Government to Provide Financial Assistance for Hydro Power Development in North Eastern States.

The Cabinet has approved a proposal by the Power Ministry to provide Central financial assistance to North Eastern States for their equity participation in hydroelectric projects through joint ventures (JVs) with State entities and Central public sector undertakings (CPSUs).

The scheme, which has an outlay of ₹4,136 crore and will be implemented from FY25 to FY32, aims to support a cumulative hydro capacity of approximately 15,000 MW. Funding will come from a 10 percent allocation of the Gross Budgetary Support (GBS) for the North Eastern Region (NER) from the Ministry of Power's total budget.

According to the scheme, a JV company will be formed for each CPSU project in collaboration with the State government. The grant for the equity portion from the Central government will be capped at 24 percent of the total project equity, with a maximum of ₹750 crore per project. This cap may be adjusted on a case-by-case basis if necessary, while maintaining the agreed equity ratio between the CPSU and the State government.

Central financial assistance will be provided only for viable hydroelectric projects. States will need to waive or stagger free power and/or reimburse State Goods and Services Tax (SGST) to ensure project viability.

The scheme is designed to encourage greater State government participation in hydro development, sharing risks and responsibilities more equitably. It is expected to address challenges such as land acquisition, rehabilitation and resettlement, and local law and order issues, thus reducing the likelihood of project delays and cost overruns.

HBL