Modi Govt Launches ₹2,584 Cr Small Hydro Power Scheme to Boost Clean Energy & Rural Jobs

The Union Cabinet chaired by Prime Minister Narendra Modi has approved the Small Hydro Power (SHP) Development Scheme for FY 2026-27 to FY 2030-31, with an outlay of ₹2,584.60 crore. The scheme aims to install SHP projects with a cumulative capacity of approximately 1,500 MW, giving a major push to India’s clean energy transition.

Under the scheme, small hydro projects ranging between 1–25 MW will be supported across states, with special emphasis on hilly and North Eastern regions that hold high untapped potential. Central financial assistance will be provided at ₹3.6 crore per MW or 30% of project cost (up to ₹30 crore per project) in North Eastern states and border districts. In other states, support will be ₹2.4 crore per MW or 20% of project cost (capped at ₹20 crore per project).

An allocation of ₹2,532 crore has been earmarked for project development, expected to attract nearly ₹15,000 crore of investment in the small hydro sector. The scheme will also ensure 100% indigenous sourcing of plant and machinery, aligning with the Atmanirbhar Bharat vision.

Additionally, ₹30 crore has been set aside to help states and central agencies prepare detailed project reports (DPRs) for about 200 future projects, creating a strong pipeline for the sector.

The initiative is projected to generate 51 lakh person-days of employment during construction, alongside long-term jobs in operations and maintenance, particularly in rural and remote areas. With decentralized power generation, SHP projects minimize the need for long transmission lines, reducing losses and ensuring sustainable energy delivery.

Officials highlighted that the scheme will rejuvenate India’s small hydro sector, accelerate exploitation of available potential, and promote socio-economic development in remote regions. Environmentally sustainable by design, SHP projects avoid large-scale land acquisition, deforestation, and displacement, while offering lifespans of 40–60 years.