The Union Cabinet, led by Prime Minister Narendra Modi, has sanctioned a scheme to bolster small hydro projects (SHPs) with a budget of Rs 2,584.60 crore. The ‘Small Hydro Power (SHP) Development Scheme’ for the period FY 2026-27 to FY 2030-31 aims to aid projects ranging from 1-25 MW capacity, particularly in states like hilly and northeastern regions with high SHP potential.
This initiative is set to generate 51 lakh person-days of employment during project construction and facilitate job opportunities in the upkeep and operation of these SHPs, primarily situated in rural and remote areas. In the northeast and border districts, projects can receive Central financial assistance of Rs 3.6 crore per MW or 30% of the project cost, capped at Rs 30 crore per project.
For other states, financial aid of Rs 2.4 crore per MW or 20% of the project cost, with a maximum of Rs 20 crore per project, will be available. The scheme is designed to harness small hydro potential in challenging terrains. An allocation of Rs 2,532 crore has been earmarked for such projects, expected to attract investments worth Rs 15,000 crore in the small hydro sector.
This move is anticipated to invigorate the clean energy drive, encourage investments in remote and rural regions, and create substantial job prospects. Additionally, the investment is poised to utilize 100% indigenous plant and machinery, aligning with the vision of Atmanirbhar Bharat. The scheme will incentivize states to develop detailed project reports for approximately 200 projects, fostering a pipeline of small hydro projects for the future.
