Proposed electricity Bill sparks concerns over privatisation, federalism, consumer rights

By Jag Jivan 

The Union government’s newly released Draft Electricity (Amendment) Bill, 2025 has reignited debate over the future of India’s power sector, with critics warning that the proposed changes could undermine public utilities, state autonomy, and affordable access to electricity. The Bill seeks sweeping reforms that would open the electricity distribution sector to private players, restructure tariffs, and strengthen the Centre’s powers over state electricity policies.

At the core of the Bill is a move to allow multiple distribution licensees to operate in the same area using the existing public-funded network. While the government presents this as a step toward “consumer choice” and competition, critics say it will enable private companies to target high-paying industrial and commercial consumers, leaving public distribution companies (DISCOMs) with loss-making rural and low-income segments. Such an arrangement, they argue, will weaken state utilities, erode cross-subsidies, and push up tariffs for ordinary consumers.

The Bill also proposes the phased removal of cross-subsidies within five years. Cross-subsidisation — where industrial and commercial users pay higher tariffs to offset lower tariffs for households and farmers — has been a key mechanism to ensure affordable electricity for weaker sections. Its removal, opponents warn, would make power unaffordable for millions of rural and low-income consumers.

The draft law introduces measures to deepen market-based trading of electricity, with expanded “open access” and smart metering systems. While such provisions are intended to enhance efficiency and transparency, trade unions and experts fear they will accelerate privatisation, job losses, and tariff volatility. Electricity, they caution, is being transformed from a public necessity into a speculative commodity.

The Bill also grants the Central Government greater authority over state regulatory commissions and renewable energy targets. Critics have described this as a serious blow to India’s federal structure. They argue that the move centralises decision-making in a sector historically managed through state-level policy and planning, and could especially strain opposition-ruled states already facing fiscal constraints.

The Centre of Indian Trade Unions (CITU), which has strongly opposed the Bill, called it “a direct assault on the public electricity system and the right to affordable energy.” In a statement, CITU said, “This draft is part of a wider neoliberal agenda to dismantle the integrated, socially driven electricity framework built over decades and hand over the sector to private monopolies.” The organisation warned that privatisation would lead to large-scale job losses, contractualisation, and outsourcing, even in sensitive sectors such as defence zones.

CITU has demanded the immediate withdrawal of the Draft Electricity (Amendment) Bill, 2025, and urged the government to guarantee electricity as a social right rather than a commercial commodity. “We will launch nationwide campaigns and coordinated actions with other trade unions and people’s movements to demand the complete withdrawal of this anti-people Bill,” said Tapan Sen, General Secretary of CITU.

The Bill, currently open for public feedback, is expected to face strong opposition from state governments, trade unions, and consumer groups in the coming weeks.