Power Distribution Reform Scheme Likely to Receive ₹18,000 Crore Allocation in FY27 Budget – EQ
In Short : The power distribution reform scheme is expected to receive an allocation of around ₹18,000 crore in the FY27 Union Budget, signaling continued government focus on strengthening distribution companies. The proposed funding aims to improve operational efficiency, reduce losses, modernize infrastructure, and ensure reliable power supply, supporting broader reforms in India’s electricity distribution sector.
In Detail : The government is expected to allocate nearly ₹18,000 crore to the power distribution reform scheme in the FY27 budget, underlining its commitment to addressing long-standing challenges in the electricity distribution segment. Distribution companies play a critical role in the power value chain, and sustained financial support is seen as essential for improving their performance and stability.
Power distribution has historically been the weakest link in the sector, affected by high technical and commercial losses, financial stress, and infrastructure gaps. Continued budgetary support reflects the recognition that reforms at the distribution level are crucial for ensuring the overall health of the power ecosystem.
The proposed allocation is expected to be used for infrastructure upgrades, including network strengthening, feeder separation, and modernization of substations. These improvements can help reduce outages, improve service quality, and enhance the reliability of power supply for consumers across urban and rural areas.
Another key focus area of the reform scheme is the reduction of aggregate technical and commercial losses. Investments in metering, energy accounting, and loss monitoring systems are aimed at improving billing efficiency and revenue realization for distribution companies.
The funding is also likely to support the expansion of smart metering initiatives. Smart meters enable accurate billing, real-time monitoring, and better demand management, while also empowering consumers with greater transparency and control over their electricity usage.
Financial sustainability of distribution companies remains a priority under the reform framework. The scheme emphasizes performance-linked funding, encouraging states and utilities to meet specific operational and financial benchmarks in exchange for central support.
Improved distribution infrastructure is essential for supporting India’s growing electricity demand and increasing integration of renewable energy. A stronger and more flexible distribution network can better handle variable power flows from rooftop solar and other decentralized energy sources.
The reform scheme also contributes to broader economic and development goals. Reliable and quality power supply supports industrial growth, improves ease of doing business, and enhances the quality of life for households, particularly in underserved regions.
Overall, the anticipated ₹18,000 crore allocation in the FY27 budget highlights the government’s intent to maintain momentum in power distribution reforms. By strengthening utilities, modernizing networks, and improving efficiency, the scheme aims to create a more resilient, financially viable, and consumer-focused electricity distribution system.
