ELECTRICITY distribution companies (DISCOMs) continue to weigh heavily on State finances, stated a report by the Reserve Bank of India (RBI).
The report also noted that the total accumulated losses of state Discoms reached a staggering Rs 6.5 lakh crore by 2022-23, accounting for 2.4 per cent of the country’s GDP.
It said, “Electricity distribution companies (DISCOMs) continue to remain a drag on State finances”.
The report added that DISCOMs remain a significant challenge for States despite various reform efforts.
To address this, the RBI stressed the importance of measures such as improving productivity, reducing transmission and distribution losses, and aligning tariffs with the actual cost of power supply.
Other recommended steps include unbundling the electricity supply industry and privatizing power generation and distribution. These measures, the report noted, are crucial for enhancing the financial health of DISCOMs and, by extension, improving the overall quality of State finances.
It added, “Unbundling the electricity supply industry, and privatizing generation and distribution remain critical and would significantly improve the quality of State finance.”
Despite multiple financial restructuring efforts, the report highlighted that the DISCOMs’ total outstanding debt has grown at an average annual rate of 8.7 per cent since 2016-17.
ANI
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