Obstacles in 'PM Surya Ghar Free Electricity Scheme' (file photo)
Reuters, Mumbai. Prime Minister Narendra Modi's ambitious 'PM Surya Ghar Free Electricity Scheme' is currently facing major challenges in its path. Despite heavy subsidies and a tough stance by the government, the scheme appears to be falling short of the target due to banks' reluctance to lend and limited cooperation from state power distribution companies (DISCOMs).
Credit constraints and arithmetic: Launched in February 2024, the aim of the scheme was to install solar panels on 40 lakh residential rooftops by March 2025, with a provision to provide subsidy up to 40 per cent of the cost.
However, according to official data, at present the number of residential installations has reached only 23.6 lakh, which is much less than the set target. The situation of applications received on the portal of the scheme is even more worrying. About 60 percent of the applications have not been approved yet, while seven percent have been rejected outright.
According to Shreya Jai, energy analyst at 'Climate Trends', "Banks' hesitancy to lend and states' indifferent attitude could derail India's efforts to move from coal to clean energy."
Banks' security and complaints from vendors Banks argue that they are thoroughly checking documents to safeguard public money. An official of a major public sector bank said that seizing solar panels would be of no use to them in case of loan default.
Questions on the functioning of the bank
At the same time, vendors and associations in states like Rajasthan and Odisha are raising questions on the functioning of the bank. According to Rajasthan Renewable Energy Association, banks are asking for collateral (guarantee) even for loans of less than Rs 2 lakh, which is against the guidelines of the scheme. Vendors from Odisha say that applications are being rejected for trivial reasons like old dues of electricity bills or land records being in the name of ancestors.
However, the Department of Financial Services says that they have taken steps like adding co-applicants and simplification of documents based on the feedback.
Fear of revenue loss is one of the main reasons for the slow pace of the scheme and the attitude of the state run establishments. Indeed, when affluent households become dependent on solar power instead of the grid, discoms lose revenue from customers with higher tariffs. Rystad Energy analyst Nitesh Shanbagh says, "Rich households are moving off the grid, increasing the financial burden on discoms." This situation could prove challenging for India's target of 500 GW of clean energy capacity by 2030, due to which the country is likely to remain dependent on coal.
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