Union Cabinet Greenlights Major Initiative for Small Hydro Projects: What You Need to Know

Cabinet Approves Small Hydro Power Development Scheme

New Delhi: On Wednesday, the Union Cabinet, led by Prime Minister Narendra Modi, sanctioned a significant scheme aimed at promoting small hydro projects (SHPs) with a financial allocation of ₹2,584.60 crore.

The initiative, known as the ‘Small Hydro Power (SHP) Development Scheme,’ is set to span from FY 2026-27 to FY 2030-31, focusing on projects with capacities ranging from 1 to 25 MW across various states, particularly benefiting hilly and northeastern regions with substantial potential for such developments.

This scheme is expected to generate approximately 51 lakh person-days of employment during the construction phase and will also create job opportunities for the maintenance and operation of these SHPs, primarily located in rural and remote areas.

For projects situated in the northeastern states and districts bordering international territories, the government will provide financial assistance of ₹3.6 crore per MW or 30% of the total project cost, whichever is lower, with a maximum limit of ₹30 crore per project.

In other regions, the assistance will be ₹2.4 crore per MW or 20% of the project cost, capped at ₹20 crore per project.

This initiative aims to harness the small hydro potential in hard-to-reach areas. The Cabinet has allocated ₹2,532 crore specifically for these projects.

It is anticipated that this will attract investments totaling ₹15,000 crore into the small hydro sector, thereby enhancing clean energy efforts, fostering investments in remote and rural locales, and generating substantial employment opportunities.

According to an official statement, "The investment will also leverage 100% of the plant and machinery from indigenous sources, aligning with the Atmanirbhar Bharat initiative."

Additionally, the scheme will encourage states to develop detailed project reports for around 200 projects, establishing a future pipeline of small hydro initiatives. A budget of ₹30 crore has been set aside to assist state and central government agencies in preparing these reports.

Given the decentralized nature of SHP projects, the need for extensive transmission lines is minimal, which helps in reducing transmission losses. Furthermore, SHP projects are environmentally friendly, as they minimize large-scale land acquisition, deforestation, and community displacement.

The statement concluded, "This will also foster socio-economic growth in remote areas by enhancing local investments and creating long-term employment opportunities, with project lifespans typically ranging from 40 to over 60 years."