An Assessment of the Financial Sustainability of the Electricity Sector in Rajasthan

The report finds that while Rajasthan has successfully increased its generation capacity and improved reliability, its distribution companies (discoms) face a severe financial crisis. Discoms are unable to recover operating costs through tariffs, leading to mounting debt and a heavy reliance on state government fiscal transfers. Although renewable energy capacity has grown rapidly, investment gaps in transmission and distribution (T&D) infrastructure hinder the integration of these sources and the achievement of comprehensive rural electrification.

• Rajasthan's distribution companies (discoms) suffer from a persistent inability to recover operating costs through power sales, resulting in significant debt and a reliance on state government subsidies. Loans and bonds more than doubled from INR 31,583 crore in FY 2010 to INR 70,863 crore in FY 2014.
• Generation reliability in Rajasthan has improved, with peak shortages falling to zero in FY 2014 from 7 per cent in FY 2012, and the energy deficit decreasing from 3.9 per cent in FY 2012 to less than 1 per cent in FY 2014.
• While total generation capacity grew at a compound annual growth rate (CAGR) of 15 per cent between FY 2010 and FY 2014, this growth was not matched by investments in transmission and distribution (T&D) infrastructure, leading to power curtailment and technical losses.
• Renewable energy capacity in Rajasthan grew rapidly at a CAGR of 40.8 per cent from FY 2010 to FY 2014, increasing its share of the total installed capacity mix from 11 per cent to 25 per cent.
• Despite the increase in renewable capacity, the actual share of renewable generation in the total mix has remained relatively static, suggesting significant barriers to integrating these sources into the sector.
• Rural electrification in Rajasthan is reported at approximately 98 per cent, but this figure is based on a weak definition where a village is considered electrified if only 10 per cent of households are connected. Only 74 per cent of villages have more than 30 per cent of households connected to the grid.
• The Ujwal Discom Assurance Yojana (UDAY) scheme, joined by Rajasthan in January 2016, aims to reduce discom debt by having the state government take over INR 60,500 crore of debt and issuing INR 20,000 crore in state-guaranteed bonds, potentially saving INR 3,000 crore annually in interest.

APA

Garg, V., Sanchez, L., & Bridle, R. (2016). An Assessment of the Financial Sustainability of the Electricity Sector in Rajasthan. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/assessment-financial-sustainability-electricity-sector-rajasthan.pdf

Chicago

Garg, Vibhuti, Lourdes Sanchez, and Richard Bridle. An Assessment of the Financial Sustainability of the Electricity Sector in Rajasthan. International Institute for Sustainable Development, 2016. https://www.iisd.org/system/files/publications/assessment-financial-sustainability-electricity-sector-rajasthan.pdf.

Wikipedia

{{cite report |last1=Garg |first1=Vibhuti |last2=Sanchez |first2=Lourdes |last3=Bridle |first3=Richard |title=An Assessment of the Financial Sustainability of the Electricity Sector in Rajasthan |publisher=International Institute for Sustainable Development |date=August 2016 |url=https://www.iisd.org/system/files/publications/assessment-financial-sustainability-electricity-sector-rajasthan.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{garg2016assessment, author = {Garg, Vibhuti and Sanchez, Lourdes and Bridle, Richard}, title = {{An Assessment of the Financial Sustainability of the Electricity Sector in Rajasthan}}, institution = {International Institute for Sustainable Development}, year = {2016}, month = aug, url = {https://www.iisd.org/system/files/publications/assessment-financial-sustainability-electricity-sector-rajasthan.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }