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Power Sector’s Hidden Faultlines
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Good Morning. India’s power sector hit a historic turning point as discoms finally turned a profit in FY25. While national AT&C losses have plummeted to 15.04%, this recovery is quite uneven. From Bihar’s digital surge to Punjab’s smart-meter lag, state-level leakages remain a ‘horseman of doom.’ Is this a structural triumph or just a temporary accounting win? The data suggests the devil is in the details.
In other news, FPI inflows rebound to Rs 19,675 crore in first fortnight of February. Meanwhile, India-UK FTA is likely to be implemented in April 2026.
India’s Discoms Turn A Profit, But State-Level Leakage Need A Fix
What?
India’s power distribution companies have crossed a milestone that once seemed distant: they’ve turned a profit. After decades of losses, the latest government data shows discoms posted a positive profit after tax in FY25, helped by a steady decline in Aggregate Technical & Commercial (AT&C) losses, which fell to 15.04%.
For a sector historically plagued by the ‘four horsemen’ of leaky wires, theft, billing failures, and collection delays, this milestone signals that massive grid modernisation and debt-restructuring efforts are finally bearing fruit. India plans to reduce these losses to 10% by 2030, which will place the country closer to the global average for AT&C losses, estimated at 6-7%.
Why?
While the all-India average looks impressive, industrial heavyweights like Maharashtra and Madhya Pradesh are still trailing, and northern states like Punjab have seen their performance slip due to lagging smart meter installations and seasonal agricultural pressures.
“Long low-voltage lines and difficult physical terrain (especially in rural areas) raise technical losses and make maintenance harder," says Rajasekhar Devaguptapu, fellow at the CSEP Research Foundation.
However, states like Bihar have defied expectations by slashing losses to 15.51%. Manoj Kumar Singh, Bihar’s energy secretary, attributed the success to “targeted interventions in billing and collection, digital systems and consumer services" that are beginning to deliver "tangible results."
This regional disparity raises a critical question: why are some states sprinting toward the 10% global-standard target while others remain stuck in structural collapse?
Why It Matters?
AT&C losses are ultimately built into the final cost of power. Every unit of electricity lost to a leaky wire or a billing error is a cost eventually passed on to the consumer’s monthly bill.
“The national number can improve. However, without discom-level granular accountability, the problem can remain ‘stuck’ and continue to pull resources and attention,” Devaguptapu said, adding a word of caution as he expects AT&C loss parameters to continue showing outliers.
As India aims to slash losses to 10% by 2030, will the states lead the shift toward cheaper, more reliable power—or remain the weak links pulling down the national average.
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Rs 19,675 crore
That’s how much money foreign portfolio investors (FPIs) invested in Indian equities in the first two weeks of February, reversing a months-long trend of outflows.
Net FPI investment recently:
- January 2026: Rs 35,962 crore of outflows
- December 2025: Rs 22,611 crore of outflows
- November 2025: Rs 3,765 crore of outflows
- Total FPI investment in 2025: Rs 1.66 lakh crore of outflows
Backdrop: Analysts say easing concerns around the proposed US-India trade deal drove the shift in sentiment. Softer US inflation data strengthened expectations of rate cuts, stabilised US bond yields and cooled the dollar. That combination improved global risk appetite and pushed investors back toward emerging markets, including India.
At home, the Union Budget 2026 reassured markets with its focus on fiscal consolidation and capital expenditure. Stable domestic interest rates also supported equities by improving visibility for corporate earnings and borrowing costs.
Critical Moment: But all is not well in Indian markets. Last week, investors triggered a sharp sell-off in IT stocks after Anthropic unveiled Claude Cowork, its AI agent platform, raising fresh concerns about disruption in the technology services space.
On Friday alone, investors sold Rs 7,395 crore worth of equities, and the Nifty fell 336 points.
Analysts believe FPIs likely trimmed IT holdings in the cash market even as headline data showed overall inflows. That suggests the rebound may not reflect broad-based buying and could mask sector-specific selling pressure.
India-UK FTA Kickoff
India’s free trade agreement with the United Kingdom, signed in July 2025, is likely to be implemented in April 2026 after British parliamentary approval. The Comprehensive Economic and Trade Agreement will allow 99% of Indian exports to enter the UK duty-free, while India will cut tariffs on British goods including cars and Scotch whisky.
Overview: The two sides have also signed a Double Contributions Convention to prevent temporary workers from paying social security in both countries. Both agreements are expected to be implemented together once ratified and approved by India’s Union cabinet.
Setup: India will cut whisky tariffs to 40% by 2035 and reduce auto duties to 10% over five years, while gaining export access for electric and hybrid vehicles.
RBI Curbs Broker Credit
The Reserve Bank of India has tightened the screws on broker funding, curbing the credit that fuels proprietary trading and leveraged bets in the market.
The Scoop: From April 2026, banks must fully secure loans and guarantees extended to brokers and cannot finance trading on their own account. By raising collateral standards and restricting unsecured credit lines, the RBI aims to rein in speculative excess and reduce systemic risk in equities and derivatives. The move could dampen trading volumes and squeeze smaller proprietary firms that depend on borrowed capital.
Forecast: The RBI has also proposed stricter norms for loan recovery, requiring banks and NBFCs to train and certify recovery agents. The changes strengthen borrower protections while increasing compliance costs for lenders.
Coders Beat Bots
AI enhances productivity but won’t trigger mass job losses in technical fields, says a February 2026 report by the Indian Council for Research on International Economic Relations. The study surveyed 651 IT firms between November 2025 and January 2026.
Overview: The report found that jobs most exposed to AI, such as software developers and statisticians, saw rising demand over the past two years. Divisions reporting productivity gains outnumbered those with declines by 3.5 to 1. Firms did slow entry-level hiring and reduced routine roles in data entry, manual testing and clerical work. Human resources and other cost-centre functions also saw contraction.
Pivot: However, the survey relies on self-reported data and reflects an early stage of AI adoption, which may understate future displacement risks.
Charter Safety Probe
India is conducting a “very thorough study” of flight operations by Non-Scheduled Operators (NSOPs) and uncontrolled airfields to identify regulatory gaps, Civil Aviation Minister K Rammohan Naidu said, following a fatal LearJet 45 crash in Maharashtra last month.
Context: The Directorate General of Civil Aviation has launched a special safety audit of charter operators. The LearJet, owned by VSR Ventures, crashed near Baramati airport on January 28, killing Maharashtra Deputy Chief Minister Ajit Pawar and four others. A preliminary probe report is expected soon.
Setting: NSOPs mainly operate chartered flights without fixed schedules, while Baramati is an uncontrolled airfield without an active control tower. Naidu also said the government’s broader focus includes strengthening smaller airlines.
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Why AI Scare Trading Could Continue This Week Too
On Episode 799 of The Core Report, financial journalist Govindraj Ethiraj talks to Rahul Singh, CIO - Equities at Tata Asset Management. We also feature an excerpt from our previous interview with C Vijayakumar, Managing Director and CEO at HCLTech, from our 2025 series NASSCOM conversations.
Why AI scare trading could continue this week too
Were India’s IT industry leaders ready for this AI disruption?
Investing trends as the markets emerge from India-US tariff cloud
The Government allows more exports of wheat and sugar to keep farmers happy
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