PM Surya Ghar & PM-KUSUM: Why India's Decentralised Solar Schemes Lag Behind Target

Q1. What is "decentralised solar power" and how is it different from large solar parks

Meaning of decentralised solar: Decentralised (or distributed) solar power refers to electricity generated by small solar units located at or very near the point of consumption — for example, panels on a household rooftop or a solar pump on a farm. This is in contrast to centralised generation, where electricity is produced at a single large plant (a thermal station or a giant "solar park") and transmitted over long distances through the grid.

Why decentralisation matters: In decentralised generation, power is consumed close to where it is produced, which reduces transmission and distribution (T&D) losses and eases pressure on the grid. It also avoids the need for large tracts of land, which is becoming harder to acquire for big solar parks. India's two flagship decentralised solar schemes are PM Surya Ghar: Muft Bijli Yojana (for rooftops of homes) and PM-KUSUM (for the agriculture sector).

The photovoltaic principle: Solar rooftop and pump systems work on the photovoltaic (PV) effect — when sunlight (photons) strikes a semiconductor cell (usually silicon), it knocks electrons loose and produces a direct current (DC). An inverter then converts this DC into alternating current (AC) for use in homes or to feed into the grid. This is the basic science behind every panel discussed in this article.

Q2. What exactly is PM Surya Ghar: Muft Bijli Yojana

Basic design: PM Surya Ghar: Muft Bijli Yojana is the Centre's flagship rooftop solar scheme, launched in February 2024 and implemented by the Ministry of New and Renewable Energy (MNRE). It aims to install grid-connected rooftop solar systems in one crore (10 million) households by FY 2026-27, and is described by the government as the world's largest rooftop solar programme. The total outlay approved is about Rs 75,021 crore.

The free electricity promise: Each beneficiary household is entitled to up to 300 units (kWh) of free electricity every month, generated by its own rooftop system. A system of about 3 kW capacity — the maximum size eligible for subsidy — typically produces enough to cover this consumption for an average household.

Central Financial Assistance (subsidy): The scheme offers a direct Central Financial Assistance (CFA) of 60% of the system cost for capacity up to 2 kW, and 40% of the additional cost between 2 kW and 3 kW. In rupee terms this works out to roughly Rs 30,000 for a 1 kW system, Rs 60,000 for 2 kW, and up to Rs 78,000 for a 3 kW system.

Loans and net metering: To help households meet the remaining cost, the scheme facilitates collateral-free loans at concessional interest (around 7%) for systems up to 3 kW. Under net metering, any surplus electricity a household generates can be exported to the grid, earning the household credit or income — turning the home into a small "prosumer" (producer + consumer).

Model Solar Village: The scheme also includes a Model Solar Village component, with funds to develop one solar-powered village per district to demonstrate energy self-reliance.

Q3. What is PM-KUSUM and what are its three components

Purpose: PM-KUSUM (Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyaan) was launched in 2019 to bring solar energy into agriculture. Its triple aim is to give farmers energy and water security, raise their incomes, cut diesel use in farming, and reduce pollution. It is implemented by MNRE with a total Central Financial Assistance of about Rs 34,422 crore, and seeks to add roughly 34,800 MW of solar capacity. The scheme was originally meant to be completed by 2022 but was extended (owing in part to pandemic disruption) to the end of the current financial year.

Component-A (decentralised solar plants): Farmers, cooperatives or developers set up small grid-connected solar power plants (typically up to 2 MW) on barren, fallow or cultivable land. The power is sold to distribution companies (discoms), giving farmers an income from land that may otherwise be unproductive. The original target under this component is 10,000 MW.

Component-B (standalone solar pumps): This supports installation of off-grid, standalone solar agricultural pumps to replace diesel pumps, with a target of 14 lakh pumps. By removing diesel, it cuts both farmers' fuel costs and carbon emissions. This has been the most successful part of the scheme.

Component-C (solarisation of grid-connected pumps): Existing electric pumps already connected to the grid are solarised, either individually or through feeder-level solarisation of an entire agricultural feeder. Farmers can use the solar power for irrigation and sell surplus power to the discom, earning extra income.

