New Delhi: The Union Cabinet, chaired by Prime Minister Narendra Modi, Wednesday approved a scheme to support small hydro projects (SHPs) with an outlay of Rs 2,584.60 crore.
The ‘Small Hydro Power (SHP) Development Scheme for the period FY 2026-27 to FY 2030-31 will support projects (between 1-25 MW capacity) to come up in different states — especially benefitting hilly and northeastern states with high potential for such projects.
It will support 51 lakh person days of employment during the project construction and will also enable employment in the maintenance and operation of these SHPs, which will come up in largely rural and remote locations.
In the northeast and in districts with an international border, Central financial assistance to the tune of Rs 3.6 crore per MW or 30 per cent of the project cost, whichever is lower, with an upper limit of Rs 30 crore per project, will be available.
In other states, Rs 2.4 crore per MW or 20 per cent of project cost, whichever is lower, with a cap of Rs 20 crore per project, would be available.
This will help in tapping the small hydro potential in remote and difficult-to-reach locations. According to the Cabinet, an amount of Rs 2,532 crore has been earmarked for such projects.
This is likely to bring in Rs 15,000 crore of investment in the small hydro sector, giving a boost to the clean energy initiative, investment in remote and rural areas and creating significant employment opportunities.
“The investment will also leverage 100 per cent of the plant and machinery from indigenous sources, fulfilling the objective of Atmanirbhar Bharat,” an official statement said.
The scheme will also incentivise the states to prepare the detailed project report for about 200 projects to create a pipeline of small hydro projects in future. An amount of Rs 30 crore has been kept to support state and Central government agencies to prepare such a DPR.
With SHP projects being decentralised in nature, the requirement of long transmission lines is minimal, which also reduces the transmission losses. SHP projects are environmentally sustainable, as they avoid large-scale land acquisition, deforestation, and the displacement of communities.
“It will also promote socio-economic development of remote areas by boosting local investment, apart from creating long-term employment with project lifespans typically ranging from 40 to over 60 years,” said the statement.
