Unlike conventional freebies, this scheme boosts long-term savings, infrastructure investment and promotes sustainable energy production
In response to the growing trend of political parties offering free electricity to secure votes, the Narendra Modi government has introduced the Pradhan Mantri Surya Ghar Yojana. This initiative aims to promote solar energy adoption by providing homeowners with a subsidy ranging from Rs 30,000 to Rs 78,000 for installing one to three kW solar panels. The scheme is designed to reduce dependence on government subsidies while offering households the benefit of free electricity for up to 25 years.
Solar Power for Households
Under this scheme, a consumer will spend around Rs 40,000 to Rs 70,000 to install a two to three kW solar panel. This investment allows households to generate up to 300 units of electricity per month, covering a significant portion of their energy needs. At the current rate of Rs 8 per unit, this translates to a monthly saving of Rs 2,400. Over 25 years, the total savings per household would amount to approximately Rs 7.20 lakh, ensuring that the initial cost of installation is recovered within one to two years. The government has also made provisions for consumers to finance the remaining amount at a concessional interest rate of 7 per cent.
Addressing the Politics of Free Electricity
In recent years, several political parties have leveraged the promise of free electricity as a means to gain political support. States like Delhi, Punjab and Himachal Pradesh have implemented such schemes, offering free or subsidised electricity to a significant portion of their populations.
In Delhi, for instance, the Aam Aadmi Party (AAP) government provides up to 200 units of electricity for free and a 50 per cent subsidy for those consuming between 201 and 400 units. However, the cost of these schemes has placed a significant burden on state budgets. In Delhi, Rs 3,250 crore was allocated for electricity subsidies in the 2023-24 budget, out of a total budget of Rs 78,800 crore. Under AAP’s rule, the capital expenditure growth rate has declined from 19.6 per cent during the previous Congress government’s tenure to 9.2 per cent. Consequently, infrastructure development in Delhi has slowed, with fewer new projects being launched.
The situation is similar in other states where free electricity has been promised. Punjab, Andhra Pradesh, Kerala, and Himachal Pradesh are all grappling with mounting debts, making it increasingly difficult to sustain free electricity schemes. In some cases, states have had to scale back or abandon these initiatives due to financial constraints.
A Viable Alternative
The Pradhan Mantri Surya Ghar Yojana offers a more sustainable solution. By encouraging households to generate their own electricity through rooftop solar panels, the scheme reduces the long-term burden on government finances. The total investment required by households under the scheme is Rs 1.5 lakh, including the government subsidy. With one crore households expected to participate, this would result in an additional capacity of 30 GW of solar power, significantly boosting India’s renewable energy output.
Unlike traditional free electricity schemes, which are funded by annual government subsidies, the Surya Ghar Yojana provides long-term benefits without placing a strain on the budget. By generating their own electricity, households will no longer be dependent on yearly subsidies and will contribute to reducing the country’s carbon footprint. This aligns with India’s broader goals of increasing renewable energy production and achieving net-zero emissions.
Economic and Environmental Impact
The Surya Ghar Yojana has far-reaching economic and environmental benefits. First, it provides households with a reliable source of free electricity for 25 years, ensuring significant savings on energy bills. This also reduces the government’s reliance on costly subsidies, freeing up funds for essential infrastructure development.
Second, the scheme is expected to generate large-scale employment, with over one lakh people required to be trained to install and maintain solar panels. This will not only create new jobs but also develop a skilled workforce in the renewable energy sector.
Third, by increasing solar energy production, the scheme will help India reduce its dependence on fossil fuels, contributing to the country’s efforts to combat climate change. Rooftop solar panels are an environmentally friendly alternative to coal-based power plants, and their widespread adoption will significantly reduce carbon emissions. By encouraging households to invest in solar energy, the scheme not only reduces the burden on state budgets but also contributes to India’s renewable energy goals. The widespread adoption of rooftop solar panels has the potential to transform the energy landscape, providing households while helping India move closer to achieving its environmental objectives.
(The writer is Professor, PGDAV College, University of Delhi; views are personal)
