Power Sector in India – Issues and Government Initiatives

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Power features as one of the essential and pioneering sources of energy in India. The country envisions to furnish affordable, suitable, renewable, and sustainable sources of power and every to its population. In other words, the key objective of the power and energy sector is to accomplish the parameters of a nation’s growth and development. The article delineates the major segments of the power and energy sector in India. It describes the generation and transmission of power to the different parts of the country.

Additionally, it also emphasizes the growing need for this Power sector in India and how its efficiency will be beneficial in the long run.

Power and Energy Sector in India

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Processing of Power in India

The country processes and distributes power and energy via three major steps:


  • Primarily, different sources of energy help in generating an adequate amount of power.
  • These sources include natural gas, coal, hydro, nuclear, biomass, and renewable sources of energy.
  • In July 2019, India was declared as the largest power generation and energy consumption nation across the globe.
  • Currently, private sector furnishes a total of 46% of power utility in India
  • The central government manages around 24% of such utilities while the state government contributes around 30% of energy generation sources in India.
  • The country ranks 4th in wind power, 6th in solar power, and 6th in clean investment in power sources worldwide.
  • In March 2019, the government initiated the renewable energy generation project for wind, solar, and biomass energies.
  • The Ministry targets to install 175 MW of renewable energy plants by 2022 in India
  • To achieve the above target, the country must produce around 33 GW per year (as opposed to its production of 24 GW per annum right now).
  • Renewable energy needs to be higher for thermal power plants as opposed to wind and solar plants because of the high load capacity of the former.


  • Mostly, central and state-owned companies carry out this process.
  • Power Grid Corporation (1989) features as the sole transmitter of power in India.
  • This Corporation manages, maintains, and implements policies related to power transmission across the different districts and states.
  • As per Electricity Act 2003, consumers can purchase access to power from any power generating plant via the help of their state governments.
  • Transmission lines in India have developed at an annual rate of 6.5% from 2007 to 2019.


  • Finally, this stage caters to the energy outreach from electricity retailers to the consumers.
  • It is mainly operated by state-owned functionaries.
  • The state government needs to take specific measures to improve this stage of energy distribution.

Issues faced by the Power Sector in India

Power generation, transmission, and distribution isn’t a cakewalk. This is because this sector faces continuous challenges in terms of its efficiency and functions. Some of the issues faced by this sector pertaining to the aforementioned steps are as follows:

  • The poor financial health of power distributors units.
  • Varying electricity costs and bills in different regions.
  • Massive aggregate terminal and commercial power damages and losses.
  • Inconsistent power supply duration in most of the rural areas.
  • Low quality of electricity and power distribution in rural and semi-rural areas.
  • As per statistics, around 300 million people still do not have accessibility to power in India.
  • The northeastern states and Jammu and Kashmir face power challenges.
  • According to government statistics, India has an energy surplus of 4.6% and a peak surplus of 2.6%.
  • The declining capacity of thermal power plants.
  • The uneven distribution of renewable energy sources.
  • The high cost of power plant installations.
  • Massive NPAs.
  • Payment delays by DISCOMS.
  • Internal disputes between states overpower and energy.
  • The difference in cost of electricities between states and union territories.
  • Low quality of rural electricity supply.
  • Power inaccessible regions in India.

Government Initiatives to Promote Power and Energy Sector in India

Deen Dayal Upadhaya Gram Jyoti Yojana

  • It aims to furnish continual power and energy supply in rural India.
  • It is an essential component of Rajiv Gandhi Vidyutikaran Yojana (RGGVY).
  • It’s objective is to generate a judicious supply of power in agricultural and non-agricultural consumers of the country.
  • For this, it tries its best to improve the distribution and transmission networks.
  • The scheme provides electronic metering for all rural areas under this initiative.

Integrated Power Development Scheme (IDPS)

  • It caters to strengthen power transmission and distribution in urban regions.
  • It aims to provide electronic metering and technologically equipped electricity facilities in urban areas.

Ujwal DISCOM Assurance Yojana

  • This scheme was launched in 2015, to improve the situation of DISCOMS in crisis.
  • Under this, the states pay around 3/4th of the fiscal debts of the ailing DISCOMS.
  • To accomplish this, the government issues “Uday bonds” to financial institutions such as banks and try raising adequate money.
  • On the other hand, the remaining 25% of the fiscal debt is converted as a loan amount at low-interest rates.
  • In return, the government expects the DISCOM operators to maintain their efficiency through reducing power loss, replacing faulty meter lines, installing smart meters, and activating GIS mapping in their systems.
  • This scheme is optional for states to implement
  • It entails additional coal supplies at low price power from NTPC
  • Deen Dayal Upadhaya Gram Jyoti Yojana, Integrated Power Development Scheme, Power System Development Fund etc. give the Ujjwala Yojana an additional priority-based funding
  • Mandatory smart metering is one of its measures to improve this sector
  • This scheme is likely to put more financial pressure on states due to an economic slowdown and poor quality DISCOMS
  • As per the central bank, DISCOMS is a great financial burden on a state

One Nation, One Grid

  • Under this scheme, the country ensures the connectivity of its regional grids into a single network
  • Further, this grid integration helps in generating surplus power and energy across the nation-states


  • The full form of SAMADHAN is Scheme of Asset Management and Debt Change Structure prevents the power project from liquidation during the times of financial crisis.
  • For this, the government instructs the banks to cover up energy plant losses and restore the financial balance.
    This further reduces debt and converts it into equities so that it attracts bidders and future buyers.

Saubhagya Scheme

  • Also known as Pradhan Mantri’s Sahaj Bijli Har Ghar Yojana.
  • Under this, the government promises to furnish adequate electricity to each and every household of the nation.
  • Additionally, it also provides free electricity to the socio-economically weaker sections of the society and charges a nominal amount of INR 500 from the rest.
  • However, this has resulted in a financial crisis and the government is taking all feasible measures to curb this loss.

How to Solve the Electricity Problem in India

  • Accurate regulation of energy and power supply across the different parts of the country.
  • Installation of smart meters in every household.
  • Approval and acceptance of tech-billing and collection.
  • Promoting renewable sources of energy such as hydropower, solar energy, wind energy, etc. as far as possible.
  • In fact, the centre has proposed a budget of 22000 crores for renewable energy resources for modernizing electricity generation, transmission, and distribution.
  • The government targets to install a total of 175 GW of renewable energy capacity in India.
  • Also, the Power System Development Fund (PSDF) has been awarded a budget of 6000 crores.
  • A single public utility block to monitor energy efficiency.
  • Flexible and consume -friendly tariff structures keeping in mind the market losses as well.

Economic Survey 2020

  • Power sector encounters a paradigm shift due to the government’s investment in this sector
  • Integrated with the government’s universal electrification drive to hike power generation and transmission
  • It has further improved India’s world rank in this sector (76th world rank)
  • Increase in power generation capacity from 344GW to 346GW in 2019
  • However, the finances pertaining to this sector are still in crisis and require maintenance

Power Sector Budget 2020

  • A budget of 22 thousand crores proposed by the central government for power and renewable energy sector
  • Conventional meters to be substituted with DISCOMS and pre-paid meters
  • Power System Development Fund has approved a budget of 6000 crores for modernizing power and energy transmission and distribution


Altogether, the power and energy sector stands crucial to the overall electricity dynamics in the country. In fact, its major contribution significantly impacts the other sectors such as economy, finance, railways, etc.

Thus, both the government and individuals must work to improve this sector to the best of their potential. Each of us should pledge to preserve, reserve, and conserve energy and make it sustainable for the future.

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