Central Government Approves Financial Assistance for State Equity in North Eastern Hydro Power Projects
The Union Cabinet, led by Prime Minister Shri Narendra Modi, has greenlit a game-changing initiative aimed at boosting hydroelectric power in India's North Eastern Region (NER). The Ministry of Power's proposal to inject Central Financial Assistance (CFA) into state governments' equity contributions for hydro projects has been approved, signaling a major step forward in regional development.
Under this ambitious scheme, which will run from FY 2024-25 to FY 2031-32, a staggering Rs. 4,136 crore will be invested. The goal is to support a total hydro capacity of approximately 15,000 MW. This investment is part of a broader 10% Gross Budgetary Support (GBS) allocation for the North Eastern Region from the Ministry of Power’s total budget.
The scheme involves creating Joint Venture (JV) Companies with state governments and Central Public Sector Undertakings (PSUs). State governments will receive financial support capped at 24% of the total project equity, with a maximum of Rs. 750 crore per project. This cap is flexible and will be reviewed on a case-by-case basis. Equity distribution between the Central PSU and the state will be maintained throughout the grant disbursement process.
To ensure the projects are financially viable, states will need to offer incentives like free power or reimbursement of SGST. By involving state governments as stakeholders, the scheme aims to mitigate challenges related to land acquisition, rehabilitation, and local law and order, thus reducing project delays and cost overruns.
This initiative is set to revolutionize hydro power development in the North East, attracting significant investments and generating numerous job opportunities for local residents. It will also support India's goal of achieving 500 GW of renewable energy capacity by 2030, enhancing the flexibility and reliability of the national grid.
Additionally, the government has previously taken steps to promote hydro power by recognizing large projects as renewable energy sources, introducing Hydro Power Purchase Obligations (HPOs), and providing tariff and budgetary support for infrastructure and flood moderation. This new scheme further reinforces the commitment to expanding hydroelectric power and supporting sustainable development in the region.

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