PM Kusum Yojana

India's agricultural sector has long been the backbone of its economy. It employs millions and ensures food security for a vast population. Yet, there are many difficulties that farmers in the nation must overcome. One of the biggest of these is insufficient irrigation. 

According to government think-tank Niti Ayog, the country's agricultural sector is predominantly rainfed. Only about 52% of the cultivated land is available to irrigation facilities. This disparity leaves many farmers dependent on erratic monsoons, making their livelihoods vulnerable to climatic uncertainties.

The challenges of irrigation in India are multi-fold. Firstly, the outdated and insufficient irrigation infrastructure of the country leads to water scarcity and inefficient water management. The Central Water Commission estimates that the nation's irrigation potential stands at 140 million hectares, but so far only about 47% of it has been tapped. Furthermore, the uneven distribution of irrigation facilities exacerbates regional disparities. 

Additionally, farmers face financial constraints when adopting modern irrigation techniques. Advanced irrigation technologies such as drip and sprinkler irrigation systems need considerable investments, which often are beyond the financial means of small farmers. Access to credit and government subsidies for irrigation infrastructure remains a major concern.

 The government has launched the PM Kusum Yojana, also known as the Kusum solar scheme, to address all these concerns. Read on to understand the scheme's objectives, benefits, components, and more.

What is PM Kusum Yojana and its Objectives?

The Kusum scheme's full form is Pradhan Mantri Kisan Urja Suraksha evam Utthan Mahabhiyan, also known as PM Kusum Yojana. It is a scheme launched by the Ministry of New and Renewable Energy (MNRE) in 2019 to promote the use of solar energy in the agricultural sector. The Kusum solar scheme aims to enhance energy security for farmers, decrease reliance on traditional power generation sources, and boost income through surplus solar power sales.

The initiative provides central and state financial assistance, procurement-based incentives, and farmer loan facilities. It could benefit 17.5 lakh farmers and generate 25,750MW of solar capacity by 2023.

Benefits of Kusum Solar Scheme

The Indian government's solar panel scheme for farmers is an ambitious programme offering numerous benefits to farmers and the environment alike.

• Income Diversification: Under the Kusum Solar Scheme, solar plants generate electricity, which power distribution companies can then sell to the government. Farmers can earn a steady income by participating in the scheme and selling surplus electricity. This reduces their dependence on traditional agricultural income sources, ensures financial stability, and also mitigates the uncertainties linked to crop failures or market fluctuations.

• Lower Operational Costs: By subsidising the cost of solar equipment, the farmer solar power scheme enables them to generate electricity for agricultural activities at a significantly reduced expense. For instance, a farmer in a remote village who previously relied on diesel generators to power irrigation pumps can now switch to solar pumps, thereby reducing their operational costs and enhancing overall efficiency.

• Reduces Carbon Footprint: The Kusum solar scheme promotes environmental sustainability by reducing carbon emissions. Solar energy is a clean and renewable energy source, completely free from any contribution to air pollution or greenhouse gas emissions. By encouraging the adoption of solar pumps, the scheme aids in combating climate change and mitigating the adverse impacts of global warming.

• Power Decentralisation: The Kusum Solar Scheme facilitates the decentralisation of power generation. Equipping farmers with solar pumps empowers them to become energy producers. The pumps can use extra solar power to meet other energy requirements such as lighting for homes and running small-scale agro-processing units. This decentralisation contributes to energy self-sufficiency and enhances the economic prospects of rural communities.

• Water Conservation: The farmer solar power scheme's efficient use of water resources helps in sustainable agriculture. This promotes the installation of drip irrigation systems along with solar pumps. Drip irrigation minimises water wastage by delivering water directly to the roots of plants, resulting in higher water use efficiency and reduced water consumption. 
• Job Creation: The implementation of the Kusum Solar Scheme creates employment opportunities in the renewable energy sector. The scheme makes it necessary to manufacture, install, and maintain solar pumps and solar power plants, leading to job creation across various stages of the value chain. For instance, installing solar pump manufacturing units generates jobs for technicians and engineers, while the installation and maintenance require skilled labour. This stimulates economic growth and empowers local communities through employment opportunities.

