Prime Minister Modi Approves Rs. 4,136 Crore for Hydroelectric Projects in North East India
The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a proposal from the Ministry of Power to provide Central Financial Assistance (CFA) to the North Eastern Region (NER) state governments. This assistance, amounting to Rs. 4,136 crore, will support their equity participation in developing hydroelectric projects.
These projects will be executed through Joint Venture (JV) collaborations between state entities and Central Public Sector Undertakings (CPSUs). The scheme will be implemented from FY 2024-25 to FY 2031-32 and aims to support a cumulative hydro capacity of approximately 15,000 MW. It will be funded through 10 per cent Gross Budgetary Support (GBS) for the North Eastern Region, drawn from the Ministry of Power’s total budget.
The Ministry’s plan includes forming a JV company for each project between a central PSU and the respective state government. The CFA for the NER state governments’ equity share will be capped at 24 per cent of the total project equity, with a maximum of Rs 750 crores per project. This cap may be revisited on a case-by-case basis. The equity ratio between the CPSU and the state government in the JV will be maintained when disbursing the grant.
CFA will only be provided to viable hydroelectric projects, with states expected to waive or stagger free power and/or reimburse SGST to ensure project viability. This scheme aims to encourage state governments’ participation in hydro development, allowing for a more equitable sharing of risks and responsibilities. By involving state governments as stakeholders, issues related to land acquisition, rehabilitation, resettlement, and local law and order are expected to be minimized, thereby reducing the chances of project delays and cost overruns.
The scheme is expected to play a crucial role in harnessing the hydropower potential of the North East, attracting significant investment to the region, and generating substantial direct and indirect employment opportunities, including in sectors like transportation, tourism, and small-scale businesses. Moreover, the development of these hydroelectric projects will contribute to India’s Nationally Determined Contribution (INDC) goal of establishing 500 GW of renewable energy capacity by 2030 and enhance the flexibility, security, and reliability of the national grid by integrating renewable energy sources.
To address the challenges hindering hydropower development, the Government of India has implemented several policy initiatives. Notably, on March 7, 2019, the Cabinet approved measures to promote the hydropower sector, such as classifying large hydro projects as renewable energy sources, introducing Hydro Power Purchase Obligations (HPOs), rationalizing tariffs through escalation, and providing budgetary support for flood moderation and the construction of enabling infrastructure like roads and bridges.
Doubts Revealed
Prime Minister Modi -: Prime Minister Modi is the leader of India. He makes important decisions for the country.
Rs. 4,136 Crore -: Rs. 4,136 Crore is a large amount of money. In India, ‘Rs.’ stands for Rupees, which is the currency used.
Hydroelectric Projects -: Hydroelectric projects use water to create electricity. This is a way to make power without polluting the environment.
North East India -: North East India is a region in India that includes states like Assam, Manipur, and Meghalaya. It is known for its beautiful landscapes and diverse cultures.
Union Cabinet -: The Union Cabinet is a group of top leaders in the Indian government. They help the Prime Minister make important decisions.
FY 2024-25 to FY 2031-32 -: FY stands for Fiscal Year, which is a one-year period used for budgeting and financial purposes. FY 2024-25 means the year starting in 2024 and ending in 2025.
15,000 MW -: MW stands for Megawatt, a unit of power. 15,000 MW is a lot of electricity, enough to power many homes and businesses.
Joint Ventures -: Joint Ventures are partnerships between two or more organizations. In this case, state entities and Central Public Sector Undertakings are working together.
Central Public Sector Undertakings -: Central Public Sector Undertakings are companies owned by the Indian government. They work on big projects like building dams and power plants.
Equity Shares -: Equity shares are parts of a company that people or organizations can own. In this plan, the government will help pay for these shares.
Renewable Energy Goals -: Renewable energy comes from sources that don’t run out, like water, wind, and sunlight. India’s renewable energy goals aim to use more of these sources to protect the environment.
