Cabinet Approves ₹2,584.60 Crore Small Hydro Power Scheme to Boost Clean Energy and Rural Employment
Focus on Small Hydropower Projects Across States
New Delhi, March 18: The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved the Small Hydro Power Development Scheme with a total outlay of ₹2,584.60 crore. The scheme will be implemented from FY 2026-27 to FY 2030-31, targeting the development of small hydropower projects with capacities ranging from 1 MW to 25 MW.The initiative is aimed at accelerating clean energy generation while tapping into the untapped hydropower potential, particularly in hilly and northeastern states.
Financial Assistance Structure for SHP Projects
Under the scheme, differentiated financial assistance has been structured based on project location:- In northeastern states and districts along international borders, central financial assistance will be provided up to ₹3.6 crore per MW or 30 percent of the project cost, whichever is lower, with a cap of ₹30 crore per project.
- For other states, assistance will be up to ₹2.4 crore per MW or 20 percent of the project cost, whichever is lower, with a maximum limit of ₹20 crore per project.
Employment Generation and Rural Impact
The scheme is expected to generate approximately 51 lakh person-days of employment during the construction phase. In addition, it will create long-term job opportunities in the operation and maintenance of these projects, most of which will be located in rural and remote areas.This localized development is expected to contribute to socio-economic growth in underserved regions.
Investment Boost and Indigenous Manufacturing Push
The Cabinet indicated that the scheme could attract investments worth ₹15,000 crore into the small hydropower sector. The initiative also aligns with domestic manufacturing goals, as it is expected to utilize 100 percent indigenous plant and machinery.This approach supports the broader objective of strengthening domestic capabilities under the Atmanirbhar Bharat initiative.
Pipeline Development and DPR Support
To ensure sustained growth in the sector, the scheme includes provisions to incentivize states to prepare detailed project reports for around 200 small hydropower projects. An allocation of ₹30 crore has been set aside to assist central and state agencies in preparing these reports.Environmental and Operational Advantages
Small hydropower projects offer several operational and environmental benefits. Due to their decentralized nature, they require minimal transmission infrastructure, resulting in lower transmission losses.Additionally, these projects are considered environmentally sustainable as they avoid large-scale land acquisition, deforestation, and displacement of communities.
Long-Term Benefits for Remote Regions
With project lifespans typically ranging from 40 to over 60 years, the scheme is expected to deliver long-term economic and employment benefits. It is also set to enhance local investment and infrastructure development in remote regions, supporting inclusive growth alongside clean energy expansion.Disclaimer: Due care and diligence have been taken in compiling and presenting news and market-related content. However, errors or omissions may arise despite such efforts.
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