• Rural Electrification: Installing standalone solar power plants can cater to the energy needs of rural households and communities. This facilitates the development of off-grid areas, reducing the disparity in access to electricity between urban and rural regions.

Components of Kusum Solar Scheme

The Indian government's solar panel scheme for farmers has three components:

Component A 

• The government aims to install 10,000MW of power plants.
• The eligible entities, including individual farmers and groups of farmers, can install renewable energy power plants (REPP). These installations, ranging in capacity from 500kW to 2MW, will be on unproductive or unused land.
• The Kusum solar scheme aims to implement energy projects within a 5-kilometre radius of the substations to reduce energy transmission costs.
• One can also install solar panels on cultivated land. However, the installations should allow crops to be easily grown below the panels. 
• The local distribution companies (DISCOMs) will purchase the power generated by these projects at a feed-in tariff or (FiT). The State Electricity Regulatory Commission (SERC) sets this tariff.
• The DISCOMs will notify about the excess capacity at each substation. They will invite applications from individuals and organisations interested in setting up renewable energy generation facilities.

Component B

• This Kusum solar scheme component focuses on the solarisation of existing agricultural pumps. 
• The government has set a target to deploy a total of 17.5 lakh standalone solar pumps, replacing diesel-run irrigation systems in regions lacking grid connectivity.
• The scheme caps financial assistance for installations to a maximum capacity of 7.5 horsepower (HP).

Component C

• This Kusum solar scheme component aims to facilitate the solarisation of 10 lakh grid-connected agricultural pumps.
• Farmers can use the energy generated by these pumps to fulfil their irrigation needs. At the same time, DISCOMs can purchase any surplus power produced at a predetermined FiT rate.
• The scheme permits solar PV (photovoltaic) capacity of up to twice the pump capacity in kilowatts.

Implementations Under Kusum Solar Scheme

Some of the key implementations under the Kusum solar scheme include the following:

• To initiate the implementation process, there will be a pilot run for Components A and C, with a capacity of 1,000MW and 1 lakh pumps respectively.
• After successfully implementing the pilot run, the government will scale up the components of the farmer solar power scheme to accommodate higher capacities and a larger number of pumps.
• Following the increase in demand, MNRE has allocated capacities to various state government agencies.
• The state governments will designate an implementation agency for each component. These agencies will assume responsibility for conducting tenders or allocations under Components A and C.

Agencies Responsible for Implementing Kusum Solar Scheme

Multiple agencies at different levels implement the Indian government's solar panel scheme for farmers. The key agencies are as follows:

1. Ministry of New and Renewable Energy

The Ministry of New and Renewable Energy (MNRE) is the central government ministry responsible for the overall implementation and coordination of the Kusum solar scheme. It formulates policies and guidelines, provides financial support, and monitors the scheme's progress.

2. State Nodal Agencies

Each state in India has designated a state nodal agency (SNA) to oversee the implementation of the farmer solar power scheme at the state level. SNAs are responsible for receiving and processing applications, disbursing subsidies, and monitoring the installation of renewable energy projects.

3. District Agricultural Development Offices

District agricultural development offices (DADOs) play a crucial role in implementing the Kusum solar scheme at the district level. They facilitate the transfer of knowledge, assist farmers in filling out application forms, and provide the necessary support for project implementation.

4. Power Distribution Companies

Distribution companies (DISCOMs) collaborate with the MNRE and SNAs to implement the Kusum solar scheme. They help in grid connectivity and the purchase of surplus power generated by farmers under the scheme.

