Mired in delays and hobbled by slow progress, the Centre’s Revamped Distribution Sector Scheme (RDSS) has picked up pace this fiscal, with at least one lakh smart meters being installed a day, the latest power ministry data, seen by Moneycontrol, shows.
Launched in June 2021, RDSS aims to improve the operational efficiencies and ensure financial sustainability of the power distribution sector.
“In a year, we have more than doubled our pace of smart meter installations from 38,000 a day in April last year to at least a lakh per day this month,” a senior power ministry official said.
Smart meters ensure billing and collection efficiencies for distribution companies, which a reduce their aggregate technical and commercial (AT&C) losses, the official said on condition of anonymity.
Though the ministry is yet to prepare a proposal to extend the programme, a two-year extension is inevitable to achieve the smart meter target, the official said. Against a target of 25 crore smart meters, 2.64 crore had been installed till April 15. The programme is to end on March 31, 2026.
A second official said the funding for RDSS, if it is extended, could touch Rs 20,000 crore in FY27.
For FY26, it got the biggest share (Rs 16,021 crore) of the budgetary allocation for power ministry. The amount is higher than that for the Centre's flagship schemes such as Ayushman Bharat (Rs 9,406 crore), a national health protection initiative, and Pradhan Mantri Poshan Shakti Nirman (PM POSHAN) (Rs 12,500 crore), a mid-day meal scheme.
Discoms’ losses
One of the objectives of RDSS is to bring down AT&C losses to pan-India levels of 12-15 percent.
In 2021-22, when the scheme was introduced, these losses were at a high of 21.91 percent, which dropped to 16.23 percent in FY23 and further to 15.37 percent the next year.
However, in FY25, AT&C losses increased 16.87 percent, which officials attributed to some states where the losses mounted instead of declining. These states were Sikkim (54.6 percent), Arunachal Pradesh (50.42 percent), Mizoram (39.19 percent), Maharashtra (23.85 percent) and Andhra Pradesh (12.05 percent).
AT&C losses in discoms are a combination of energy loss and commercial loss. While energy loss may comprise technical loss, theft, and inefficiency in billing, commercial loss is on account of default in payment and inefficiency in collection.
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Consequently, accumulated losses of discoms also increased to Rs 6.92 lakh crore in FY24 compared to Rs 5.45 lakh crore in FY21.
“It’s been observed that the losses reported by government discoms in states are far more than the private ones. We have started meeting discoms in groups of 10 states to work out customised solutions so as to improve their performances and expedite prepaid installation works,” said the second ministry official.
RDSS is a reform-based result-linked scheme where the government initially provides a 10 percent gross budgetary support as an advance. It releases further funds provided the discoms qualify for the annual evaluations and there is actual physical progress.
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