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Insights on India’s power distribution sector based on the 11th Integrated Ratings

Current analysis is based on FY22 data collected as part of the 11th Integrated Rating Exercise. All financial data is cash-adjusted.

Distribution of Gap / AT&C Loss


Absolute Gap (crores) ​ I ​ Gap (%) ​ I ​ ​ ACS-ARR (cash adjusted)(INR/kWh)



Financial deficit in India’s power distribution sector nearly halved in FY22 as compared to FY20, despite an 8 percent increase in gross input energy

Driven by 50 percent improvement in ACS-ARR Gap, which captures the cash-adjusted gap per unit energy. Power distribution entities were recording a loss of 79 paise per unit energy in FY20, which reduced to only 39 paise per unit energy in FY22.

Trend in national cash adjusted gap for FY20 to FY22 (in INR ‘000 crores)

Improving absolute cash adjusted gap​ (INR ‘000 crores)

Stable gross input energy in sector(MUs)

Improving per unit cash adjusted gap
(INR per kWh)

Losses in the distribution sector not evenly distributed across states

The distribution of the cumulative gap shows that sectoral losses are concentrated in only a few states, with three states actually commanding a surplus. AT&C losses are also not evenly distributed across the country—while some states report best-in-class losses of 5-13%, others are deeply in the red, with losses exceeding 30%.

Liquidity position

The sector continued to suffer from liquidity crunch, with discoms’ current liabilities (INR ~6.64 lakh crore) exceeding their overall current assets and amounting to nearly twice the value of their current liquid assets (INR ~3.64 lakh crore). The sector’s Adjusted Quick Ratio was ~0.55 in FY22.

In FY22, the sector cleared-off accumulated payables from FY21 to reach pre-COVID19 levels

Payables to generation and transmission companies (GenCos and TransCos) were adversely impacted in FY21, driven by significant financial losses in the sector and an increase in consumers’ receivables. As a result, the days payable increased from 162 days in FY20 to 176 days in FY21. Notably, the utilities cleared payables which accumulated in FY21, and reverted to pre-COVID levels (~161 days) in FY22. Despite this positive trend, days payables remain much higher than desired levels, considering that LPS Rules, 2022 specify a timeline of 45 days for clearing bills.

Growth in payables to GenCos and TransCos over FY20-FY22 (in INR ‘000 crores)

Payables to GenCos & TransCos​ (INR ‘000 crores)

Stable power purchase costs in sector​ (INR ‘000 crores)

Increasing days payable to GenCos and TransCos​ (Days)

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