5. Rural Agricultural Cooperatives

In some cases, rural agricultural cooperatives can also take part in implementing the farmer solar power scheme. They can act as intermediaries, helping farmers access the scheme's benefits and supporting the establishment of solar projects. Here is a table listing the state-wise agencies implementing the Kusum solar scheme:

Financial Assistance under Kusum Solar Scheme

The financial benefits provided under the farmer solar power scheme are as follows:

• Under Component A: The DISCOM will provide a procurement-based incentive (PBI) of Rs. 0.4 per unit or Rs. 6.6 lakhs per MW per year, whichever is lower, for the first five years.

• Under Components B and C: Farmers will get central financial assistance of 30% of the tender cost or the benchmark cost, whichever is lower, and a state government subsidy of 30%. The remaining 40% can come from banks or the farmers can pay it themselves.

Farmers in various states such as Lakshadweep, Jammu and Kashmir, Uttarakhand, Himachal Pradesh, Sikkim and other Northeastern states, Andaman, and the Nicobar Islands, are eligible for a different financial assistance structure. This assistance includes 50% provided by the central government, a 30% subsidy from the state government, and the remaining 20% contributed by the farmers themselves.

Securing Financial Assistance Under Kusum Solar Scheme

The process of receiving financial assistance varies for each component of the farmer solar power scheme. Here are the details:

Component A

• If the eligible applicant fails to arrange the necessary funds for setting up the power plant, they must connect with the local DISCOM or developers. This will be the case for renewable power generators (RPGs). Here, the landowner will earn the lease for the mutually agreed amount.
• Implementing agencies can receive procurement-based incentives only by submitting a claim request for projects completed within a year from their commissioning date, up to five years from the commercial operation date (COD). The agency must ensure the claim form comes along with a duly signed copy of the lease rent receipt and the joint metering report that verifies the agency's payment to the Kusum solar scheme's beneficiary.

Components B and C (Individual Pump Solarisation)

• The Ministry of New and Renewable Energy (MNRE) issues the allocation notification of solar pumps to each state for replacing existing grid-connected pumps. The order rollout follows approval from the screening committee.
• Upon acceptance, the implementing agency prepares a proposal in the prescribed format by MNRE and submits it within the specified timelines. The ministry then reviews the draft and, if satisfied, approves the bid in the proposal.
• It is compulsory to complete the installation of pumps or solarisation within 24 months from the date of sanctioning to receive the farmer solar power scheme benefits. However, in certain specific circumstances, an extension of up to six months by the MNRE secretary or up to three months by the group head at the ministry is possible.
• After issuing a letter of award to the approved vendors, the implementing agency will receive 40% of the advance payment for the agreed quantity.
• The ministry will release the remaining amount, including service charges, after accepting the project completion report, GFR-format utilisation certificates, and other necessary documents.
• The implementing agency will adjust the system cost by incorporating the state government subsidy and MNRE central financial assistance (CFA). The beneficiary only needs to pay the remaining amount.

Component C (Feeder Level Solarisation)

• Under this Kusum solar scheme component, the disbursement of CFA for capital expenditure (capex) involves providing a 40% advance to DISCOMs. They will receive this disbursement only after completing the tender process and signing the work agreement with the selected contractor. The balance will be processed upon completing the project and commencing power supply to agriculture feeders.
• There will be no advance CFA for Renewable Energy Service Company (RESCO) projects. The entire eligible CFA will be released only after the successful commissioning of the power plant and upon the declaration of its operational date. RESCO developers will receive the CFA through their respective DISCOMs.

Kusum Solar Scheme Eligibility Criteria

The eligibility criteria for the farmer solar power scheme are as follows:

• For Component A:  Individual farmers, farmer groups, cooperatives, village panchayats, farmer producer organisations, and water user associations are eligible to set up solar power plants on their barren or cultivable land within a 5km radius of the substations.
• For Component B: Individual farmers can install standalone solar agriculture pumps of a capacity of up to 7.5HP to replace existing diesel agriculture pumps or irrigation systems in off-grid areas where grid supply is unavailable.
• For Component C: Individual farmers with grid-connected agriculture pumps are eligible to solarise them. The beneficiary farmer must have an Aadhaar card and a valid bank account.

