The Union Cabinet approved the Small Hydro Power scheme for FY 2026-27 to FY 2030-31 on 18 March 2026. Notably, Prime Minister Narendra Modi chaired the meeting. The scheme has an outlay of Rs 2,584.60 crore. Moreover, it targets about 1,500 MW of new small hydro capacity. Hence, it aims to bring clean power to hilly, remote and rural areas.
Central Financial Assistance Rates
The scheme supports projects of 1 to 25 MW capacity. Specifically, North Eastern states and border districts get Rs 3.6 crore per MW or 30% of cost. The lower figure applies, with a cap of Rs 30 crore per project. Meanwhile, other states get Rs 2.4 crore per MW or 20% of cost. However, the cap there is Rs 20 crore per project.
Funds for Projects and DPRs
Out of the outlay, Rs 2,532 crore goes to the projects themselves. In addition, Rs 30 crore will support detailed project reports (DPRs) for about 200 projects. Then, state and central agencies will prepare these DPRs to build a future pipeline. As a result, the government expects about Rs 15,000 crore of investment in the sector.
Local Machinery and Rural Jobs
Notably, the projects will use 100% plant and machinery from domestic sources. Thus, the scheme supports the Atmanirbhar Bharat goal. Also, construction should generate about 51 lakh person-days of work. Furthermore, small plants need short transmission lines and little land. So, they avoid large-scale deforestation and displacement.
About Small Hydro Power in India
India treats hydro projects up to 25 MW as small hydro. Currently, the Ministry of New and Renewable Energy (MNRE) handles this segment. Unlike large dams, most small plants use the natural flow of hill streams. Therefore, hilly and North Eastern states hold high potential for such plants.
Small Hydro Power Scheme: Key Facts for Revision
- Period: FY 2026-27 to FY 2030-31
- Outlay: Rs 2,584.60 crore
- Target: About 1,500 MW
- Project size: 1 to 25 MW
- NE and border districts: Rs 3.6 crore/MW or 30%, cap Rs 30 crore
- Other states: Rs 2.4 crore/MW or 20%, cap Rs 20 crore
- DPR support: Rs 30 crore for about 200 projects
Why the Small Hydro Power Scheme Matters for UPSC and UKPSC
Notably, small hydro suits the hill states of the Himalaya. So, remember the 25 MW limit, the assistance rates and the 1,500 MW target. Also, link the scheme with India’s renewable energy goals and energy access in remote areas. For official updates, also visit MNRE. Next, for a related story, read about the Kishau Dam project.
So, are you preparing for the UKPSC Upper PCS 2026 prelims? Then join our UKPSC 2026 Prelims Test Series for regular practice.