainability of the distribution sector along with providing electricity to households across the country.

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Smart meters

Under it, the government also has an ambitious target to install 250 million smart meters across the country by 31 March, 2025. However, the report submitted in the parliament noted that only 20.8 million smart meters had been installed in the country as of 10 February.

According to the ministry’s response to the panel, the installation of smart meters has gained momentum and currently 80,000 smart meters are installed daily and this is expected to reach 100,000 smart meters per day.

However, smart meters have been in the news amid complaints over alleged faulty meters and higher expenses being incurred by consumers compared with bills from conventional meters. The issue has also gained momentum with opposition parties protesting against the implementation.

Also read | Govt says 73 lakh smart meters installed across country till November

The parliamentary panel has suggested that cases of complaints regarding faulty meters be addressed on a priority with installation of check meters in respect of all the complaints to verify the readings of faulty smart meters. It has also recommended an independent third party verification of installed smart meters and awareness campaigns to boost consumer confidence.

“The ministry should focus on cyber security aspect of smart meters,” it said.

Capacity addition

Further, the slow progress in terms of capacity addition of power projects also was highlighted by the panel in its report. It noted that in FY24, a total of 5.4GW thermal power and 60MW of hydro power capacity was installed against the target of 14.7GW and 2.88GW respectively. Similarly, in the ongoing fiscal (as of 31 January), about 1.38GW of thermal and 40MW of hydro power capacity has been installed as against the target of 15.36GW and 1.73GW, respectively.

Also read | Power capacity addition grows this fiscal led by new renewable projects

Noting that the delay in construction would lead to cost escalation, the panel suggested the power ministry coordinate with concerned states and implementing agencies in order to ensure that the hindrances are addressed and scheduled capacity addition targets are achieved in a time-bound manner.

In 2023, the Centre announced a plan to add 80GW of thermal power capacity by FY32 to meet the rising power demand. Despite the growth of renewable energy capacity, coal-based plants continue to provide the base load power and help maintaining grid stability given that solar and wind are intermittent sources of power.