Ever wondered where your ₹4,999 electricity bill actually goes? According to a striking infographic shared by credit analyst Dhananjai Khilare on LinkedIn, your payment powers more than just your household. It supports a vast, complex network riddled with financial leaks, subsidies, and hidden burdens—and you might be footing the bill for more than your fair share.
The journey of your electricity payment begins with your local Distribution Company, or DISCOM. These entities are responsible for buying electricity from generators—coal, gas, solar, hydro, and more—and distributing it to your home. They also maintain the entire physical infrastructure: poles, transformers, meters, and wires. But while you’re paying for this service, you might be shocked to learn that your payment often covers more than your own usage.
This is because India’s electricity system is heavily subsidized. Residential and agricultural users frequently pay less than the actual cost of power. To bridge this financial gap, state governments inject subsidies into DISCOMs. In FY2019 alone, these subsidies amounted to ₹1.1 lakh crore. On top of that, schemes like the PM Surya Ghar Muft Bijli Yojana further reduce—or completely eliminate—bills for specific consumer groups.
So, who’s making up the difference? Commercial and industrial consumers often pay far more than the actual cost of power, effectively balancing the books through a mechanism known as cross-subsidy. This ensures farmers and low-income households get affordable or free electricity, while businesses and middle-class families bear the burden.
Despite these support mechanisms, DISCOMs are in financial distress. In FY2020–21, the revenue gap crossed ₹1 lakh crore. With many unable to cover their operational costs, they resort to borrowing—plunging deeper into debt and weakening the system further.
Delays in subsidy payments by state governments only worsen the cash crunch. To keep the sector afloat, the central government has launched multiple rescue plans over the years. The most recent, the Revamped Distribution Sector Scheme (RDSS), aims to cut losses and enforce financial discipline among DISCOMs.
A portion of your bill also funds modernization efforts: investments in smart grids, smart meters, and tech upgrades to curb electricity theft, improve billing accuracy, and reduce transmission losses.
In the end, while some consumers enjoy discounted or even free electricity, others—including average households and businesses—are left carrying the financial weight. Not just through higher tariffs, but also indirectly via the taxes used to rescue financially struggling DISCOMs.
