3 minutes of readingBombayUpdated: February 2, 2026 08:18 pm IST
Maharashtra has emerged as one of the states facing the sharpest deterioration in the finances of state-owned power distribution companies, with Discom debt in the state more than doubling in the last five years, prompting a sharp warning from the Sixteenth Finance Commission over the fiscal risks posed by the rising liabilities of the power sector.
In its report for the 2026-31 allotment period, the commission warns that in a small group of eight states, including Maharashtra, Discoms’ loans have grown faster than income and assets, making repayment of operations “unlikely”. At the all-India level, Discom’s outstanding debt has increased from about Rs 4.7 lakh crore in 2018-19 to Rs 7.42 lakh crore in 2023-24, and more than three-fourths of this debt is concentrated in these eight states that include Maharashtra.
“For eight states, debt growth between 2018-19 and 2023-24 has exceeded their growth in income and assets, making self-liquidation of debt unlikely,” the state commission said.
Maharashtra figures prominently in this warning. According to the commission data, the state’s Discom debt rose from Rs 35,197 crore in 2018-19 to Rs 84,171 crore in 2023-24, an increase of nearly Rs 49,000 crore or around 139 per cent in five years. This places Maharashtra among the eight states where power sector liabilities have become structurally unsustainable.
The commission notes that “rising debt, short-term borrowings and accumulated losses have been a perpetual burden on Discom’s finances,” adding that fiscal stress in the sector is now heavily concentrated in a small number of states.
Their analysis shows that 83 per cent of the state sector Discoms’ cumulative losses, which amounted to Rs 5.86 lakh crore in 2023-24, are concentrated in just eight states. These states also account for 78 percent of Discom’s total outstanding debt.
A key concern highlighted by the commission is the pace at which debt has accumulated in recent years. In Maharashtra, Discom borrowings rose 32 per cent in 2022-23 and another 44 per cent in 2023-24, pointing to a sharp acceleration rather than a gradual build-up of liabilities.
While Maharashtra is not the state with the highest losses, data shows that it accounted for almost 5 per cent of Discom’s total cumulative losses in India in 2023-24, placing it firmly within the high-stress category identified by the commission.
Story continues below this ad.
Beyond debt levels, the commission points to persistent operational weaknesses that have prevented sustained change in the energy distribution sector. These include gaps between the average cost of supply and the average revenue earned, high transmission and billing losses, delays in tariff reviews, and weak billing and collection efficiency.
As the report notes, “persistent inefficiencies in operations continue to increase Discoms’ financial stress,” despite repeated restructuring efforts and rescue packages by states and the Centre.
At an all-India level, the commissions note that Discom’s total debt rose by over 57 per cent between 2018-19 and 2023-24, underlining the limited impact of earlier reform measures. It warns that the continued buildup of liabilities in the energy sector could significantly limit states’ fiscal space in the medium term, particularly as spending pressures increase in areas such as infrastructure, health, education and social welfare.
