Legacy dues in the power sector have been markedly reduced to Rs 41,090 million (mn) in February from Rs 1.4 trillion (tn) in June 2022 as a result of government measures, Parliament was informed. The reduction reflects the implementation of rules and rescheduling mechanisms aimed at addressing accumulated arrears. The change was outlined in a written reply to the Lok Sabha by the Union Minister of State for Power. The disclosure framed the improvement as outcome of regulatory action and repayment restructuring.

The government had notified the Electricity (Late Payment Surcharge and Related Matters) Rules, 2022 on 3 June 2022, under which dues, including late payment surcharges up to that date, were classified as arrears and designated for rescheduling. The rules required distribution licensees to repay those arrears through equated monthly instalments (EMIs) starting in August 2022. The mechanism provided for conversion of legacy liabilities into manageable EMIs and permitted pre-payment by some utilities. The approach was presented as helping restore fiscal discipline in power purchases.

A total of 13 states reported arrears amounting to Rs 1.4 trillion (tn) as of 3 June 2022 and these were rescheduled into EMIs, the reply stated. Distribution utilities had completed 43 EMIs and some utilities opted for pre-payment of legacy amounts, which accelerated the decline in outstanding liabilities. The rescheduling and selective pre-payments were credited with the sharp fall in legacy dues.

As of 10 February 2026 the outstanding legacy dues had reduced to Rs 41,090 million (mn) while total overdues combining current and legacy amounts stood at Rs 252,870 million (mn). The presentation to Parliament indicated that continued adherence to the EMI schedule and regulatory oversight would be critical to sustain the improvement. The government framed the outcome as progress in addressing systemic delays in payments and in strengthening the financial position of distribution entities.