The Power Finance Corporation has reported that the aggregate technical and commercial (AT and C) losses of discoms have gone up from 20.7 percent in 2019-20 to 22.3 percent in 2020-21. The AT and C estimate gives an idea of the losses a distribution company, or discom, faces in its line of business. In layman's terms, if a discom has received 100 units of power, the AT and C figure tells us how many units are not recovered in terms of revenue.

So a figure of 25 percent would mean that for every 100 units of power fed into the discom, 25 units are not recovered, and the discom operates with a recovery of only 75 units. Broadly, the losses comprise technical losses and commercial losses, the latter largely implying theft.

Some technical losses are inevitable in a distribution system, but these can vary a lot across discoms, roughly between 4 and 12 percent, depending on the technology adopted and the condition of the distribution infrastructure. Commercial losses are due to meters not being read, faulty meters, or meters being manipulated or bypassed. The Indian distribution system has always faced high AT and C losses, in excess of 30 percent in the early 2000s, which drain the discoms financially and make them economically unviable.