Cabinet okays ₹75,000-crore ‘free electricity’ solar scheme

Cabinet okays ₹75,000-crore ‘free electricity’ solar scheme


The Union Cabinet approved a ₹75,021-crore package for the ‘PM-Surya Ghar: Muft Bijli Yojana’ (PM Free Electricity scheme) to promote rooftop solar installations in India.

  • The scheme aims to provide 300 units of “free electricity” every month to one crore households.


GS-02 (Government Policies & Interventions)

PM Surya Ghar Muft Bijli Yojana:

  • The PM Surya Ghar Muft Bijli Yojana is a scheme introduced by the central government aimed at providing 300 units of free electricity per month to its beneficiaries, with an investment of ₹75,000 crores.
  • Initially proposed in the interim budget speech by the Finance Minister, the scheme targets lighting up 1 crore households.
  • Under this initiative, Urban Local Bodies and Panchayats will be encouraged to promote rooftop solar systems within their jurisdictions.
  • The Central Government ensures no financial burden on the people by providing significant subsidies directly to their bank accounts and offering highly concessional bank loans.
  • Anticipated benefits: It includes annual savings of fifteen to eighteen thousand rupees for households through free solar electricity and surplus sales to distribution companies, facilitation of electric vehicle charging, creation of entrepreneurship opportunities for vendors in supply and installation, and generation of employment opportunities for skilled youth in manufacturing, installation, and maintenance.

Introduction of PM Free Electricity Scheme:

  • The Union Cabinet has greenlit a significant initiative, the ‘PM-Surya Ghar: Muft Bijli Yojana’ (PM Free Electricity scheme), aimed at advancing rooftop solar (RTS) installations across the country.
  • With a substantial investment of ₹75,021 crores, the scheme is poised to transform the landscape of solar energy adoption in India.
  • Objective and Scope: The primary objective of the PM Free Electricity scheme is to offer 300 units of “free electricity” every month to approximately one crore households. By encouraging the adoption of rooftop solar systems, the government seeks to alleviate the burden of electricity expenses on households while promoting clean and sustainable energy alternatives.

Subsidy and Financing Mechanism:

  • Under the scheme, the government will provide financial assistance by subsidizing a significant portion of the installation costs. Specifically, 60% of the cost for 2 kW systems and 40% for systems ranging from 2 to 3 kW will be covered by the central subsidy.
  • This translates to substantial subsidies, such as ₹30,000 for 1 kW systems, ₹60,000 for 2 kW systems, and ₹78,000 for 3 kW systems or higher.

Application Process and Loan Facility:

  • Households interested in availing subsidies can apply through a central portal, where they will have access to relevant information and vendor options for installing rooftop solar systems.
  • Additionally, to cover the remaining installation expenses, households can benefit from collateral-free, low-interest loans, currently set at around 7%. This financial assistance empowers consumers to invest in solar energy with minimal financial burden.

Implementation Strategy:

  • The implementation strategy involves collaboration with public sector units (PSUs) affiliated with the Ministry of Power. These PSUs will reach out to eligible households and oversee the installation of rooftop solar systems free of cost.
  • To finance the component not covered by the central subsidy, the PSU or its affiliated agency will secure loans, which will be repaid through surplus power sales back to the grid.