Cabinet approves ‘Small Hydro Power (SHP) Development Scheme

March 18, 2026: The Union Cabinet has approved the Small Hydro Power (SHP) Development Scheme for the period FY 2026–27 to FY 2030–31, with a total financial outlay of ₹2,584.60 crore. The scheme aims to facilitate the installation of approximately 1,500 MW of small hydro power capacity across the country.

Under the scheme, small hydro projects ranging from 1 MW to 25 MW capacity will be supported, with a special focus on hilly regions and North Eastern states, where such projects have high potential.

Financial Assistance Structure:

• North Eastern states & border districts:
  • Central assistance of ₹3.6 crore per MW or 30% of project cost (whichever is lower)
  • Maximum limit: ₹30 crore per project
• Other states:
  • Central assistance of ₹2.4 crore per MW or 20% of project cost (whichever is lower)
  • Maximum limit: ₹20 crore per project

Out of the total outlay, ₹2,532 crore has been allocated for project implementation.

Focus on Future Pipeline:
The scheme also aims to build a strong pipeline of upcoming projects by supporting the preparation of Detailed Project Reports (DPRs). Around 200 projects are expected to be developed at the planning stage. ₹30 crore has been earmarked to assist state and central government agencies in DPR preparation.

Significance: The initiative is expected to:

• Boost renewable energy capacity
• Promote decentralized power generation
• Support energy access in remote and hilly regions
• Contribute to India’s clean energy transition goals

Source: PIB