Revamped Distribution Sector Scheme (RDSS)

The Revamped Distribution Sector Scheme (RDSS) - A Reform based and Results linked scheme, launched by the Government of India, in July 2021, aims at transforming the electricity distribution sector.

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Government of India launched the Revamped Distribution Sector Scheme (RDSS) with an outlay of Rs. 3,03,758 crore and estimated GBS from Central Government of Rs. 97,631 crore for the duration of 5 years i.e. from (FY 2021-22 to FY 2025-26).

The Scheme aims to reduce the Aggregate Technical & Commercial (AT&C) losses to pan-India levels of 12-15% and Average Cost of Supply (ACS) - Average Revenue Realised (ARR) gap to zero by 2024-25.

The Scheme has two major components: Part A -  Financial support for Prepaid Smart Metering & System Metering and upgradation of the Distribution Infrastructure and Part B - Training & Capacity Building and other Enabling & Supporting Activities. Financial assistance to DISCOMs is provided for upgradation of the Distribution Infrastructure and for Prepaid Smart Consumer Metering & System Metering based on meeting pre-qualifying criteria and achieving basic minimum benchmark in reforms.

The scheme provides for financial assistance to DISCOMs to implement prepaid smart metering for consumers and strengthening of distribution infrastructure based on a 2-tier evaluation framework comprising of

  1. Pre-Qualification Criteria and
  2. Result Evaluation Matrix of various performance parameters with yearly targets.

DISCOMs to qualify for receiving grant funds under the scheme need to mandatorily comply with the pre-qualifying criteria and also achieve basic minimum benchmarks score of 60% as per Result Evaluation Matrix approved for each of the DISCOMs. The Pre-Qualification criteria include timely publishing of audited annual accounts and un-audited quarterly accounts, timely release of subsidy and government department dues by State/UT, no new creation of regulatory assets, pre-paid metering of government departments, timely payment of GENCO dues and timely publishing of Tariff & True up Orders by Regulators. The Result Evaluation Matrix comprises of various performance parameters in four categories viz. i. Financial Sustainability, ii. Operational – Outcomes of infrastructure works, iii. Infrastructure works &iv. Policy & Structural Reforms, Capacity Building and IT/OT Enablement.

Reforms undertaken by DISCOMs under the scheme have started showing the desired results in first year itself. The average AT&C loss of distribution utilities in country has reduced from 22.32% in FY 2020-21 to 16.44% in FY 2021-22. Similarly, there has been an improvement in the average revenue realization by the DISCOMs. Timely payments of subsidy and Govt. department dues by State Governments have also contributed to increased revenue. All these have resulted in reduction of ACS-ARR gap for DISCOMs. The ACS-ARR gap has also significantly reduced from Rs. 0.69/kWh in FY 2020-21 to Rs. 0.15/kWh in FY 2021-22. As a result, financial health of the DISCOMs is improving and DISCOMs are in much better position to ensure quality and reliable power supply to its consumers.