Funding cloud on Modi govt's solar plan for farmers after FinMin red flag

The Finance Ministry has reportedly asked the Ministry of New and Renewable Energy rework funding plans

The government’s ambitious plan to roll out solar power-run irrigation pumps for farmers is facing funding challenges. KUSUM (Kisan Urja Suraksha Evam Utthaan Mahabhiyan), one of PM Narendra Modi's pet projects, may see a reduced budget support as the finance ministry has raised red flags.

KUSUM was announced in the Union Budget this year. In his Independence Day speech on Wednesday, Modi mentioned that KUSUM would help farmers save fuel and earn money.

“We have rolled out the scheme. Farmers can now earn money from farming and earn extra at the same time by selling the additional solar power generated at their farms,” he said.

The scheme was announced with a total outlay of Rs 1,400 billion, including a budgetary support of Rs 480 billion over a period of 10 years. The project needs an initial funding of close to Rs 280 billion, according to a calculation by the nodal department of Ministry of New and Renewable Energy (MNRE).

Sources in the ministry, however, said the finance ministry denied such a huge sum for the scheme and asked the ministry of MNRE to rework the funding.

“We have conveyed to MNRE that Rs 280 billion budgetary support for the scheme cannot be given," a senior Finance Ministry official told Business Standard.
 

“The allocation for any scheme should accompany a sound financing plan. MNRE has been told to come up with proposals to partly finance the scheme through other means,” said the official requesting anonymity.

MNRE officials said they were looking at other funding sources through multi-lateral funding agencies, banks, co-operatives etc.

States such as Gujarat and Maharashtra are already installing solar pumps. They also plan to provide state subsidy and loan support to farmers for installing solar pumps. MNRE is in discussion with others to support the KUSUM scheme through state funding and draft state-specific plans.

The KUSUM scheme entails installation of 2.75 million solar pumps (1.75 million standalone and 1 million grid-connected), 10 GW of solar power plants with an intermediate capacity of 0.5–2 MW, 50,000 grid-connected tube-wells or lift irrigation and drinking water projects across rural areas. It also includes replacement of existing diesel-run pumps with solar ones. Farmers will also be allowed to sell the surplus solar power generated through these systems.