Union Cabinet approves Rs 2,584 Cr Small Hydro Scheme to unlock 1,500 MW in Northeast

The Union Cabinet, on March 18, approved the Small Hydro Power (SHP) Development Scheme, committing Rs 2,584.60 crore to develop approximately 1,500 MW of hydropower capacity between FY 2026-27 and FY 2030-31.

The scheme targets small hydro projects in the 1–25 MW range and is designed to benefit hilly regions and North Eastern states, which hold significant untapped water resources but have historically struggled to attract large-scale energy investment.

Under the financial structure, states in the North East and border districts will receive central assistance of up to Rs 3.6 crore per megawatt — or 30 per cent of project cost — capped at Rs 30 crore per project. Other states will be eligible for up to Rs 2.4 crore per MW, or 20 per cent of project cost, with a ceiling of Rs 20 crore per project.

The government said the scheme is expected to generate 51 lakh person-days of employment during construction, with additional jobs sustained through long-term operation and maintenance. Project lifespans are estimated at 40 to 60 years or more.

Officials said the scheme prioritises environmental sustainability, noting that small hydro projects require minimal land acquisition, cause limited deforestation and involve little displacement of communities — concerns that have dogged larger dam projects across India.

The scheme also aims to promote indigenous manufacturing of hydro equipment, in line with the government's Atmanirbhar Bharat initiative. Because power would be generated close to consumption points, transmission losses are expected to remain low — a particular advantage for remote and rural areas.

Home Minister Amit Shah welcomed the decision, saying it would benefit the North East specifically. "Congratulations to the people of the Northeast. The region's growth engine receives another boost with Union Cabinet approval of the Rs 2,584.60 crore Small Hydro Power Development Scheme. It will unlock untapped resources to fulfil Modi ji's vision of turning the region into the nation's powerhouse," Shah wrote on social media.