Cost-sharing: Under PM-KUSUM, the broad model is 30% Central Financial Assistance, with the state and the beneficiary sharing the rest. In many states that do not add their own share, the farmer ends up bearing about 70% of the cost — a major reason for slow uptake under some components.

Q4. How much progress have the two schemes actually made

Overall shortfall: Taken together, as per the scheme portals (as on 31 May 2026), the two programmes had installed about 13 GW of decentralised solar capacity, against a target of 40 GW by the end of the current financial year — a wide gap.

What the pattern shows: The standalone solar pump component (B) is close to its target, but the decentralised power-plant component (A) and grid-pump solarisation (C) are far behind. On the household side, rooftop installations have crossed about 33 lakh, but this is still a small fraction of the one-crore goal.

Q5. Why are these schemes underperforming despite generous subsidies

The power-subsidy paradox: The single biggest barrier is, ironically, cheap or free power. Several states already give domestic or agricultural consumers free or heavily subsidised electricity. Where power is already free, a household or farmer has little reason to spend lakhs of rupees upfront to install a solar system — the savings it would generate are simply not attractive enough.

The high upfront cost: Even with subsidy, the out-of-pocket cost of a rooftop system can run into a few lakh rupees, recovered only gradually through 300 units of free power and the sale of surplus electricity. For many low-income households this initial outlay is the decisive hurdle.

The state-wise contrast: States with relatively high power tariffs — such as Gujarat, Maharashtra and Kerala — have seen much stronger uptake of rooftop solar, because here the savings from going solar are large. States offering very large free-power schemes have lagged.

The fiscal logic: The state power-subsidy bills involved are very large — for example, of the order of tens of thousands of crore rupees a year for states like Maharashtra, Rajasthan, Karnataka and Punjab (2025-26 estimates). A rooftop subsidy, by contrast, is a one-time expenditure. This is the crucial insight: a one-time capital incentive is far cheaper for a government than an unending, year-after-year power subsidy. Some states (such as Uttar Pradesh and Rajasthan), despite offering subsidised power, have done reasonably well precisely because they added their own top-up incentives to push the switch to solar.

Q6. What did the Estimates Committee observe and recommend

About the body: The Estimates Committee is a financial committee of the Lok Sabha with 30 members (all from the Lok Sabha; no Rajya Sabha members). It examines whether public money is being spent economically and suggests efficiencies — earning it the nickname "the continuous economy committee."

Key observations on PM-KUSUM: The Committee noted that under Component-A only a small fraction of the target had been met, partly because there is no dedicated central financial assistance for these plants and because converting agricultural land to non-agricultural use is costly and cumbersome. For standalone pumps, it observed that states like Rajasthan need higher-capacity pumps (beyond the 7.5 HP norm) due to falling groundwater, and recommended revising the criteria. On grid-pump solarisation, it found that many states add no share of their own, leaving farmers to bear around 70% of the cost, and that the cost of evacuating power over long distances is high.

Key recommendations on PM-KUSUM: The Committee recommended providing central financial assistance for small decentralised plants, revising pump-capacity norms for low-groundwater states, exploring ways to enhance funding so farmers bear less, and giving discoms the responsibility for evacuating power. It also recommended studying and subsidising agrivoltaics — growing crops underneath or between elevated solar panels — which can both shield crops from excess heat and earn farmers extra income.

Key observations on PM Surya Ghar: Against the one-crore target, the Committee noted (in its December 2025 report) about 1.38 crore registrations, of which around 59 lakh applications had been processed, with sharp inter-state disparity. It flagged delays in approvals and subsidy disbursal, a high rejection rate for loans (often due to lack of clarity on house ownership), a shortage of empanelled vendors, and supply shortages of components in far-flung areas.

Key recommendations on PM Surya Ghar: The Committee recommended making it easier for consumers to meet upfront costs, faster and smoother loan and subsidy disbursal, reducing the Rs 2.5 lakh performance bank guarantee required of vendors to attract more of them, diversifying component supply and boosting local manufacturing, and extending the scheme to isolated single dwellings in farm fields and to PM Awas Yojana beneficiaries (it suggested every PMAY allottee be given a 500-watt rooftop system).

