By Dipak Kurmi
As India prepares for the Union Budget for FY26-27, the country stands at a critical juncture in its energy transition journey. After several years of rapid policy expansion and ambition, the challenge is no longer about formulating intentions but about executing the clean energy agenda effectively. India has laid a strong foundation through flagship programmes in power distribution, rooftop solar, and agricultural energy. However, significant gaps remain in financial allocations, institutional capacity, and last-mile delivery, which need to be addressed if the country is to realise its clean energy goals.
The 2026-27 Budget holds the potential to either continue this transition as a collection of disjointed schemes or catalyse a more cohesive, system-wide transformation. At the heart of this transformation lies the Revamped Distribution Sector Scheme (RDSS), designed to restore the financial health and technical efficiency of the country’s power distribution companies (DISCOMs). Over the past few years, the RDSS has gained considerable ground, but FY26-27 should be marked by a shift from expanding its scope to accelerating its execution. The focus should no longer be on adding new components but on rolling out critical technologies such as smart meters, feeder upgrades, and loss-reduction measures.
A more outcome-oriented approach to funding these initiatives is essential for the FY26-27 Budget. Instead of simply allocating resources based on historical patterns, the Budget should link financial support to measurable outcomes. For instance, the speed of smart meter installations, reductions in Aggregate Technical and Commercial (AT&C) losses, and the modernisation of feeders should be directly tied to funding allocations. Furthermore, the Budget must offer flexible financing options to accommodate the varied needs of states, particularly those with weaker distribution infrastructures. If left unaddressed, such disparities could exacerbate existing regional inequalities and hinder the success of India’s clean energy push.
To support these initiatives, the Budget should consider stronger central procurement frameworks and standardised total-expenditure (TOTEX) contracts. These measures can de-risk private sector participation in the energy transition by offering more predictable, transparent financing models. Additionally, transitional financing mechanisms for utilities, particularly DISCOMs, would enable them to implement reforms more swiftly on the ground. Such financing models are essential if India is to meet its clean energy targets while ensuring grid stability. Beyond technological upgrades, it is equally crucial to prepare RDSS for the future energy landscape, which will be dominated by digitalisation and renewable-heavy grids.
A critical aspect of RDSS’s role in the future grid is its capacity to integrate decentralised energy sources, particularly rooftop solar. Dedicated budgetary support for cybersecurity, data governance, and workforce capacity would ensure that RDSS functions effectively as the backbone for integrating rooftop solar systems that are being rolled out under various Ministry of New and Renewable Energy (MNRE) schemes. As decentralised energy solutions like rooftop solar gain traction, ensuring the security and operational stability of the grid becomes paramount. This is where the Budget can make a tangible difference by investing in the infrastructure that will support a renewable-heavy grid.
Rooftop solar, especially under the PM Surya Ghar programme, is another area where continuity and clarity in the Budget will be critical. The government’s goal of reaching one crore households under this scheme necessitates significant financial support to scale up installations. Yet, the key to meeting this target lies not only in increasing allocations but also in streamlining administrative processes. The Budget must define clearly how Rooftop Solar (RTS) Phase II projects will be absorbed into PM Surya Ghar to avoid administrative duplication and inefficiencies. Coordination between DISCOMs and the MNRE will be vital to ensure a smooth roll-out of rooftop solar systems across the country.
However, the scaling-up of rooftop solar will require more than just administrative clarity. Access to finance remains a key barrier, especially for middle- and lower-income households that cannot self-finance installations. To address this, the Budget must provide a comprehensive suite of financial instruments, including credit guarantees, interest subventions, and other forms of financial support, which would make rooftop solar more accessible to a wider population. Additionally, linking performance incentives for DISCOMs to timelines for approvals, net metering, and billing integration would help clear the existing bottlenecks that currently slow down rooftop solar installations.
Agriculture-focused solarisation, another flagship programme under PM-KUSUM, also demands a recalibration in FY26-27, rather than simple expansion. While the scheme has seen some success, it needs a more targeted approach. The Budget should prioritise components of PM-KUSUM that are performing well, particularly Component A, which supports the installation of solar pumps for farmers. Adjusting Component A to better suit the needs of small and marginal farmers, who make up the majority of India’s agricultural community, would help ensure the scheme’s success at the grassroots level. Additionally, strengthening Components B and C, which focus on feeder separation and solarisation of irrigation systems, will require more substantial support and faster feeder upgrades to achieve the desired impact.
One important shift that the Budget could signal is the adoption of a “separate-strengthen-solarise” approach under Component C of PM-KUSUM. Under this approach, priority should be given to strengthening the existing electricity infrastructure, such as feeders, transformers, and metering, before adding solar capacity. This would ensure that when solar power is added to the grid, it can be absorbed by an upgraded network capable of handling the increased load. Such a strategic, phased approach would not only improve grid reliability but also reduce the losses for DISCOMs, ultimately lowering electricity costs for farmers while aligning with the broader goals of RDSS.
The FY26-27 Budget has a unique opportunity to catalyse India’s energy transition by linking the country’s flagship clean energy programmes with systemic, institutionally supported execution. By moving beyond isolated schemes and aligning various programmes—such as RDSS, rooftop solar, PM-KUSUM, and energy storage—India can make significant strides towards a coherent, integrated energy system. The Budget can strengthen institutional capacity and offer flexible financing mechanisms to accelerate the transition, while also investing in workforce capacity and the necessary technological infrastructure.
Moreover, the Budget must acknowledge the broader economic and environmental imperatives of India’s clean energy push. As the country strives to reduce its carbon footprint and meet its international climate commitments, the energy transition must go hand in hand with fostering economic resilience. Investments in clean energy technologies can not only help India meet its climate targets but also create jobs, stimulate innovation, and reduce dependence on fossil fuels. In this sense, the FY26-27 Budget can set the stage for long-term sustainability, both in terms of energy security and economic growth.
The real test of India’s FY26-27 Union Budget will not be how many schemes it funds but how effectively it turns those schemes into a connected, reliable, and sustainable energy system. India’s energy transition is no longer just a matter of launching new initiatives; it is about scaling up existing programmes, ensuring financial sustainability, and creating an institutional framework that can support long-term clean energy growth. The Budget should focus on outcomes, integrate flagship schemes, and facilitate the transition from policy ambition to real-world execution, making India’s energy future one of resilience, sustainability, and equity.
(The writer can be reached at dipakkurmiglpltd@gmail.com)
