**Executive Summary**
The Revamped Distribution Sector Scheme (RDSS), launched in 2021, aims to enhance the operational efficiency and financial sustainability of Distribution Utilities (DISCOMs) through a total sanctioned investment of Rs. 2.83 lakh crore. The initiative targets a reduction in national AT&C losses to 12–15% and the elimination of the ACS-ARR gap by improving infrastructure and implementing smart metering. As of March 2026, the scheme has successfully reduced national AT&C losses from 21.91% in FY21 to 15.04% in FY25.
**Key Points / Main Content**
**Infrastructure and Loss Reduction**
* **Funding Allocation:** Projects worth Rs. 1.53 lakh crore have been sanctioned specifically for loss reduction infrastructure.
* **Technical Upgrades:** Works include the replacement of old conductors, creation and augmentation of substations and Distribution Transformers (DTs), and feeder segregation.
* **Monitoring Systems:** Implementation of SCADA/DMS systems is underway for real-time monitoring to improve power supply quality.
**Smart Metering Initiatives**
* **Scope:** Rs. 1.31 lakh crore has been sanctioned for smart metering, covering 19.79 crore consumers, 2.11 lakh feeders, and 52.53 lakh DTs.
* **Deployment Progress:** Out of 20.33 crore sanctioned meters, 4.69 crore have been installed under RDSS, contributing to a nationwide total of 6.13 crore smart meters across all schemes.
* **Consumer Protections:** To build confidence, the Ministry has mandated no penalties for maximum demand recorded by smart meters and the installation of "check meters" to verify accuracy.
* **Financial Incentives:** Consumers are incentivized to adopt prepaid smart meters through billing rebates and easy installment plans for past arrears.
**Governance and Monitoring**
* **Institutional Oversight:** Projects are monitored by Nodal Agencies (PFC Ltd and REC Ltd), a State-level Distribution Reforms Committee, and a Central-level Inter-Ministerial Monitoring Committee.
* **Conditional Funding:** The release of funds is strictly contingent on DISCOMs meeting operational and financial benchmarks, including timely subsidy payments and regular tariff orders.
**Performance Trends (FY21–FY25)**
* **AT&C Loss Reduction:** National levels dropped from 21.91% to 15.04%.
* **Billing Efficiency:** Improved from 84.08% to 87.59%.
* **Collection Efficiency:** Increased from 92.9% to 97%.
**Impact Analysis**
**Stakeholder: Distribution Utilities (DISCOMs)**
**Impact**
DISCOMs are seeing improved financial discipline through better energy accounting and enhanced revenue collection. However, their access to RDSS funding is now conditional upon meeting strict performance parameters.
**Action Required**
DISCOMs must ensure the regular issuance of tariff orders, timely publishing of accounts, and the elimination of regulatory assets to maintain fund eligibility.
**Stakeholder: Electricity Consumers**
**Impact**
Consumers, particularly in the commercial and industrial sectors, are being transitioned to prepaid smart metering. They benefit from billing rebates, the removal of demand-based penalties, and flexible debt recovery options.
**Action Required**
Consumers are encouraged to transition to prepaid systems to avail themselves of rebates and utilize installment plans for any outstanding arrears.
**Stakeholder: State Governments**
**Impact**
States are responsible for the high-level monitoring of reforms and ensuring the financial commitments to utilities are met.
**Action Required**
Government departments must ensure the timely payment of subsidies and outstanding dues to utilities to support the financial viability of the sector.
Key Entities Referenced
Revamped Distribution Sector Scheme (RDSS): A central government scheme launched in 2021 to improve the operational efficiency and financial viability of power distribution utilities through infrastructure works and smart metering.
Ministry of Power: The primary central ministry responsible for the implementation, oversight, and issuance of advisories for power distribution reforms.
Power Finance Corporation (PFC) Ltd: A nodal agency responsible for the regular monitoring and review of works sanctioned under the RDSS, including smart metering projects.
REC Ltd: A designated nodal agency tasked with monitoring and reviewing the implementation progress of distribution sector projects under the RDSS.
Inter-Ministerial Monitoring Committee: A central-level body headed by the Secretary (Power) established to review and monitor the implementation of works sanctioned under the RDSS guidelines.
Ministry of Power
POWER DISTRIBUTION REFORMS AND
FINANCIAL SUSTAINABILITY OF DISCOMS
Posted On: 30 MAR 2026 4:15PM by PIB Delhi
Revamped Distribution Sector Scheme (RDSS) has been launched by the Government of India (GoI) in
the year 2021 with the objective of improving the operational efficiency and financial viability of the
Distribution Utilities. Under the scheme, distribution infrastructure works, including smart metering
works, worth Rs. 2.83 lakh crore have been sanctioned. The scheme aims to reduce Aggregate Technical
and Commercial (AT&C) losses to pan-India levels of 12–15% and eliminate the gap between Average
Cost of Supply (ACS) and Average Revenue Realised (ARR).
Under the scheme, projects worth Rs. 1.53 lakh crore for loss reduction infrastructure and Rs. 1.31 lakh
crore for smart metering have been sanctioned based on the proposals submitted by the States. The Loss
reduction works include replacement of old conductors, augmentation of substations and Distribution
Transformers (DTs), creation of new substations, installation of new DTs, feeder segregation and
implementation of SCADA/DMS systems for real-time monitoring. The works have been undertaken
under RDSS to reduce losses and improve quality of power supply.
Further, installation of smart meters is a key intervention under the scheme which helps improve the
financial discipline of the DISCOMs through enhanced revenue collection and better energy accounting of
the distribution system. Smart metering works for 19.79 crore consumers, 2.11 lakh feeders and 52.53 lakh
Distribution Transformers (DTs), totaling 20.33 crore smart meters, have been sanctioned based on the
proposal submitted by the States/ distribution utilities and 4.69 crore smart meters have been installed.
Smart meters have also been installed under other schemes including States’ own schemes. A total of 6.13
crore smart meters have been installed across the country under various schemes.
To accelerate installation of smart meters, the Ministry has issued various advisories and Standard
Operating Procedures (SOPs) to build consumer confidence, which include:
i. Prioritizing installation of prepaid smart meters for Government establishments, commercial,
industrial and high-load consumers and subsequently for other consumers based on demonstration
of benefits.
ii. Incentivizing consumers for prepaid meter installation through rebates in bill;
iii. No penalty on consumer based on maximum demand recorded by smart meter;
iv. Mechanism for recovery of past arrears in easy installments;
v. Installation of check meters for enhancing confidence in accuracy of smart meters.The performance of distribution utilities under the scheme, is regularly reviewed through institutional
mechanisms. Monitoring and review of works sanctioned under RDSS, including smart metering works, is
being done by the Nodal Agencies namely PFC Ltd and REC Ltd on a regular basis. Further, an
institutional mechanism at the State level i.e., Distribution Reforms Committee headed by Chief Secretary
of the State concerned, and at the Central level i.e., Inter-Ministerial Monitoring Committee headed by
Secretary (Power), has been put in place under the RDSS guidelines to review and monitor the
implementation of the works sanctioned under the Scheme.
Further, the release of funds under the scheme is contingent on improvement in various operational and
financial parameters which, in addition to other initiatives taken by GoI and States, has helped to improve
efficiency in DISCOMs. These include timely payment of Government subsidies and Govt. department
dues to the utilities, regular issuance of tariff order, publishing of accounts, non-creation of regulatory
assets, etc.
As a result of the various reform measures undertaken under RDSS and other initiatives, the AT&C losses
of distribution utilities at the national level have reduced from 21.91% in FY21 to 15.04% in FY25.
Further, the Billing Efficiency at national level has improved from 84.08% in FY21 to 87.59 % in FY25
and the collection efficiency has improved from 92.9% in FY21 to 97 % in FY25.
This information was given by The Minister of State in the Ministry of Power, Shri Shripad Naik, in a
written reply in the Rajya Sabha today.
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NR/AP/MD
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