Naik chairs GoM constituted for addressing issues related to electricity distribution
Published: Mar 21, 2026
By TIOLCorplaws News Service
NEW DELHI, MAR 21, 2026: UNION Minister of State for Power and New & Renewable Energy, Shripad Yesso Naik, chaired the 6 th meeting with Group of Ministers constituted for addressing the issues related to viability of electricity distribution utilities at Bharat Electricity Summit 2026 in New Delhi yesterday.
A. K. Sharma, Energy Minister, Uttar Pradesh, Pradyuman Singh Tomar, Energy Minister, Madhya Pradesh, Hiralal Nagar, Minster of State for Energy, Rajasthan and Smt. Meghana Bordikar, Minister of State for Energy attended the meeting. The meeting was also attended by senior officials from Central Government, State Governments, State Power Utilities of Member States and Power Finance Corporation (PFC) Ltd.
CMD, PFC Limited, GoI, in her welcome address welcomed all the dignitaries. She mentioned that DISCOM face deep-rooted, long-term risks from persistent structural, financial, and operational inefficiencies that undermine sustainable, quality supply. Progress has been tangible in select areas, yet entrenched structural weaknesses continue to cast a long shadow over sustainable outcomes. Generation and transmission can perform at their peak only when the distribution segment is financially robust and operationally sound. Past schemes delivered episodic gains rather than sustained turnaround, and only truly creditworthy DISCOMs can unlock the long-term investment the power sector needs.
Naik in his opening address welcomed Energy Ministers from the member States. He mentioned that for the first time, India's power distribution utilities have turned a sector-wide profit, underpinned by reductions in AT&C losses and the ACS-ARR gap. He mentioned that the gains achieved so far are notable, yet they remain fragile in nature and unevenly distributed across utilities and regions. Despite recent improvements, roughly half of distribution utilities remain loss-making, leaving the sector saddled with heavy debt and sizeable, recurrent accumulated losses. The recent gains show that we are finally on the right path, but they also underline that we are still far from where a truly healthy power sector needs to be.
The Minister highlighted that non-cost reflective tariffs, compounded by delays in subsidy release, push DISCOMs into a cycle of expensive short-term borrowing to simply keep operations afloat. Further, distorted cross-subsidies are propelling industrial and commercial consumers to migrate to open access, eroding the very revenue base DISCOMs rely on. These trends are flashing a clear warning: continued unavailability is already feeding into deteriorating service quality and a vicious cycle of decline.
Naik said that reforms must rest on three pillars to secure a truly viable power sector. The first pillar is regulatory discipline: timely and cost-reflective tariffs with automatic FPPCA pass-through and a clear glide path to sharply reduced cross-subsidies. The second pillar is decisive Government action: comprehensive restructuring of DISCOM debt coupled with truly professional, arm's-length management of distribution utilities. The third pillar is utility-led excellence: relentless operational efficiency driven by smart metering, digitalisation, and data-backed loss reduction across the network. He emphasized that the financial viability is not optional but foundational to the power sector, without which India's energy transition and the vision of Viksit Bharat will be very difficult materialise. Minister urged States to demonstrate strong, time-bound commitment to these reforms, making distribution sector viability a shared national mission rather than a Central scheme alone.
Joint Secretary (Distribution), Ministry of Power, GoI in his presentation highlighted the current financial position of State DISCOMs and key issues affecting their financial viability. The presentation also highlighted the recommendations of the 16 th Finance Commission report to improve the viability of distribution sector. Findings of the GoM during course of its previous 5 meetings and its recommendations were discussed in detail.
During the meeting it was deliberated that States broadly endorse the Group of Ministers' recommendations, signalling a shared willingness to move forward on the next wave of power sector reforms. States requested central Government to bring mandate for cost-reflective tariffs or via clear policy rules that bind Regulators, can be firmly steered toward timely, cost-based pricing. It was agreed that chronic DISCOM inefficiencies impose a steep annual drag on the economy, with cumulative losses running into multiple lakh crore rupees over recent years. The States explicitly requested for central support for debt restructuring of DISCOMs which should be reform linked. The States further requested for a follow-up meeting on clear action points for every stakeholder and issue time-bound directions to drive implementation on the ground.
In his closing remarks, Naik conveyed his sincere appreciation to all Ministers from member States and officials from Central and State Governments for their wholehearted engagement and invaluable contributions to the work of the Group. He mentioned that over the past year, the Group has worked with a deep sense of purpose and that its recommendations would substantially shape the core provisions on distribution sector reforms. He urged States to undertake the reform forward especially on structural improvements in the distribution segment so that the States represented in the GoM move from being a major part of the challenge to leading the solution.
The Group of Ministers reiterated their commitment, to take necessary measures for improving the financial viability of distribution utilities.
