The Union Cabinet, chaired by Prime Minister Shri Narendra Modi, has approved the Small Hydro Power (SHP) Development Scheme for the period FY 2026-27 to FY 2030-31, with an outlay of Rs.2,584.60 crore to support installation of SHP projects with a combined capacity of approximately 1,500 MW.
The scheme aims to promote small hydro projects ranging from 1–25 MW across various states, with a special focus on hilly and North Eastern regions, where the hydro potential is high. Central financial assistance will be provided at Rs.3.6 crore per MW or 30% of the project cost (whichever is lower, up to Rs.30 crore per project) for North Eastern states and districts bordering other countries. For other states, assistance will be Rs.2.4 crore per MW or 20% of project cost (capped at Rs.20 crore per project).
An allocation of Rs.2,532 crore is earmarked to tap the small hydro potential in remote and hard-to-reach areas, expected to attract Rs.15,000 crore in investments, generate 51 lakh person-days of employment during construction, and create long-term jobs in operation and maintenance. The scheme also encourages the use of 100% indigenous plant and machinery, supporting the Atmanirbhar Bharat initiative.
The programme will incentivise states to prepare detailed project reports (DPRs) for around 200 projects, with Rs.30 crore set aside for this purpose, creating a pipeline for future SHP development.
SHP projects are environmentally sustainable as they minimize large-scale land acquisition, deforestation, and displacement of communities, while promoting socio-economic development in remote areas. Being largely decentralized, these projects also reduce transmission losses, making them an efficient and eco-friendly addition to India’s renewable energy landscape.
Launching this scheme is expected to rejuvenate the Small Hydro Power sector, accelerate the exploitation of untapped potential, and contribute significantly to India’s clean energy goals.
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