J&K’s Power purchase bill rises 20% while revenue grows only 10%, widening fiscal gap

Srinagar, Sep 30: Jammu and Kashmir’s power sector continues to strain the Union Territory’s finances, with the Rs 9,886 crore power purchase bill in 2024-25 growing nearly 20% while revenue from power receipts rose by only about 10% highlighting a widening fiscal gap.

A senior government official informed that while the power purchase bill has increased by around 20%, revenue realisation has grown by only around 10%, signalling the urgent need for corrective measures. High Aggregate Technical and Commercial (AT&C) losses and systemic inefficiencies have compounded the problem, leading to mounting liabilities and escalating debt. “Chief Secretary, during a recent review meeting, pointed out that this gap needs to be bridged soon as it is straining UT’s financial resources. And it is a loss to the state exchequer.”

“One of our biggest challenges has been the gap between the cost of supplying power and the revenue we recover. While the average cost per unit is Rs 7, we recover only about Rs 2.5 per unit due to high AT&C losses and systemic inefficiencies. The government is taking steps through smart metering, better billing, and distribution modernisation to bridge this gap and make the sector financially sustainable.”

Power receipts in the UT have shown uneven growth, standing at Rs 2,034 crore in 2018-19, rising to Rs 2,890 crore in 2019-20, before dipping to Rs 2,350 crore in 2020-21. Receipts then climbed to Rs 2,716 crore in 2021-22 and Rs 3,308 crore in 2022-23, and in 2023-24 it rose to Rs 4209 crore. In stark contrast, the power purchase bill rose steadily from Rs 7,847 crore in 2020-21 to Rs 9,008 crore in 2021-22, reaching Rs 9,886 crore in 2024-25.

High Aggregate Technical and Commercial (AT&C) losses have forced the government to borrow around Rs 28,000 crore in recent years to cover power costs, pushing public debt from 48% of GSDP in FY 2015-16 to 52% in 2023-24. Analysts warn that unless systemic inefficiencies are addressed, the sector will continue to drain the UT’s scarce financial resources, limiting investments in infrastructure and development.

The government has launched reforms, including 100% smart metering, modernisation of the distribution network, and optimised repayment schedules to reduce high-cost borrowing. Officials aim to bring down AT&C losses from 41% to 25% by 2025-26, which would improve revenue recovery and reduce the fiscal burden.

Experts say that bridging the gap between cost and revenue is not just an operational necessity but a cornerstone for broader fiscal stability in J&K. “Delays in implementing reforms could worsen the financial strain, but if measures are executed effectively, the power sector could be turned into a sustainable, revenue-generating asset,” analysts said.

The UT’s power paradox—where expenditure far outpaces revenue—remains a pressing challenge. Rising power bills continue to siphon scarce resources, but a combination of smart metering, improved billing, and distribution modernisation offers a potential pathway toward a financially stable power sector, provided reforms are implemented rigorously and efficiently.