Budget 2026: The government is likely to enhance subsidies for rooftop solar installations under the Pradhan Mantri Surya Ghar: Muft Bijli Yojana (PMSGY)
in the upcoming Union Budget, according to exclusive sources cited by ET Now. This adjustment is expected to make solar power more accessible for households, fostering faster adoption amid rising energy demands and climate goals. The proposed increase targets systems up to 2 kW, raising the subsidy from the current Rs 30,000 per kW to Rs 40,000 per kW. For installations between 2 kW and 3 kW, the subsidy will remain at Rs 18,000 per kW, while for systems larger than 3 kW, it will be capped at Rs 78,000. If these changes are implemented, they could significantly reduce the upfront costs for residential users, potentially accelerating the adoption of solar power. Govt likely to increase subsidy amount for solar scheme for faster adoption in upcoming budget | Top Highlights
- Govt likely to increase subsidy amount for solar scheme for faster adoption in upcoming budget.
- The subsidy amount under PM Surya Ghar Muft Bijli Yojana (PMSGY) is likely to be hiked for up to 2 kW solar system installations.
- Subsidy amount for up to 2 kW likely to be increased to Rs 40k/kW from 30k/kW.
- The govt also provides an 18k/kW subsidy for systems between 2 kW & 3 kW.
- Subsidy above 3 kW is capped at Rs 78,000.
- Subsidy amount to be increased to achieve the target of 10 mn solar installations by FY27.
- Approximately 1.6 mn solar installations have been completed as of July 2025.
- The govt may also announce a small hydro policy in the budget.
- Financial incentives to be provided for hydro project capacity up to 25 MW.
- • The Ministry of New & Renewable Energy has sent a proposal.
- Overall budgetary allocations for the renewable sector allocation may be increased beyond Rs 26,500 cr.
According to PIB, launched in February 2024, the PMSGY aims to install rooftop solar systems in one crore households by FY 2026-27, providing up to 300 units of free electricity per month. The scheme, with a total outlay of Rs 75,021 crore, subsidises up to 40 per cent of solar panel costs and integrates with state-level incentives to promote grid-connected solar power. As of December 9, 2025, over 19.45 lakh systems have been installed nationwide, benefiting approximately 24.35 lakh households and delivering zero electricity bills to more than 7.7 lakh users.