Q7. Why is decentralised solar so important for India's energy future

Rising demand and the limits of hydropower: India's electricity demand is rising sharply, especially in summer. Hydropower was traditionally the go-to source for meeting extra summer demand, but large hydro capacity has stagnated and cannot meet the surge alone. Solar is set to overtake hydropower to become India's second-largest source of electricity generation.

The daytime peak-demand match: Peak demand in April and May 2026 — during the day, when heat drives up cooling load — was met largely through solar power. This is a natural fit: solar generates the most when the sun is strongest, which coincides with daytime peak demand.

The land constraint: Setting up large centralised solar parks needs vast land, which is increasingly scarce and contested. Decentralised rooftops and farm pumps use space that already exists, sidestepping this constraint.

The heat and climate link: In a year of low rainfall and high temperatures (such as the current one), power demand spikes just when the climate stress is highest. Decentralised solar can cushion this impact by adding generation at the point of need. Such extreme summers are becoming the norm rather than the exception, making distributed generation increasingly relevant.

The subsidy-relief angle: Because subsidised grid electricity is politically very difficult to withdraw, decentralised solar offers a way out — it can lower households' bills directly without the state having to keep paying recurring power subsidies. If fully implemented, PM Surya Ghar alone could save the government an estimated Rs 75,000 crore a year, according to the Estimates Committee.

Q8. How do these schemes fit into India's larger clean energy targets

The 500 GW pledge: At COP26 (Glasgow, 2021), India announced its "Panchamrit" climate goals, including a target of 500 GW of installed electricity capacity from non-fossil sources by 2030, alongside the long-term goal of net-zero emissions by 2070.

Where India stands: As on 31 March 2026, India's non-fossil capacity had reached about 283 GW, of which solar power alone was about 150 GW — the largest single component of the renewable basket. India crossed the milestone of having over 50% of its installed capacity from non-fossil sources around mid-2025, and ranks among the top countries globally in renewable energy installed capacity. The country added a record amount of solar capacity in 2025-26.

The decentralised piece of the puzzle: Within this, decentralised solar through PM Surya Ghar and PM-KUSUM is meant to complement utility-scale solar parks. Reaching 500 GW will require sustained annual additions of around 50 GW, and distributed generation is a crucial, land-light part of that effort. The implementation gaps flagged by the Estimates Committee are therefore not just scheme-level problems but a national-target concern.

Wider institutional context: India's solar push also rests on supporting initiatives — the Jawaharlal Nehru National Solar Mission (the original 2010 mission that scaled up solar), the International Solar Alliance (ISA, co-founded by India and France in 2015), Solar Park schemes, and domestic manufacturing support such as the Approved List of Models and Manufacturers (ALMM) and Production-Linked Incentives. Decentralised schemes are the "last-mile" of this ecosystem, taking solar directly to homes and farms.

The core message from the Estimates Committee and the broader debate is that the real bottleneck is not the absence of subsidy but the structure of incentives. Where consumers already enjoy free power, no rooftop subsidy will move them — so the focus must shift to reducing the upfront cost burden through easier collateral-free loans, faster approvals and quicker subsidy disbursal. A gradual, carefully calibrated rebalancing of recurring power subsidies towards one-time capital incentives would be fiscally healthier for states in the long run, though it remains politically sensitive. On the agriculture side, central assistance for small decentralised plants, revised pump-capacity norms for low-groundwater regions, giving discoms responsibility for power evacuation, and promoting agrivoltaics can revive PM-KUSUM's lagging components. Extending coverage to PM Awas Yojana beneficiaries and isolated farm dwellings, expanding the vendor base, and securing component supply chains through local manufacturing would deepen reach. Ultimately, getting decentralised solar right is essential not only for these two schemes but for meeting India's 500 GW non-fossil target by 2030 and managing the rising, heat-driven peak power demand of a warming climate.