The power sector of India is at a turning point where it needs to support a fast-growing economy and at the same time go green. The Draft Electricity Amendment Bill, 2025, portrays a bold and farsighted move that is in line with the ultimate aim of Viksit Bharat by 2047. Besides being a landmark in dealing with issues that have been piling up in the sector for a long time, the reform also paves the way for enhanced financial stability and a competitive, clean energy future.
The need for electricity reforms
So far, after the enactment of the Electricity Act in 2003, the sector has undergone significant changes; however, it is still haunted by financial problems especially in the distribution division, where losses have been more than 6.9 trillion rupees. The main sources of these losses are tariffs that are below the real cost of supply, hence deficits have become a practice leading to less money for investments and power supply. At the same time, high cross-subsidies cause the rise of industrial tariffs which make Indian products less competitive in the global market and limit the growth of MSMEs. Besides, the absence of timely tariff adjustments and regulatory delays worsen the situation that eventually comes down to consumers and the economy.
These problems call for a solution in the form of reforms that will bring about implementation of cost-reflective tariffs, competition, regulatory accountability, and clean energy transition facilitation. The draft bill envisages a situation wherein electricity regulatory commissions would be charged with the responsibility of ensuring that tariffs are cost-reflective and that they can also allow suo moto revising tariffs to avert delays, thus, financial health restoration and investment attraction will be their outcomes.
In sync with the vision of Viksit Bharat 2047
The main goal of Viksit Bharat 2047 is to create a developed, self-reliant, and globally competitive economy of India which will be powered by a resilient infrastructure. The per capita use of electricity is to be four times of what it is at present, and the growth of industry, transport, and urbanization is to be the drivers of the increased consumption.
The major emphasis of the Bill on tariff rationalization, industrial and transport sectors exemption from cross-subsidies in five years, and captive power generation encouragement are in complete harmony with the vision. It intends to accomplish this through the reduction of energy costs for manufacturing enterprises, railways, and metro systems which will lead to the cutting of transportation costs and the overall economic productivity growth. Besides, the pledge to a sustainable energy future made explicit through the introduction of market-based mechanisms for renewable capacity expansion and binding non-fossil energy consumption targets is a must for Viksit Bharat to accomplish its environmental and economic goals.
Problems addressed so far: India’s power sector problems in the past
- High cross-subsidies burdening industries and transport, reducing their competitiveness.
- Duplication of infrastructure in distribution networks as a result of multiple licensees operating parallel systems.
- Regulatory uncertainties and lack of accountability which result in delays and inefficiencies.
- Limited use of clean energy because of lack of market frameworks and enforcement mechanisms.
- Just as the electricity grid is becoming more and more digitized, there are cybersecurity threats that have not been dealt with yet.
- Financial losses of DISCOMs caused by non-cost-reflective tariffs and regulatory delays.
The present Bill tackles these problems head-on by requiring that tariffs be set transparently and allowing distribution licensees to share networks in order to avert duplication. Further, it enhances regulatory accountability features with the imposition of strict timelines and offers clear frameworks for captive generation and non-fossil energy mandates. In addition, it sets out cybersecurity standards that take into account the latest grid realities.
A bold step reflecting a pro-reform government
The Draft Electricity Amendment Bill, 2025, is an announcement of the government’s intention to follow a progressive and reform-oriented course. By urging for extensive changes, which could be politically sensitive, such as the enforcement of cost-reflective tariffs, the gradual elimination of cross-subsidies, and the introduction of punitive measures to tackle renewable energy shortfalls, it shows that the government is ready to tackle head-on the inefficiencies that are deeply rooted in the sector.
The establishment of an Electricity Council to coordinate policy between the Centre and States is a perfect example of cooperative federalism which is necessary for the unification of reform progress. Regulators being legally empowered to take suo moto actions and the tightening of accountability norms leading to increased investor confidence and ensuring that consumers are the ones who get the benefits on time make up the rest of the picture.
In short, the Bill is indicative of a government which is willing to sacrifice its political expediency in the short-term for the sake of sustainability of the sector in the long-term by accepting structural reforms which will be the foundation of India’s energy security, industrial competitiveness, and climate commitments in the coming years.
The Draft Electricity Amendment Bill, 2025, is a landmark reform that not only recognizes but also resolutely handles the challenges of the Indian power sector through extensive legal and regulatory changes. By aligning itself with the vision of Viksit Bharat 2047, concentrating on financial sustainability, competitiveness, and clean energy transition, it positions the power sector as a core engine for India’s development.
This bold legislative move is the reflection of a pro-reform government that the author envisions to be, which is resolute in unlocking India’s total economic potential by making sure that electricity is affordable, reliable, and sustainable for all. It is a move that is decisive in moving towards a resilient energy future that will be the light bearer to a developed India.
