Unpacking India’s Electricity Subsidies: Reporting, transparency, and efficacy

This report analyzes electricity subsidies in India from FY 2016 to FY 2019, evaluating the impact of the Ujjwal DISCOM Assurance Yojana (UDAY) scheme. It finds that direct tariff subsidies increased by 32% during this period, reaching INR 110,391 crore in FY 2019, while most electricity distribution companies (DISCOMs) failed to meet financial performance targets regarding revenue recovery and loss reduction.

• Direct tariff electricity subsidies provided by state governments in India rose by 32% between FY 2016 and FY 2019, totaling INR 110,391 crore (USD 14.96 billion) in FY 2019. This amount represented 4.52% of the total budget outlay and 37.36% of the budget allocated for defence expenditure for that year.
• The Ujjwal DISCOM Assurance Yojana (UDAY) scheme, a central government bailout intended to improve the financial performance of electricity distribution companies (DISCOMs) by 2019, saw poor results. By FY 2019, only 6 out of 31 states and union territories (UTs) met the target of reducing aggregate technical and commercial (AT&C) losses to 15%. Additionally, 24 of 31 states and UTs experienced a revenue gap in FY 2019, and sales revenue as a share of total expenditure decreased by 3% from FY 2016 to FY 2019.
• National subsidy allocation is heavily skewed toward agricultural consumers, who received 75% of total subsidies, followed by domestic consumers (20%) and industries (4%). Only four states—Delhi, Haryana, Tamil Nadu, and Uttar Pradesh—have specified subsidy support for a fixed number of units.
• There is a widespread failure to adhere to the National Tariff Policy's target range of +/-20% of the average cost of supply (ACoS) for billing consumers. In 12 of 31 jurisdictions, industrial and commercial users were charged over 120% of ACoS, while domestic and agricultural users were charged less than 80%.
• Transparency and data reporting regarding subsidies are insufficient. Only 13 states and UTs with subsidies clearly report the data, and only seven of those report by category. Furthermore, data for 15 states and UTs vary significantly depending on whether the source is state documentation or the Power Finance Corporation (PFC).

APA

Sharma,, P. A. V. N. (2020). Unpacking India’s Electricity Subsidies: Reporting, transparency, and efficacy. International Institute for Sustainable Development. https://www.iisd.org/publications/india-electricity-subsidies

Chicago

Sharma,, Prateek Aggarwal,Anjali Viswamohanan,Danwant Narayanaswamy,Shruti. Unpacking India’s Electricity Subsidies: Reporting, transparency, and efficacy. International Institute for Sustainable Development, 2020. https://www.iisd.org/publications/india-electricity-subsidies.

Wikipedia

{{cite report |last1=Sharma, |first1=Prateek Aggarwal,Anjali Viswamohanan,Danwant Narayanaswamy,Shruti |title=Unpacking India’s Electricity Subsidies: Reporting, transparency, and efficacy |publisher=International Institute for Sustainable Development |date=16 December 2020 |url=https://www.iisd.org/publications/india-electricity-subsidies |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{sharma2020unpacking, author = {Sharma,, Prateek Aggarwal,Anjali Viswamohanan,Danwant Narayanaswamy,Shruti}, title = {{Unpacking India’s Electricity Subsidies: Reporting, transparency, and efficacy}}, institution = {International Institute for Sustainable Development}, year = {2020}, month = dec, url = {https://www.iisd.org/publications/india-electricity-subsidies}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }