In a stark contrast to the financial strain gripping India's power sector, Uttar Pradesh has emerged as a standout performer by significantly reducing its outstanding debt over the last five years. While most states grapple with escalating liabilities, UP's disciplined fiscal management offers a blueprint for recovery.
National Debt Surge vs. UP's Decline
Fresh data presented in the Lok Sabha by Minister of State for Power Shripad Naik reveals a troubling national picture. The country's total outstanding power sector debt ballooned from ₹5.76 lakh crore in 2020–21 to ₹8.05 lakh crore in 2024–25, marking a sharp increase of nearly 40%. This surge underscores the severe financial stress burdening distribution companies (discoms) across India.
Against this bleak backdrop, Uttar Pradesh charts a remarkably different course. The state successfully reduced its outstanding power debt from ₹81,952 crore in 2020–21 to ₹61,395 crore in 2024–25. This represents a substantial decline of approximately 25%, showcasing a sustained commitment to fiscal correction.
Sharp Contrast with Other Major States
The divergence between Uttar Pradesh's trajectory and that of other large states is pronounced. During the same five-year period, several key states witnessed their power debts skyrocket:
- Tamil Nadu: Debt rose from ₹1.37 lakh crore to ₹1.88 lakh crore.
- Rajasthan: Debt nearly doubled, jumping from ₹53,030 crore to ₹98,488 crore.
- Maharashtra: Debt saw a dramatic increase from ₹38,254 crore to ₹90,659 crore.
States like Haryana, Telangana, and Karnataka also recorded steep increases. This mounting debt has crippled the ability of many discoms to invest in crucial grid upgrades, modern systems, and improved customer service.
The Union Power Ministry attributes the nationwide rise in liabilities to deep-rooted sectoral weaknesses. Key factors include:
- Tariffs that do not reflect actual costs.
- Delays in revising electricity tariffs.
- Operational inefficiencies within discoms.
- Late payment of subsidies by state governments.
- Over-reliance on short-term loans to cover funding gaps.
These issues have led to heavy accumulated losses for state-owned discoms, further eroding their capacity to modernize aging infrastructure.
The UP Turnaround Story
Uttar Pradesh's journey to lower debt demonstrates a consistent, year-on-year effort. After reaching a five-year peak of ₹82,047 crore in 2021–22, the state began a steady reduction. Borrowings were brought down to ₹67,937 crore by 2023–24, before falling further to the current ₹61,395 crore in 2024–25.
According to Avadhesh Kumar Verma, a Central Advisory Committee member and Chairman of the Uttar Pradesh Rajya Vidyut Upbhokta Parishad, this downward trend is a strong indicator of improved financial discipline. He explained that power utilities across India depend heavily on loans from institutions like the Power Finance Corporation (PFC), Rural Electrification Corporation (REC), and commercial banks to cover operational shortfalls. Therefore, a declining outstanding debt is a crucial sign of healthier sectoral performance.
Verma stated that UP's positive trajectory reflects structural strengthening, better fiscal management, and effective efforts to reduce technical and commercial (AT&C) losses. The Ministry of Power also highlighted the growing impact of reforms under the Revamped Distribution Sector Scheme (RDSS). Nationwide measures such as stricter prudential norms, performance-linked borrowing limits, and tighter monitoring of AT&C loss reduction are beginning to show results. Uttar Pradesh, however, appears to have implemented and leveraged these reforms more efficiently than most other states, positioning itself as a model of financial turnaround in a struggling sector.
