Small Hydro Power Development Scheme | 20 Mar 2026

Source: PIB 

The Union Cabinet has approved the Small Hydro Power (SHP) Development Scheme (FY 2026-27 to FY 2030-31) with an outlay of Rs. 2,584 crore to install approximately 1,500 MW of capacity and revitalize decentralized clean energy. 

• Project Scope: The scheme supports small hydro projects with a capacity between 1 MW and 25 MW, focusing on hilly and North Eastern (NE) states as well as districts with international borders. 
• Central Financial Assistance (CFA): 
  • For NE States and Border Districts: Rs. 3.6 crore per MW or 30% of project cost (whichever is lower), with an upper limit of Rs. 30 crore per project. 
  • Other States: Rs. 2.4 crore per MW or 20% of project cost (whichever is lower), with a cap of Rs. 20 crore per project. 
• Proposed Benefits: 
  • Socio-Economic Impact: It is expected to catalyze Rs. 15,000 crore in private investment and generate 51 lakh person-days of employment during the construction phase. 
    • It will also stimulate local investment and create sustainable employment in remote areas over project lifespans of 40 to 60 years. 
  • Atmanirbhar Bharat: The initiative leverages 100% indigenous plant and machinery, strengthening domestic manufacturing in the renewable energy sector. 
  • Environmental Benefits: SHP projects are environmentally sustainable as they minimize large-scale land acquisition, deforestation, and displacement compared to large dams. 
  • Technical Advantages: Being decentralized in nature, these projects reduce transmission losses and the need for long-distance transmission infrastructure. 
• Future Pipeline: An allocation of Rs. 30 crore is set aside to assist agencies in preparing Detailed Project Reports (DPRs) for approximately 200 future projects.