Despite improvements in recent years, transmission and distribution of electricity remains a loss making business in India. Transmission and Distribution (T&D) losses — a measure of billing efficiency — for Indian discoms have typically hovered around the 20 percent mark, among the highest in the world[1].
Though recent years have seen increased private sector participation thanks largely to the Electricity Act of 2003, power distribution and transmissions remains dominated by state-run companies. For decades, power distribution companies in India have been plagued by problems that are now well documented (see image below), which has resulted in huge inefficiencies and accumulating losses.
Photo Credit: KPMG
According to Government of India data, discoms in India had accumulated[2] losses of approximately Rs. 3.8 lakh crore and had outstanding debt of approximately Rs. 4.3 lakh crore as on March 2015. It's in this backdrop that, in November 2015, the Narendra Modi-led government introduced[3] the UDAY scheme for financial turnaround of power distribution companies.
Under the UDAY scheme, state governments would take over large chunks of the debt of the discoms, with the centre offering them a host of sops[4] in return. To keep their end of the bargain, discoms needed to upgrade their network in a bid to minimise T&D losses.
While the UDAY scheme has shown results in terms of reducing discoms' debt levels[5] — though there are some suggestions[6] the joy might be short-lived — the progress on some other fronts has been slow.
The UDAY scheme had set a target[7] of a complete switch to smart meters for consumers using more than 500 kWh per month by December 2017, and...