Follow India Renewable Energy News on WhatsApp for exclusive updates on clean energy news and insights

GoM Proposes Debt Restructuring Plan for Discoms

The Group of Ministers (GoM), chaired by Power Minister Manohar Lal, has proposed a new scheme to restructure the mounting debt of state-run power distribution companies (Discoms). The panel recommended that the debt be recognized as a liability of state governments, highlighting the severity of the issue. Discoms’ accumulated losses reached Rs6.5 lakh crore in FY23 (2.4% of India’s GDP), while their outstanding debt exceeded Rs7.5 lakh crore in FY24.

The GoM stressed that State Electricity Regulatory Commissions (SERCs) should issue tariffs reflecting the full cost of supply, while state governments can provide subsidies where necessary. It was also noted that high cross-subsidies are inflating manufacturing costs, thereby impacting competitiveness. Moreover, Aggregate Technical and Commercial (AT&C) losses remain a critical concern, with each 1% increase causing an additional Rs10,000 crore loss to utilities.

Data shows that accumulated Discom deficits rose further to Rs6.92 lakh crore in FY24, with Tamil Nadu, Uttar Pradesh, Rajasthan, Madhya Pradesh, and Telangana among the worst affected. The Supreme Court recently directed liquidation of regulatory assets within four years. Ratings agency ICRA estimates regulatory assets at around Rs3 lakh crore, mainly in Tamil Nadu, UP, Rajasthan, Maharashtra, Delhi, West Bengal, and Karnataka.