Cabinet clears Rs 2,584.60 crore small hydro scheme for 1,500 MW

The Union Cabinet has approved a Small Hydro Power Development Scheme for FY 2026-27 to FY 2030-31 with an outlay of Rs 2,584.60 crore. The scheme targets development of about 1,500 MW of small hydro capacity across states, with emphasis on hilly and North Eastern regions.

Funding structure
The scheme provides central financial assistance (CFA) based on location. Projects in North Eastern states and border districts will receive up to Rs 3.6 crore per MW or 30% of project cost, whichever is lower, capped at Rs 30 crore per project.

For other states, assistance is set at Rs 2.4 crore per MW or 20% of project cost, whichever is lower, with a cap of Rs 20 crore per project.

Out of the total allocation, Rs 2,532 crore is earmarked for direct project support. The scheme is expected to enable overall investments of about Rs 15,000 crore in the sector.

Pipeline development
The scheme includes support for preparing detailed project reports (DPRs) for around 200 projects. An allocation of Rs 30 crore has been provided to assist state and central agencies in developing this pipeline.

Employment impact
The programme is expected to generate about 51 lakh person-days of employment during construction. Additional long-term employment is anticipated in operation and maintenance, particularly in rural and remote areas where such projects are typically located.

Strategic role
The scheme focuses on decentralised generation using domestically sourced equipment. Small hydro projects require limited transmission infrastructure and are associated with lower transmission losses.

The government stated that these projects involve relatively lower land acquisition and environmental impact compared to large hydro, while supporting local economic activity in remote regions.

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