Cabinet Approves Rs. 2,585 Crore Small Hydro Power Scheme to Boost Clean Energy & Rural Jobs

New Delhi, March 18, 2026: The Union Cabinet, chaired by Prime Minister Shri Narendra Modi, has approved the Small Hydro Power (SHP) Development Scheme for the period FY 2026-27 to FY 2030-31, with a total outlay of Rs. 2,584.60 crore. The scheme aims to install small hydro projects with an approximate capacity of 1,500 MW, particularly benefiting hilly and North Eastern states with high hydro potential.

The initiative will support small hydro projects ranging from 1 to 25 MW, providing financial assistance to promote clean energy generation in remote and difficult-to-access regions.

Key Highlights of the Scheme

Outlay: Rs. 2,584.60 crore
Capacity Target: ~1,500 MW
Beneficiaries: Hilly and North Eastern states; border districts; rural and remote areas
Financial Assistance:
- North Eastern states & international border districts: Rs. 3.6 crore per MW or 30% of project cost (whichever is lower), capped at Rs. 30 crore per project
- Other states: Rs. 2.4 crore per MW or 20% of project cost (whichever is lower), capped at Rs. 20 crore per project
Investment Potential: ~Rs. 15,000 crore in the small hydro sector
Employment Generation: ~51 lakh person-days during construction; additional jobs in operation and maintenance

The scheme also allocates Rs. 30 crore to assist state and central agencies in preparing detailed project reports (DPRs) for approximately 200 projects, creating a robust pipeline of small hydro projects in the future.

Environmental and Socio-Economic Benefits

Eco-friendly: Minimal land acquisition, low deforestation, and reduced displacement of communities
Decentralized Power: SHP projects are close to consumption centers, reducing transmission losses
Long-Term Employment: Projects typically have lifespans of 40–60+ years, ensuring sustainable jobs in rural areas
Atmanirbhar Bharat: 100% of plant and machinery sourced indigenously

Launching this scheme is expected to rejuvenate the Small Hydro Power sector, accelerate exploitation of hydro potential, boost local investment, and promote socio-economic development in remote and rural regions.