Cabinet Approves Small Hydro Power Development Scheme with ₹2,584.60 Crore Outlay for FY 2026-27 to FY 2030-31

The Union Cabinet chaired by Prime Minister Narendra Modi on March 18, 2026 approved the Small Hydro Power (SHP) Development Scheme for the period FY 2026-27 to FY 2030-31 with a total outlay of ₹2,584.60 crore. The scheme will support installation of SHP projects of approximately 1,500 MW capacity. It covers small hydro projects between 1 MW and 25 MW capacity and will particularly benefit hilly and North Eastern states with high potential. For North Eastern states and districts with international borders, central financial assistance will be ₹3.6 crore per MW or 30 percent of the project cost, whichever is lower, with an upper limit of ₹30 crore per project. For other states, assistance will be ₹2.4 crore per MW or 20 percent of project cost, whichever is lower, with a cap of ₹20 crore per project. ₹2,532 crore has been earmarked for such projects. The scheme is expected to attract ₹15,000 crore of investment in the small hydro sector and will leverage 100 percent indigenous plant and machinery, advancing the Atmanirbhar Bharat objective. The scheme also incentivises states to prepare Detailed Project Reports for about 200 projects, for which ₹30 crore has been set aside. The scheme is projected to generate 51 lakh person days of employment during construction, plus long-term jobs in operation and maintenance. SHP projects are decentralised, require minimal transmission infrastructure, reduce transmission losses, and avoid large-scale land acquisition, deforestation, and displacement of communities. Project lifespans typically range from 40 to over 60 years, making these investments durable drivers of rural employment and clean energy. The scheme targets renewable energy expansion aligned with India's climate commitments.