The cash gap for Indian distribution companies (discoms) is anticipated to stay elevated at 30–33 paise per unit in the current financial year, primarily due to limited tariff hikes and rising power purchase costs. According to ICRA, the gross debt of state-owned discoms reached ₹7.1 trillion by March 2025, which is deemed unsustainable given their current revenue and profitability levels. Despite the operational challenges, tariff hikes approved for FY27 across 17 states remain muted, exacerbating the financial strain on discoms. ICRA's outlook for the distribution segment is negative, emphasizing the need for improved operational efficiencies and the implementation of smart metering. The agency also noted that long-term power purchase bids have recently been revived, with thermal project tariffs ranging from ₹5.0–6.5 per unit. Furthermore, average spot power tariffs in the day-ahead market decreased to ₹3.8 per unit in FY26, down from ₹4.4 per unit in FY25. ICRA projects a power generation capacity addition of around 50 GW this fiscal year, with thermal power contributing approximately 6 GW. The demand for power is expected to rise by 5–5.5%, driven by agricultural and household sectors, alongside industrial demand and emerging technologies like electric vehicles.