MC Exclusive: Interim Budget likely to offer enhanced subsidies under PM Suryoday Yojna

The budgetary allocation will include an increased range of subsidies offered by the government to promote rooftop solar installations in households.

The upcoming Interim Budget, slated to be presented by Union Finance Minister Nirmala Sitharaman on February 1, is expected to include a budget allocation for the recently introduced rooftop solar scheme for households, known as the Pradhan Mantri Suryoday Yojna. It is expected that the budget will unveil enhanced subsidies as part of the scheme.

The allocation in the Interim Budget for the scheme is likely to be at least Rs 20,000 crore, two officials involved with the programme told Moneycontrol on condition of anonymity. FM Sitharaman will present the Interim Budget primarily as a vote-on-account ahead of the upcoming general elections in April-May, 2024. Prior to the Budget, the scheme with the proposed budgetary allocation will soon be tabled in the Union Cabinet for its approval.

On January 22, Prime Minister Narendra Modi announced that his first decision after returning from Ayodhya following the consecration ceremony at the Ram temple was to launch the Pradhan Mantri Suryoday Yojnain in one crore houses.

State-owned REC Ltd has been appointed as the implementing agency for the scheme and the target is to have rooftop solar installations in one crore households within a year. Officials added that the budgetary allocation will include an increased range of subsidies offered by the government to promote rooftop solar installations in households.

Also read: Pradhan Mantri Suryoday Yojana: REC Ltd made nodal agency; to lend Rs 1.2 lakh cr.

To be sure, a residential rooftop solar (RTS) scheme is already in place, which is likely to be upgraded to the Pradhan Mantri Suryoday Yojna with new guidelines and incentives. The Ministry of New and Renewable Energy (MNRE) launched the existing 'Rooftop Solar Programme Phase-II' on March 8, 2019 with an objective to achieve 4,000 MW of RTS capacity in the residential sector by providing subsidy or Central Financial Assistance (CFA). However, until November, 2023, the capacity installed under the RTS Phase-II subsidy scheme was 2651.10 MW.

The financial outlay of the Phase-II RTS programme in 2023-24 was Rs 11,814 crore, which is likely to increase in the upcoming Interim Budget with the announcement of the Pradhan Mantri Suryoday Yojna. The current outlay of Rs 11,814 crore includes Rs 6,600 crore of CFA to states and Rs 4,985 crore of incentives to the distribution companies.

Officials said the government is certain of increasing the subsidy or CFA for the lower categories such as those wanting to install up to 3 kW. Currently, the CFA admissible for general category states is Rs 14588/kW for first 3 kW RTS capacity and Rs 7294/kW for RTS capacity beyond 3 kW and up to 10 kW.

For special category states (North-eastern states including Sikkim, Uttarakhand, Himachal Pradesh, UT of Jammu & Kashmir, Ladakh, Lakshadweep, and Andaman & Nicobar Islands), the admissible CFA is Rs 17662/kW for first 3 kW RTS capacity and Rs 8831/kW for RTS capacity beyond 3 kW and up to 10 kW.

Resident Welfare Associations (RWAs) and Group Housing Societies (GHS) are also eligible to avail CFA for RTS installation in common facilities, up to a maximum of 500 kW capacity. The CFA admissible for RWA or GHS is Rs 7294/kW in general category states and Rs 8831/kW in special category states.

The CFA or subsidy is available only for residential sector grid-connected solar rooftop projects. For other sectors such as government, institutional, social, commercial, industrial and so on, no CFA is available.