Budget allocations can realise India’s energy ambitions
The Union Budget for FY26-27 arrives at a critical moment for India’s energy transition. After several years of rapid policy expansion, the challenge is no longer one of intent or ambition, but of execution. Flagship programmes across power distribution, rooftop solar and agricultural energy have laid strong foundations, yet they remain constrained by gaps between financial allocations, institutional capacity and last-mile delivery.
How the upcoming Budget responds to these constraints will determine whether India’s clean energy push continues as a collection of schemes or evolves into a coherent, system-level transformation. At the heart of this transition lies the Revamped Distribution Sector Scheme (RDSS), which is meant to restore the financial health and technical efficiency of power distribution companies (DISCOMs). Over the past few years, RDSS has seen wide coverage, but FY26-27 must mark a shift from expanding scope to accelerating execution. Faster rollout of smart meters, feeder upgrades and loss-reduction measures is now more important than adding new components.
Experts suggest that the next Budget should link allocations more closely to outcomes, such as the pace of smart meter installations, reduction in Aggregate Technical and Commercial (AT&C) losses, and the modernisation of feeders. Flexible funding, especially for weaker states, will be critical to avoid widening disparities in distribution infrastructure. Stronger central procurement frameworks and standardised total-expenditure (TOTEX) contracts could further de-risk private participation, while transitional financing can help utilities move faster on the ground. Equally important is preparing RDSS for the digital and renewable-heavy grid of the future.
Dedicated budgetary support for cybersecurity, data governance and workforce capacity would allow RDSS to function as the backbone for integrating decentralised and rooftop solar systems being rolled out under various MNRE schemes.
Rooftop solar, especially under the PM Surya Ghar programme and the existing RTS Phase II pipeline, is another area where continuity and clarity in the FY26-27 Budget will matter. With the government targeting one crore households under PM Surya Ghar, allocations need to reflect the scale of installations required to meet that ambition. More importantly, the Budget must clearly define how RTS Phase II projects are to be absorbed into PM Surya Ghar, reducing administrative duplication and streamlining DISCOM processes.
Access to finance will remain a key constraint. While early adoption has been driven largely by households that can self-finance, expanding rooftop solar to middle- and lower-income groups will require credit guarantees, interest subventions and other financial instruments. In parallel, DISCOM-focused performance incentives linked to approval timelines, net metering and billing integration could ease the last-mile bottlenecks that currently slow down rooftop installations.
Agriculture-focused solarisation under PM-KUSUM is another flagship scheme that needs recalibration rather than mere expansion. FY26-27 should prioritise components that are performing well, adjust Component A to better suit small and marginal farmers, and strengthen Components B and C through higher support and faster feeder upgrades. Aligning PM-KUSUM with water management, micro-irrigation and agrivoltaics can also improve farm incomes while building climate resilience.
A crucial shift that the Budget could signal is the adoption of a “separate-strengthen-solarise” approach under Component C. This would mean prioritising feeder separation and network strengthening before adding solar capacity. Using budgetary support upfront to improve lines, transformers and metering ensures that when solar power is added, it flows into systems capable of handling it. The result would be more reliable daytime electricity for farmers, lower losses for DISCOMs, and better alignment between PM-KUSUM and distribution reforms under RDSS.
Taken together, the FY26-27 Budget has the potential to act as a catalyst for India’s energy transition by moving beyond piecemeal, scheme-by-scheme expansion. By integrating flagship programmes, strengthening institutional capacity, and aligning financial allocations with realistic delivery pathways, the government can ensure that clean energy growth supports both economic resilience and long-term sustainability.
The real test of the Budget will not be how many schemes it funds, but how effectively it turns those schemes into a connected and reliable energy system for the country.; views are personal
