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

This report assesses the financial sustainability of the electricity sector in Rajasthan, India, using the Financial Sustainability Electricity Sector (FSES) framework. It finds that while generation capacity and reliability have improved, distribution companies (discoms) face severe financial distress due to an inability to recover operating costs through tariffs, leading to high debt and a heavy reliance on state government fiscal transfers.

• Rajasthan's distribution companies (discoms) are experiencing severe financial instability, characterized by a persistent gap between the average cost of supply and average revenue realization. This has led to a significant increase in debt, with loans and bonds rising from INR 31,583 crore in FY 2010 to INR 70,863 crore in FY 2014. Consequently, there is an increasing dependence on state government fiscal transfers, which grew by 269 per cent between FY 2007 and FY 2013.
• Generation reliability in Rajasthan has improved significantly between FY 2010 and FY 2014. Total generation capacity increased by over 80 per cent, resulting in the energy deficit dropping from 3.9 per cent in FY 2012 to less than 1 per cent in FY 2014, and peak shortages falling from 7 per cent in FY 2012 to zero in FY 2014.
• There is a critical imbalance between investment in generation and investment in transmission and distribution (T&D) infrastructure. While generation capacity grew at a compound annual growth rate (CAGR) of 15 per cent from FY 2010 to FY 2014, the lack of corresponding T&D investment has caused technical and distribution losses and the curtailment of renewable energy generation.
• Renewable energy capacity in Rajasthan grew rapidly, with a CAGR of 40.8 per cent between FY 2010 and FY 2014, increasing its share of total installed capacity from 11 per cent to 25 per cent. However, the actual share of renewable energy in the total generation mix has remained relatively static, indicating barriers to integrating this capacity into the sector.
• Rural electrification in Rajasthan is reported at approximately 98 per cent, but the report notes this is based on a weak definition where a village is considered electrified if only 10 per cent of households are connected. Data shows that only 74 per cent of villages have more than 30 per cent of households connected to the grid.
• The Government of Rajasthan joined the Ujwal Discom Assurance Yojana (UDAY) scheme in January 2016 to address discom debt. Under this agreement, the state government will take over INR 60,500 crore of debt, with the remaining INR 20,000 crore issued as state-guaranteed bonds, potentially saving discoms around INR 3,000 crore annually in interest costs.

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} }