Power Ministry Seeks RDSS Extension Till FY28 Amid Slow Progress

The Ministry of Power has sought a two-year extension for the Revamped Distribution Sector Scheme (RDSS) until FY28 to achieve its intended targets, according to a report by the Lok Sabha’s Standing Committee on Energy.

Launched in 2021 with an outlay of INR 3 lakh crore (INR 3 trillion) and gross budgetary support of INR 97,631 crore, RDSS aims to improve operational efficiencies and ensure financial sustainability in the power distribution sector. The scheme targets reducing Aggregate Technical and Commercial (AT&C) losses to 12-15 percent while enhancing electricity access nationwide. It consists of two primary components: financial support for prepaid smart metering and system metering, along with infrastructure upgrades, including capacity building and training initiatives.

During a parliamentary review, Pankaj Agarwal, Secretary of the Ministry of Power, informed the committee that an extension was necessary due to slow progress in smart meter installations. The government had set a target of installing 50 million smart meters by March 31, 2025, but as of February 10, only 20.8 million had been installed, falling significantly short. The delays stemmed from tendering issues, testing approvals, and challenges in establishing a direct debit facility. Currently, around 80,000 smart meters are being installed daily, with expectations to scale up to 100,000 per day in the coming weeks. Given these challenges, the Ministry acknowledged that additional funding from lenders like Rural Electrification Corporation (REC) would be required.

The Standing Committee expressed concerns over the worsening financial health of power distribution companies (discoms). Their accumulated losses have risen from INR 5.45 lakh crore in FY21 to INR 6.92 lakh crore in FY24, while inefficiencies in billing and revenue collection persist. The gap between the Average Cost of Supply and Average Revenue Realised remains a major challenge. As of February 10, power utilities had utilised 96 percent of the funds allocated for FY25, with a revised budget estimate of INR 12,665 crore for the scheme. Initially, budget utilisation was slow due to project award delays, but implementation has now gained momentum, leading to better fund utilization.

The Committee recommended that the Ministry conduct a comprehensive review of the scheme to address bottlenecks and ensure the proposed extension leads to the successful achievement of RDSS goals. The government remains committed to improving the financial stability of discoms, enhancing operational efficiencies, and reducing AT&C losses to strengthen India’s power infrastructure.