India's power distribution sector has achieved a historic financial turnaround, with electricity distribution companies and power departments reporting a collective profit after tax of Rs 2,701 crore in FY2024-25.

This marks the first time the sector has posted a net profit since the unbundling and corporatisation of State Electricity Boards, representing a sharp reversal from a loss of Rs 25,553 crore in FY2023-24.

Union Power Minister Manohar Lal described the development as the beginning of a new chapter for India's power distribution system.

The milestone comes after distribution utilities had remained in the red, with losses reaching Rs 67,962 crore in FY2013-14.

The minister attributed the achievement to reforms driven by Prime Minister Narendra Modi's vision, stating the energy sector plays a significant role in driving India's growth.

The positive performance follows several government reforms aimed at improving the financial health of distribution utilities.

These include the Revamped Distribution Sector Scheme, which focuses on modernising infrastructure and rolling out smart metres, alongside stricter financial norms that link funding access to performance benchmarks.

Outstanding dues to generating companies have declined by 96 per cent from Rs 1,39,947 crore in 2022 to just Rs 4,927 crore by January 2026.

Changes in electricity rules have also helped ensure timely tariff revisions, better cost recovery and transparent accounting of subsidies.

The gap between average cost of supply and average revenue realised has narrowed from Rs 0.78/kWh in FY 2013-14 to Rs 0.06/kWh in FY 2024-25.

Additionally, accumulated losses of distribution utilities showed a year-on-year decline for the first time, falling to Rs 6.39 lakh crore in FY25, down from Rs 6.92 lakh crore in FY24

Despite the positive trend, significant challenges remain.

As of FY2025, distribution utilities continue to grapple with Rs 6.39 lakh crore in accumulated losses and Rs 7.18 lakh crore in debt.