Cabinet Approves ₹2584 Crore Small Hydro Scheme

The Union Cabinet, chaired by Prime Minister 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 ₹2,584.60 crore, the scheme aims to develop approximately 1,500 MW of small hydro capacity across the country. It focuses on decentralised renewable energy generation, particularly in hilly and remote regions.

Key features of the SHP scheme

The scheme supports small hydro projects with capacities ranging from 1 MW to 25 MW. It is designed to tap the untapped hydro potential in difficult terrains, especially in Himalayan and North Eastern regions. Out of the total outlay, ₹2,532 crore has been allocated for project implementation, while ₹30 crore is earmarked for preparing detailed project reports (DPRs) to build a future pipeline.

Financial assistance and regional focus

Higher financial incentives have been provided for North Eastern states and border districts. These regions will receive central assistance of ₹3.6 crore per MW or 30% of project cost, subject to a maximum of ₹30 crore per project. For other states, assistance will be ₹2.4 crore per MW or 20% of project cost, capped at ₹20 crore. This differential support aims to address regional challenges and encourage balanced development.

Boost to clean energy and employment

The scheme is expected to attract investments of around ₹15,000 crore in the small hydro sector. It will generate nearly 51 lakh person-days of employment during construction and create long-term jobs in operation and maintenance. The initiative also aligns with the Atmanirbhar Bharat mission by promoting the use of domestically manufactured equipment.

Important Facts for Exams

• Small Hydro Power projects have a capacity range of 1–25 MW.
• The scheme targets installation of about 1,500 MW capacity.
• Higher incentives are provided for North Eastern and border areas.
• SHP projects are decentralised and reduce transmission losses.

Environmental and regional development benefits

Small hydro projects are considered environmentally sustainable as they require minimal land acquisition and avoid large-scale displacement. Their decentralised nature reduces transmission infrastructure needs and losses. The scheme is expected to promote socio-economic development in rural and remote areas, with project lifespans ranging from 40 to over 60 years, ensuring long-term benefits.