India’s electricity crisis does not begin at the turbine hall or the coal pit; it begins at the socket on your wall. The flick of a switch activates not just a fan or a bulb but an entire fiscal illusion built around state-owned distribution companies. DISCOMs, meant to be the last-mile custodians of power delivery, have instead become the weakest and most distorted link in the electricity value chain. By 204-25, their accumulated losses crossed ₹7.08 lakh crore, growing at roughly 7 percent annually since 2015, while outstanding debt ballooned beyond ₹7.5 lakh crore. This mountain of red ink did not emerge from consumer excess or market failure; it was engineered through decades of political mandates, rigid contracts, and regulatory indulgence. Yet none of this appears on the electricity bill. The consumer pays a clean number, silently absorbing the cost of a system designed to defer accountability.

The deepest fault line runs through power procurement, which consumes nearly 70 percent of a DISCOM’s expenditure and remains largely outside its effective control. Long-term power purchase agreements signed for 20 to 25 years were meant to guarantee energy security in an era of projected demand growth. Instead, they locked utilities into expensive capacity payments that must be honoured whether power is drawn or not. As demand repeatedly underperformed projections and renewables became cheaper, DISCOMs found themselves paying for idle thermal plants while low-cost solar and wind remained underutilized. Fuel price pass-throughs and inflated capital costs further tightened the noose. What was once prudent planning ossified into a financial trap, converting procurement from a market choice into an inherited liability.

Tariff design has ensured that this trap never springs visibly. India’s cost-plus regulatory framework calculates expenses and promises a return, but it also institutionalizes inefficiency. Losses are not eliminated; they are warehoused as regulatory assets—future claims on consumers. Political reluctance to approve timely tariff revisions, especially near elections, pushes these assets into the future, creating the comforting illusion of cheap power today. Across states, such deferred liabilities have quietly reached lakh-crore proportions. Electricity appears affordable not because it is cheap to produce, but because its true cost has been postponed, turning today’s relief into tomorrow’s shock.

Federal politics further distort the grid. Electricity’s placement on the concurrent list allows states to shape outcomes even as regulators are nominally independent. Free or subsidized power promises to farmers and low-income households are routinely announced without timely budgetary support, forcing DISCOMs to borrow simply to function. Cross-subsidies were meant to bridge this gap, with commercial and industrial users paying ₹10–12 per unit against an actual cost of ₹7–8. But this model is breaking down. High-paying consumers are exiting the grid through captive generation and open-access renewables, with captive capacity already nearing 79 GW. Every factory that disconnects shrinks the subsidy pool, intensifying pressure on remaining consumers and accelerating the financial spiral.

Into this impasse enters the draft Electricity Amendment Bill, carrying the promise of a federal reset. It does not tinker at the edges; it targets structural contradictions. By allowing multiple distribution licensees to operate on the same network, it seeks to inject competition into procurement and service quality. It pressures regulators to revise tariffs on schedule, curbs the indefinite roll-over of losses, and proposes phasing out industrial cross-subsidies by shifting welfare subsidies directly onto state budgets. Renewable procurement obligations, energy storage recognition, and standardized service benchmarks signal a future-oriented grid. The strengthened role of the Centre through an Electricity Council aims to reduce Centre–State friction, even as it raises concerns about over-centralization.

The bill is bold, and therefore unsettling. Distribution competition has delivered uneven results globally, often triggering fears of cherry-picking profitable consumers while universal service obligations weaken. Cost-reflective tariffs could also raise prices in the short term, testing political patience. Yet the alternative is worse. The existing model—where governments mandate inefficiency, regulators defer costs, DISCOMs borrow to survive, and consumers quietly pay—has exhausted its credibility. Reform is no longer optional; it is inevitable. Whether this legislation becomes genuine correction or another layer of control will depend on execution. But one reality is unavoidable: India’s electricity bills already carry the price of delay. The choice now is whether inefficiency is confronted openly, or continues to arrive discreetly, month after month, through every switch we turn.

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