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.
Reduction in ACS-ARR gap in the sector
Absolute cash-adjusted gap improvement was driven by higher subsidy disbursal by states, and better cash collections
Aggregate subsidy disbursement by states, increased from INR 124,000 crore in FY20 to INR 179,000 crore in FY22. Shortfall in cash collection (the cash-adjustment component) also improved – in FY20, cash adjusted revenue was INR 38,000 crore lower than accrued revenue, compared with INR 23,000 crore in FY22.
(FY 2020) (INR '000 Crores)
|Amount (INR/kWh)||Amount |
(FY 2022) (INR '000 Crores)
|Amount (INR/kWh)||CAGR |
FY 2019 - FY 2022
|Revenue Booked (excl. Subsidy)|
|Receivables cash adjustment|
|Power Purchase cost|
|Gap / Surplus|
Utility ACS-ARR Gap vs Trajectory Comparison
Of the 65 utilities with FY22 financials available, 34 showed an improving ACS-ARR trajectory in FY22. These together held 48 percent of the sector’s debt and 64 percent of sector’s payables to GenCos & TransCos. This is a significant shift from the 10th Integrated Ratings, wherein only 15 utilities, holding 22 percent of sector’s payables and 29 percent of sector’s debt, showed an improving trajectory.
% share in sector debt
% share in GenCo & Transco Payables