PM Surya Ghar Muft Bijli Yojana

The centre announced the PM Surya Ghar Muft Bijli Yojana February 13.

What is the PM Surya Ghar Muft Bijli Yojana?

It is a scheme that aims to provide free electricity to households who opt to install rooftop solar electricity units. The households will be able to get 300 units of electricity free every month. The scheme focuses on the household segment with up to 3 KW system, which covers most of the residential consumers in India.

What is the amount of subsidy for households?

A subsidy of 60% of the cost for systems up to 2 KW capacity and 40% of cost for system between 2-3 KW has been announced. The subsidy has been capped at 3 KW capacity, which means financial support will not be provided for capacity beyond 3 KW. At current benchmark prices, `30,000 subsidy will be provided for 1 KW system, `60,000 for 2KW system and h78,000 for KW system or higher.

How can you get the system installed?

Any resident with a roof suitable for installing solar panels can apply by first register on the national rooftop solar portal. The consumer can choose a vendor from the list provided on the portal. The vendors are registered with the distribution companies, but in future there could be a national registry as well. A valid electricity connection is required for it and the household must not have availed any other subsidy for solar panels.

What happens to the cost of system installation beyond subsidy?

For the amount to be paid till the subsidy gets credited, households can access collateral-free low-interest loans. If a consumer is unable to bear the upfront cost required to pay the vendor at the start of the installation, which is needed till the subsidy gets credited, he or she can pay 10% upfront, for instance, and take a loan for the remaining 90% at 7% interest rate.

Once the central subsidy is released, it gets adjusted with the loan amount and the remaining 30% gets repaid in a 10-year tenure in monthly instalments. Multiple banks will be available to give loans at around 7% at present rate for up to 3 KW. The interest rate has been pegged at 0.5% above the prevailing repo rate at a given time. In the event of the repo rate, currently at 6.5%, getting reduced to, say, 5.5%, the effective interest rate for consumers will drop to 6%.