Documents Necessary for Kusum Solar Scheme

The following documents are necessary to apply for the farmer solar power scheme:

• Aadhaar Card: To verify the identity and address of the applicant.
• Land Documents: To prove the ownership or lease of the barren or cultivable land used for solar power plant or pump installation. The paper should include the Khasra and Khatauni numbers or their equivalent.
• Bank Account Passbook: To provide the bank details for receiving the subsidy and selling the excess power to DISCOMs.
• Declaration Form: To declare that the applicant is not availing of any other similar scheme or subsidy from the central or state governments.
• Passport-Size Photo: For identification purposes.

How to Apply for Kusum Solar Scheme

Farmers applying for the farmer solar power scheme can follow the steps below: 

• Visit https://pmkusum.mnre.gov.in
• Click on the 'Registration' tab on the home page.
• Complete the registration form by providing all the required details.
• Tick the declaration checkbox and tap on 'Submit.'
• Following registration, tap on 'Login'.
• Enter the required details in the application form.
• Upload the necessary documents.
• Click on 'Submit'.

It is important to note that farmers must deposit 10% of the total setup cost of the solar pump they have applied for. Installing the pump set commences after the sanctioning of the subsidy amount. Typically, the turnaround time for subsidy sanctions under the Kusum solar scheme ranges from 10 to 90 days.

How to Get an MNRE Certificate

Here are the steps to get a certificate from the Ministry of New and Renewable Energy (MNRE) under the Kusum solar scheme:

• Visit the PM Kusum Yojana website at https://pmkusum.mnre.gov.in and click on the 'Loan Application' tab.
• Fill in the interest form for setting up a solar plant under Component A with your state, DISCOM, substation, capacity, application category, name, mobile number, email address, district, taluk, village, survey number, land coverage area, correspondence address, and bank details.
• Upload the required documents such as a letter of approval (LOA) from the DISCOM and ID proof. Submit the form.
• You will receive an acknowledgement slip with a reference number for your application.
• MNRE will then verify your application and issue a certificate of approval for setting up a solar plant under the Kusum solar scheme.

Common Challenges in Implementing Kusum Solar Scheme

Some of the challenges associated with the farmer solar power scheme are as follows: 

• Financial Challenges: The scheme requires considerable funds from central and state governments as well as farmers. The availability of low-cost financing for farmers and the state's share of funds is a significant challenge in implementation. The scheme does provide procurement-based incentives (PBI) to the DISCOMs for buying power from farmers, but this may not be sufficient to cover their costs and losses due to cross-subsidy and transmission charges.

• Logistical challenges: The Kusum solar scheme involves the installation of a large number of solar pumps and plants across the country. The availability and quality of solar equipment, especially under the domestic content requirement (DCR) norms, is still a matter of concern. The scheme also requires coordination among stakeholders such as farmers, DISCOMs, implementing agencies, nodal agencies, manufacturers, service providers, and more. The lack of awareness, plus capacity-building issues, monitoring troubles, and inadequate evaluation mechanisms may affect the smooth implementation of the scheme.

• Regulatory challenges: The farmer solar power scheme requires regulatory support from the state electricity regulatory commissions (SERCs) to fix the tariff, metering, billing, and payment arrangements for the power generated by the farmers. However, some SERCs may not favour promoting distributed solar generation due to its impact on their revenue and existing power purchase agreements (PPAs) with conventional generators. The scheme also requires streamlining land regulations through inter-departmental coordination to reduce delays in leasing or converting agricultural land for solar power generation.

Technical challenges: The Kusum solar scheme requires technical support for designing, installing, operating, and maintaining solar pumps and plants. Farmers may struggle to access quality after-sales services and spare parts for their solar equipment. DISCOMs may face challenges integrating variable and intermittent solar power into their grid network, as well as ensuring grid stability and reliability. The scheme also requires standardisation of technical specifications, testing procedures, and quality standards for solar equipment.

Frequently asked questions