The unidirectional push by the Union Government for privatisation of the power sector is likely to have crippling effects on the future of the farmers, common consumers and weaker sections of society. The central government released the draft of the Electricity (Amendment) Bill 2025 on October 9 last year. The Ministry of Power has claimed that the Draft Electricity (Amendment) Bill, 2025, proposes major reforms in India’s power sector, aiming to introduce competition by allowing multiple distribution companies (Discoms) in the same area, enabling consumer choice and breaking state monopolies. Key changes include cost-reflective tariffs, a reduction in industrial cross-subsidies and the acceleration of green energy adoption.
Practically, the proposed Electricity (Amendment) Bill 2025 poses a risk to consumers, power sector employees, the federal structure of the country and farmers. The Bill primarily promotes privatisation of electricity distribution, weakens social protections in the power sector and centralizes decision-making powers. Removal of cross-subsidy within a time span will lead to a sharp increase in electricity tariffs for agricultural consumers. Allowing multiple distribution licensees in the same area will result in private companies choosing only high-paying consumers, leaving public Discoms with loss-making consumers.
Gradual elimination of cross-subsidy will cause significant tariff increases for domestic consumers, particularly low-income households. Electricity may become market-driven rather than service-oriented, undermining universal access. Private distribution companies are unlikely to serve rural and low-revenue agricultural areas, affecting reliable supply to villages. Increased power tariffs may lead to higher cost of agricultural production, ultimately affecting food prices.
Electricity is a concurrent subject under the Constitution but the Bill increases central government control over state electricity policies. Creation of a new central body, the National Electricity Council and expanded rule-making powers will reduce the autonomy of state governments. States may lose flexibility in determining tariffs, subsidies and distribution policies according to local needs.
The Union Ministry of Power is making efforts to build consensus to get the Bill passed in the Parliament, claiming that all the objections of stakeholders have been addressed. The ministry is also discussing the said Bill and the conditions for financial packages with the MPs. But it is a fact that stakeholders, employees, engineers and others submitted a clause-wise report opposing the Bill during the virtual meeting held on January 12, 2026, but didn’t get any reply.
Notably, in October 2025, a meeting of the Group of State Ministers was conducted by the Ministry of Power regarding the privatization of electricity. They suggested imposing three conditions on the financial packages provided by the central government to the states. The first condition is that the state should sell 51 per cent equity of the Discom, which means privatization. The second option is to sell 26 per cent equity but hand over management to the private sector. The third option is to list the Discom on the stock exchange.
Electricity must remain a public service, ensuring affordable and reliable power for all citizens. Activities for the complete privatization of the transmission sector are proceeding at a very rapid pace in all states. In the name of Tariff-Based Competitive Bidding (TBCB), new substations and transmission lines are being directly handed over to private entities. In the name of asset monetization, even existing substations will be transferred to private companies. TBCB in transmission marks the beginning of the end of the government sector in transmission.
People are worried about the financial weakening of public Discoms, increased electricity tariffs for farmers and domestic consumers, privatization of profits and socialization of losses and the threat to affordable and universal electricity access. There is a demand for a meaningful consultation with power employees, engineers, farmers and consumer organizations before any reforms are undertaken.
National Policy on electricity has listed multiple objectives for the draft NEP 2026, aimed at addressing issues such as non-cost-reflective tariffs and high cross-subsidisation, among others. The policy allows private companies to use power distribution networks built with public funds by state Discoms, while the responsibility of maintenance, losses and system stability remains with public utilities. The stakeholders fear that exempting private companies from universal supply obligation will enable them to supply power only in profitable urban and industrial areas, abandoning rural, agricultural and poor consumers, which by default will become the responsibility of government Discoms.
Ultimately, the new policy will lead to a sharp increase in electricity tariffs, weakening of subsidised power supply to farmers, higher cost of irrigation and adverse impact on agriculture and increased burden on poor and middle-class consumers due to expensive and unreliable power.
(The author is a Power Sector Expert and Media Advisor, All India Power Engineers Federation (AIPEF). Views expressed are personal.)
