Perceptions of Electricity Sector Reform in Uttar Pradesh

The report analyzes the financial instability of electricity distribution companies (discoms) in Uttar Pradesh, where a significant revenue gap of INR 21,486 crores existed in FY16. It examines consumer attitudes toward tariff hikes, revealing that while most expect increases, there is strong opposition to them unless linked to service improvements. The report also evaluates the UDAY scheme, finding that while it has reduced interest costs through bond issuance, progress on key operational milestones like smart metering and feeder segregation has been limited. Recommendations include improving rural metering, implementing targeted compensation for vulnerable users, and enhancing communication strategies to build public support for cost-reflective tariffs.

• Electricity distribution companies (discoms) in Uttar Pradesh are financially unsustainable, with a revenue gap of INR 21,486 crores (USD 3.2 billion) in FY16.
• Metering and billing efficiency are critically low in rural areas, with only 25% of rural households having a meter installed compared to 85% of urban households; consequently, less than 10% of the rural population pays for grid electricity based on meter readings.
• There is a strong consensus among both rural and urban households (over 80%) that the government should provide free electricity to poor people, although there is no general sense of entitlement to free electricity for all consumers.
• Industrial and commercial consumers strongly oppose the current cross-subsidy system, with 81% of industrial and 68% of commercial interviewees against paying higher tariffs to keep agriculture and household rates lower.
• Most consumers across all groups expect electricity tariffs to increase over the next five years, and a majority of residential households prefer a one-time immediate increase over gradual monthly hikes.
• The UDAY scheme has provided financial relief by saving the state INR 3,323 crore (USD 506 million) in interest costs through the issuance of bonds totaling INR 49,847 crores (USD 7.5 billion).
• Progress on UDAY operational milestones in Uttar Pradesh has been limited; while feeder metering and LED distribution have seen success, there has been little to no progress in smart metering, feeder segregation, or consumer indexing.
• Agricultural consumers using electric pumps are largely unaware of their subsidies, with only 7 out of 67 interviewed farmers knowing their tariffs were subsidized.
• Industrial and commercial consumers report that absorbing the costs of tariff hikes is their only available coping mechanism due to locked-in production cycles and the lack of competitive open-market power options in the state.

APA

Sharma, S., Moerenhout, T., & Garg, V. (2018). Perceptions of Electricity Sector Reform in Uttar Pradesh. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/electricity-sector-reform-uttar-pradesh.pdf

Chicago

Sharma, Shruti, Tom Moerenhout, and Vibhuti Garg. Perceptions of Electricity Sector Reform in Uttar Pradesh. International Institute for Sustainable Development, 2018. https://www.iisd.org/system/files/publications/electricity-sector-reform-uttar-pradesh.pdf.

Wikipedia

{{cite report |last1=Sharma |first1=Shruti |last2=Moerenhout |first2=Tom |last3=Garg |first3=Vibhuti |title=Perceptions of Electricity Sector Reform in Uttar Pradesh |publisher=International Institute for Sustainable Development |date=March 2018 |url=https://www.iisd.org/system/files/publications/electricity-sector-reform-uttar-pradesh.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{sharma2018perceptions, author = {Sharma, Shruti and Moerenhout, Tom and Garg, Vibhuti}, title = {{Perceptions of Electricity Sector Reform in Uttar Pradesh}}, institution = {International Institute for Sustainable Development}, year = {2018}, month = mar, url = {https://www.iisd.org/system/files/publications/electricity-sector-reform-uttar-pradesh.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }