India’s progress in electricity access over the past two decades represents one of the most consequential public infrastructure transformations globally. Yet, as policymakers now confront issues of reliability, financial sustainability, and grid stability, experts argue that the next phase of reform must focus squarely on electricity distribution, tariff rationalization and system modernisation.

This crucial topic is discussed threadbare in the latest episode, in which Geetanjali Minhas speaks to policy and industry veterans and experts.

To watch this episode of Checks and Balances, click here: https://www.youtube.com/watch?v=REhM8kdQigM&list=PLAL9BzZjy-arPgMr6rtpRuUo7j0cIqVdW

Ajay Shankar, IAS (Retd) and Distinguished Fellow, TERI, who is a former Joint Secretary in the Ministry of Power, recalls that in 2000 nearly 45% of India’s population lacked access to electricity – a level worse than sub-Saharan Africa at the time. “I remember drafting a parliamentary reply stating that at the prevailing pace, electrification in Bihar would take more than 700 years,” he said, underscoring the depth of the access crisis at the turn of the century.

Between 2007–08 and 2019–20, however, nearly 700 million people gained access to electricity, completing household electrification in what the International Energy Agency has termed a historically unprecedented achievement. India alone accounted for nearly 80% of the global increase in electricity access since the mid-2000s, according to experts involved in the rollout of national electrification programmes.

Defining Universal Electrification Realistically
Policy experts caution against interpreting “100% electrification” as a static or absolute condition. India’s persistent poverty means a small proportion – an estimated 1–1.5% – of households remain structurally difficult to serve due to the absence of permanent housing, migratory living conditions or extreme remoteness. Nevertheless, transmission infrastructure has reached most habitations, and access constraints are increasingly socio-economic rather than physical.

More significant has been the improvement in supply availability. Villages in historically underserved states such as Bihar and Uttar Pradesh now receive 16–18 hours of electricity daily, a level that was limited to major urban centres two decades ago. This marks a qualitative shift from access-led policy to consumption-led demand growth.

Distribution: The Binding Constraint
Despite adequate national generation capacity, electricity distribution has emerged as the binding constraint in India’s power sector. Consumers interface with distribution companies (discoms), whose financial and operational performance varies sharply across states.

Rising appliance ownership, air-conditioning demand and electrification of rural consumption have pushed distribution networks beyond their designed capacity. Shankar notes that discoms must invest ahead of anticipated demand, yet most are financially incapable of doing so. Aging infrastructure, high losses and inadequate capital expenditure have resulted in reliability gaps and visible network degradation.

State-level governance choices have produced divergent outcomes. Gujarat’s reforms, particularly feeder separation, realistic tariff-setting, and transparent subsidies for agriculture, created a financially viable electricity system. Delhi’s decision to privatise distribution improved service quality and reduced losses. In contrast, the states that have frozen tariffs for political reasons continue to experience chronic distribution stress.

Tariffs, Subsidies and Political Economy
Electricity tariffs remain among the most politically sensitive instruments of economic policy. While agriculture subsidies estimated at over Rs 80,000 crore annually are explicitly budgeted by states, household tariffs have often been suppressed without adequate compensation to discoms, leading to structural revenue gaps.

Recent policy initiatives signal a potential rebalancing. The government’s rooftop solar programme aims to provide 300 free units per month to economically weaker households. According to Shankar, this effectively defines a lifeline consumption threshold, beyond which tariffs can reflect the true cost of supply. Simplifying the current multi-slab tariff architecture could also reduce discretion, improve billing transparency, and strengthen regulatory governance.

Renewable Expansion and Grid-Level Risks
India’s renewable energy expansion driven overwhelmingly by private investment through competitive bidding mechanisms has enabled ambitious commitments, including 500 GW of non-fossil capacity by 2030. Solar tariffs have fallen to approximately Rs 2.5 per unit, well below the cost of new thermal generation.

However, experts warn that renewable scale-up is exposing grid stability risks. Binit Das, Programme Manager, Renewable Energy at the Centre for Science and Environment, points to declining grid inertia as coal plants retire and inverter-based renewables dominate. Without sufficient storage, hybridisation, and transmission reinforcement, high renewable injection can lead to frequency instability and congestion.

Energy storage is increasingly viewed as the critical enabler. Solar-plus-storage projects are now cost-competitive with new coal plants and can be deployed in significantly shorter timeframes. Scaling storage capacity is therefore central to meeting incremental demand while maintaining system stability.

Financial Stress and the Reform Agenda
Despite repeated bailout packages, discom finances remain fragile. As of March 2023, 38 state-owned discoms had accumulated losses exceeding Rs 6.7 lakh crore, with rising debt and persistent gaps between average cost of supply and average revenue realised. High AT&C losses, delayed subsidy payments, non-reflective tariffs and rigid power purchase agreements continue to undermine viability.

Energy Policy expert Debajit Palit, Centre Head, Centre for Climate Change and Energy Transition at Chintan Research Foundation, argues that while India has largely completed village and household electrification, the remaining challenges lie in reliable supply and responsive service delivery, both of which fall squarely within the domain of state governments. Without financially sound utilities, improvements in service quality and consumer trust remain elusive.

From Access to System Reform
Policy consensus is emerging that India must now transition from an access-centric paradigm to a system reform agenda. This includes tariff rationalisation, investment in distribution infrastructure, selective private participation, digitalisation through initiatives such as the India Energy Stack, and institutional capacity building within discoms.

India’s electrification journey demonstrates the State’s capacity to deliver at scale when there is policy alignment. Whether the country can now translate near-universal access into a reliable, affordable and low-carbon electricity system will depend on politically difficult but economically necessary choices at the state level. The outcome will shape not only India’s energy transition but also its broader development trajectory.