Cabinet Approves Small Hydro Power Scheme 2026–31

₹2,584 Crore SHP Scheme to Boost Renewable Energy in India

The Union Cabinet, chaired by Narendra Modi, has approved the Small Hydro Power (SHP) Development Scheme for FY 2026–27 to FY 2030–31. With a total outlay of ₹2,584.60 crore, the initiative aims to add around 1,500 MW of small hydro capacity, promoting decentralised renewable energy in remote and hilly regions.

Key Features of the SHP Scheme

The scheme supports hydro projects with capacities ranging from 1 MW to 25 MW. It focuses on harnessing untapped hydro potential, particularly in challenging terrains such as Himalayan and North Eastern regions. Out of the total budget, ₹2,532 crore is allocated for implementation, while ₹30 crore is set aside for preparing Detailed Project Reports (DPRs) to ensure future project readiness.

Financial Assistance and Regional Focus

The scheme provides differential financial support to address regional disparities. North Eastern states and border districts will receive central assistance of ₹3.6 crore per MW or 30% of the project cost (maximum ₹30 crore per project). Other states will receive ₹2.4 crore per MW or 20% of project cost (capped at ₹20 crore). This targeted approach aims to accelerate development in geographically challenging areas.

Boost to Clean Energy and Employment

The initiative is expected to attract investments of nearly ₹15,000 crore in the sector. It will generate approximately 51 lakh person-days of employment during construction and create long-term jobs in operation and maintenance. The scheme also promotes domestic manufacturing under the Atmanirbhar Bharat initiative, strengthening India’s renewable energy ecosystem.

Environmental and Regional Development Benefits

Small hydro projects are environmentally sustainable, involving minimal land acquisition and limited ecological disruption. Their decentralised nature reduces transmission losses and infrastructure requirements. With a lifespan of 40–60 years, these projects offer long-term energy security and contribute to socio-economic development in rural and remote regions.

Exam-Focused Points

• Approved by Union Cabinet (2026) .

• Outlay: ₹2,584.60 crore .

• Target: ~1,500 MW capacity addition .

• Project size: 1–25 MW (Small Hydro Projects) .

• Higher incentives for North East & border areas .

• Expected investment: ₹15,000 crore .

• Employment generation: ~51 lakh person-days .

• Promotes clean, decentralised energy & Atmanirbhar Bharat .