In 2025-26, the estimated subsidy bill is ₹7,752 crore. The concession has been on since May 2016.
| Photo Credit: S.R. RAGHUNATHAN
Tamil Nadu seems to be a pioneer in supplying free electricity to domestic consumers, irrespective of the financial status of the beneficiaries.
Capturing this aspect in Volume I of its main report, the Sixteenth Finance Commission, which quoted the 2023-24 Household Consumption Expenditure Survey of the Union Ministry of Statistics and Programme Implementation and a study commissioned by the panel and carried out by the Asian Development Bank, gave a comparative account of households receiving free electricity in different consumption quintiles.
According to the findings of the survey and the study, there has not been much variation in the percentage of households belonging to different quintiles (from low to high). In fact, the households in the categories of Q3 and Q4 (which represent middle income and higher middle income groups) are higher than those in Q1 and Q2 (economically weaker sections and lower income group). This is why the Commission has identified Tamil Nadu as one characterised by regressive benefits, because power subsidies flow disproportionately to higher consumption households. In the assessment of the panel, Karnataka, Punjab, Rajasthan and Himachal Pradesh too fall under this category.
As of now, over 2.3 crore consumers in Tamil Nadu are enjoying free electricity up to 100 units bimonthly, regardless of the level of consumption. In the current year (2025-26), the estimated subsidy bill is ₹7,752 crore. The concession has been on since May 2016.
At the same time, the Commission pointed out, “Kerala, Goa, Gujarat, and Odisha provide relatively targeted access to free power, restricting it to specific groups such as SC/ST [Scheduled Castes/Scheduled Tribes] or to consumers with less than 30 units per month.” In fact, Kerala and Goa have nil percentage of households in the highest quintile in receiving free electricity. The panel added that such an arrangement “allows them [the States concerned] to support an improved quality of life of vulnerable populations with relatively less fiscal impact.”
Quintile-wise percentage of households receiving free electricity in select States
| State | Q1 | Q2 | Q3 | Q4 | Q5 | Total |
| Tamil Nadu | 89.5 | 89.7 | 92.3 | 93.2 | 85.2 | 89.5 |
| Punjab | 92.6 | 88 | 89.5 | 84.4 | 75.1 | 82.9 |
| Karnataka | 90.9 | 91.4 | 92.3 | 88.5 | 62.3 | 81.4 |
| Telangana | 21.5 | 21.4 | 27.1 | 28.9 | 15.4 | 22.7 |
| Andhra Pradesh | 25.2 | 20.1 | 19.1 | 14.8 | 8.9 | 15.8 |
Source: Household Consumption Expenditure Survey, 2023-24, Union Ministry of Statistics and Programme Implementation, as quoted in Volume- I, main report of the 16th Finance Commission.
Published – February 04, 2026 12:00 am IST
