Agri Business

Budget 2020: PM KUSUM to be expanded to 20 lakh farmers, Finance Minister

Twesh Mishra New Delhi | Updated on February 01, 2020

Nirmala Sitharaman, Union Finance Minister. File photo

New scheme for supporting farmers for setting up solar projects on barren land also announced

The Pradhan Mantri Kisan Urja Suraksha evem Utthan Mahabhiyan (PM KUSUM) Scheme will be expanded to cover 20 lakh farmers.

“The Government has provided financial sovereignty to farmers through the KUSUM scheme...The scheme will be expanded to include 20 lakh farmers. Farmers will be supported for setting up stand-alone solar pumps,” Finance Minister, Nirmala Sitharaman said during the Union Budget speech 2020-2021.

“We shall also help another 15 lakh farmers solarise their grid connected pump sets. In addition, a scheme to enable farmers to set up solar power generation capacity on their barren land and to sell it to the grid will be operationalised,” Sitharaman said.

“This is a major step forward in which farmers with barren land will be helped to set up solar power projects on their land, sell the power to the grid and make a living,” she added.

In February 2019, the Union Cabinet had approved the KUSUM scheme. An official statement said that there will be three components of the proposed scheme. The first component proposes 10,000 MW of de-centralised ground- mounted grid-connected renewable power plants. The second envisages installation of 17.50 lakh standalone solar powered agricultural pumps and the third is for solarisation of 10 lakh grid-connected solar-powered agricultural pumps.

Under the original scheme, on a per pump basis, the Centre will subsidise 30 per cent of the cost, the State will do the same, and 30 per cent of the amount will be offered as a loan. The farmer has to give an upfront cost of 10 per cent and then pay the instalments to the bank.

KUSUM was envisaged to replace nearly 2 crore electric and 75 lakh diesel pumps over 10 years.

Under the scheme approved by the Cabinet, the Centre will provide ₹10,000 crore for four years. The Indian Renewable Energy Development Agency (IREDA) will borrow ₹6,000 crore for the first phase (lasting for a year) to fund the Centre’s contribution. IREDA will next borrow ₹15,000 crore for the second phase that will last for a year.

The Government had proposed this scheme in the Union Budget 2018-2019 and eyed to solarise every agricultural pump and connect all the grid connected pumps with solar power.

A Central Financial Assistance (CFA) then envisaged for the scheme was ₹ 48,000 crore for 10 years. A similar amount was to be parked by the states and the financing institutions.

In January 2020, the Ministry of New and Renewable Energy has allowed more flexibility to power distribution companies (Discoms) for utilising the Centre’s financial support under the KUSUM Scheme.

Published on February 01, 2020

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