The Revamped Distribution Sector Scheme (RDSS) is a central sector scheme launched by the Ministry of Power, Government of India. It aims to improve the operational efficiencies and financial sustainability of the power distribution companies (DISCOMs) and power departments. The scheme was approved in July 2021 with an outlay of over ₹3.03 lakh crore for a period of five years (FY 2021-22 to FY 2025-26).
Objectives of the Scheme
The primary goals of the RDSS are aligned with ensuring affordable and reliable electricity supply to consumers. The specific objectives include:
- Reducing the Aggregate Technical and Commercial (AT&C) losses from the pan-India level of 21.7% in 2020-21 to 12-15% by 2024-25.
- Reducing the Average Cost of Supply (ACS) and Average Revenue Realized (ARR) gap to zero by 2024-25.
- Improving the quality, reliability, and affordability of power supply to consumers through a financially sustainable and operationally efficient distribution sector.
Key Components of RDSS
The scheme is designed as a results-linked program where financial assistance is contingent upon meeting pre-defined reform-based benchmarks. It consists of two major components:
Part A: Financial Support for Infrastructure Strengthening
This component provides financial assistance for system strengthening to reduce losses and improve efficiency. It covers:
- Smart Metering: Implementation of smart prepaid meters for all consumers, including agricultural connections, in Public-Private Partnership (PPP) mode on a Design-Build-Finance-Own-Operate-Transfer (DBFOT) basis.
- Infrastructure Works: Upgradation and strengthening of the distribution infrastructure, including the separation of agricultural feeders, aerial bunched cabling, and the addition of new substations to reduce technical losses.
- System Modernization: Deployment of advanced technologies such as SCADA (Supervisory Control and Data Acquisition) and DMS (Distribution Management Systems) for better grid monitoring.
Part B: Training, Capacity Building, and Enabling Activities
This component focuses on long-term sustainability through non-infrastructure support:
- Capacity Building: Training programs for DISCOM personnel to enhance technical and managerial competencies.
- IT/OT Initiatives: Scaling up existing IT and Operational Technology (OT) systems to improve billing, collection, and customer service.
- Project Management Support: Providing consultancy and technical support to DISCOMs for the efficient implementation of the projects.
Key Features and Implementation Mechanism
| Feature | Description |
| Funding Pattern | The central government provides grants, with the percentage varying based on the state’s category (General vs. Special Category States). |
| Pre-conditions | States must fulfill certain conditions, such as the publication of audited accounts and the timely payment of government department electricity bills. |
| Results-linked Approach | Funds are released only after the DISCOM achieves mutually agreed-upon performance milestones. |
| Nodal Agencies | Rural Electrification Corporation (REC) and Power Finance Corporation (PFC) act as the nodal agencies for the scheme. |
Performance Benchmarks for DISCOMs
To qualify for financial support, DISCOMs are required to meet trajectory-based improvements in the following areas:
- AT&C Loss Reduction: Achieving specific yearly targets for reducing aggregate technical and commercial losses.
- ACS-ARR Gap Reduction: Closing the gap between the cost of electricity supply and the actual revenue collected.
- Metering Targets: Mandatory transition to smart metering, particularly for high-loss areas and government-owned entities.
- Governance Reforms: Strengthening the financial management and internal audit systems of the distribution companies.
Significance for the Power Sector
- Financial Turnaround: By incentivizing loss reduction, the scheme aims to break the cycle of debt and losses that has historically plagued India’s state-owned DISCOMs.
- Technological Transformation: The mass deployment of smart meters is expected to significantly reduce billing inaccuracies and pilferage.
- Consumer Benefit: A more stable financial position for DISCOMs ensures fewer power cuts and better infrastructure for the end consumer.
- Green Integration: Improved grid stability and monitoring infrastructure facilitate the smoother integration of decentralized renewable energy sources into the distribution network.