{"id":252266,"date":"2023-07-15T20:44:36","date_gmt":"2023-07-15T15:14:36","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=252266"},"modified":"2023-08-31T12:40:52","modified_gmt":"2023-08-31T07:10:52","slug":"discoms-still-an-area-of-darkness","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/discoms-still-an-area-of-darkness\/","title":{"rendered":"Discoms still an area of darkness"},"content":{"rendered":"\n

Source:<\/strong> The post is based on the article \u201c Discoms still an area of darkness<\/strong> \u201d published in \u201c Business standard\u201d on 15th July 2023.<\/p>\n

Syllabus:<\/strong> GS 3 – Infrastructure ( Energy)<\/p>\n

News:<\/strong> The revenues of electricity distribution companies (Discoms) in India have declined over a 12-year period, from 75% of total revenues in FY10 to 71% in FY22. This is despite government interventions to improve financial and operational efficiencies.<\/p>\n

What are reasons for decline in the revenues of Indian Discoms?<\/strong><\/h2>\n

Reduced consumer payment:<\/strong> According to a study by Prabhat Barnwal and Nicholas Ryan, the revenues collected from bill-paying consumers have declined from 75% of total revenues in FY10 to 71% in FY22.<\/p>\n

Free or subsidized power:<\/strong> To cater to lower-income groups, several states are providing free or subsidized power. This has led to lesser revenue collection from consumers.<\/p>\n

Less incentive for loss reduction:<\/strong> Power Finance Corporation data notes that there is little incentive for discoms to reduce losses as their primary focus is ensuring power supply across their grid.<\/p>\n

What are the impacts of decline in the revenues of Indian Discoms?<\/strong><\/h2>\n

Increased government subsidies:<\/strong> As consumer revenues decline, discoms have become heavily reliant on government subsidies and grants. This lead to a lack of financial discipline. For example, profits reported by two of Rajasthan’s discoms in FY22 were largely due to state subsidies and grants from the Ujjwal Discom Assurance Yojana (UDAY).<\/p>\n

Pressure on industrial sector:<\/strong> The shortfall in consumer payments is often compensated by increasing the price of electricity for the industrial sector. This increases operational costs for industries.<\/p>\n

Potential for service instability:<\/strong> With lower revenues, discoms face challenges in managing their operating expenses, servicing debts, and investing in infrastructure. This can potentially affect the quality and reliability of power supply.<\/p>\n

Economic sustainability:<\/strong> The continuous decline in revenues and dependence on government support questions the fiscal sustainability of the power sector in the long run.<\/p>\n

What are possible solutions for improving the finances of Discoms?<\/strong><\/h2>\n

Open Access:<\/strong> Introduce competition among discoms. Allow consumers to choose their power provider, similar to the telecom sector.<\/p>\n

Smart Metering:<\/strong> Implement smart meters across the country. As of June 2023, only 3% of consumers have a smart meter, but installation is increasing in states like Bihar, Assam, and Haryana.<\/p>\n

Time-of-Day Metering:<\/strong> Encourage consumers to use power during non-peak hours by offering lower bills, thus balancing demand and reducing costs.<\/p>\n

Reform measures:<\/strong> Implement various reform measures including fuel & power purchase adjustment surcharge (FPPAS) rules and ensure timely recovery of Government dues to improve the financial health of discoms.<\/p>\n","protected":false},"excerpt":{"rendered":"

Source: The post is based on the article \u201c Discoms still an area of darkness \u201d published in \u201c Business standard\u201d on 15th July 2023. Syllabus: GS 3 – Infrastructure ( Energy) News: The revenues of electricity distribution companies (Discoms) in India have declined over a 12-year period, from 75% of total revenues in FY10… Continue reading Discoms still an area of darkness<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[10503,216,8184],"class_list":["post-252266","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-business-standard","tag-gs-paper-3","tag-indian-economy","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/252266","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=252266"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/252266\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=252266"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=252266"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=252266"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}