Why in News?
Over the past five years, the PM-KUSUM scheme has helped farmers install more than 25 lakh solar pumps, making irrigation cheaper and reducing dependence on conventional electricity. However, solar pumps can also create a problem because solar energy is almost free, which may encourage farmers to pump more groundwater than necessary. Therefore, as the government plans PM-KUSUM 2.0, the main challenge is to promote clean and affordable solar energy in agriculture while ensuring that groundwater is not overused and depleted.
What are the Key Facts About PM-KUSUM?
PM-KUSUM is a government scheme started in 2019 to help farmers use solar energy for farming. Its main goals are to make irrigation cheaper, reduce the use of diesel, increase farmers’ income, reduce pollution, and improve energy and water security. The scheme was later expanded, with its deadline extended to 31 March 2027.
The scheme has three main parts. Under Component A, farmers can set up small solar power plants on their land and sell the electricity to local electricity companies (DISCOMs), giving them an additional source of income. Component B focuses on installing standalone solar pumps for farmers who do not have access to the electricity grid. These pumps can replace diesel pumps and save farmers a large amount of money on fuel. Component C focuses on converting existing electric agricultural pumps to solar-powered pumps, either for individual farmers or by solarising entire electricity feeders.
The government also provides financial support for these solar pumps. In most states, the Centre provides 30% of the cost as a subsidy, while the State Government provides at least another 30%. The farmer generally pays the remaining 40%, although part of this amount can be taken as a bank loan. In special areas such as the North-Eastern and hilly states and island Union Territories, the central subsidy is higher at 50%, so the farmer has to pay less.
The scheme has made significant progress. By August 2026, around 11.49 lakh solar pumps had been installed, more than 15.89 lakh pumps had been covered through feeder-level solarisation, and about 1,726 MW of solar capacity had been created. Overall, more than 21.77 lakh farmers have benefited.
PM-KUSUM is important because it can reduce the huge amount of money states spend on subsidising agricultural electricity, while also helping financially stressed DISCOMs. It can reduce diesel use, lower India’s dependence on imported petroleum, and create demand for Indian-made solar equipment, supporting the Make in India initiative. Most importantly, replacing diesel and conventional electricity with solar energy can significantly reduce carbon emissions from agricultural irrigation. However, there is one major concern: because solar electricity is very cheap, farmers may be encouraged to pump more groundwater than necessary. Therefore, PM-KUSUM must promote solar energy without encouraging excessive groundwater extraction.
What are the Concerns Regarding PM-KUSUM?
1. The “Zero Marginal Cost” Paradox
Solar pumps provide farmers with almost free energy once they are installed. This removes the cost that farmers normally have to pay for diesel or electricity. For standalone solar pumps, any electricity that is not used cannot really be stored or sold—it is simply wasted. This creates a “use it or lose it” situation.
As a result, farmers may pump more water than they actually need because pumping an extra litre does not cost them anything. Some may even pump water and sell it to nearby farmers. This can put even more pressure on groundwater, especially in already water-stressed areas of North-Western and Southern India.
2. Failure of the Feed-in-Tariff System
Under Component C, one of the main ways to encourage farmers to save water is to allow them to sell the extra electricity produced by their solar pumps back to the electricity grid. However, financially stressed DISCOMs (electricity distribution companies) are often unwilling or unable to offer attractive prices for this surplus electricity or purchase it regularly.
Because of this, farmers lose the financial benefit of saving electricity. Instead of earning money by sending unused electricity to the grid, they may simply use the electricity to pump more groundwater. This weakens the scheme’s goal of encouraging water conservation.
3. Lack of Coordination Between Water and Energy Policies
There is a major gap between renewable-energy policies and groundwater management. Solar pump subsidies are often provided without properly considering the condition of the local groundwater. For example, installing large solar pumps in areas where groundwater is already over-exploited or critically low can make the situation worse.
The government therefore needs to consider CGWB aquifer assessments before deciding where and how many solar pumps should be installed.
4. Unsustainable Cropping Patterns
The scheme adds cheap solar energy to an agricultural system that already encourages the cultivation of water-intensive crops. Government MSP and procurement policies often make crops such as paddy and sugarcane financially attractive, even in areas where water is scarce.
When farmers growing these crops also get access to almost free solar-powered irrigation, they have even less reason to reduce water use. This can increase groundwater extraction and make existing water problems worse.
5. High Upfront Cost for Small Farmers
Although the government provides significant financial assistance under the scheme, farmers still have to contribute a portion of the cost themselves. For small and marginal farmers, this upfront contribution can still be too expensive.
As a result, wealthier farmers are more likely to benefit from the scheme, while poorer farmers may be unable to participate. This can increase the economic inequality between farmers rather than reducing it.
6. Lack of Grid Infrastructure
Under Component A, decentralized solar power plants need to be located within about 5 km of electricity substations. This is intended to reduce transmission losses and make it easier to connect the plants to the grid. However, many remote rural areas do not have adequate electricity infrastructure or nearby substations.
This means that even if a village has good solar potential, it may not be able to benefit from the scheme because the required grid infrastructure is missing. Therefore, the scheme’s benefits may be concentrated in areas that already have better infrastructure, creating a problem of regional inequality.
How can PM-KUSUM 2.0 Optimize the Clean Energy Transition Moving Forward?
1. Reward farmers for saving water:
Under feeder-level solarisation, farmers should be financially rewarded for using less electricity and groundwater. For example, if a farmer uses less than a scientifically decided limit, the government can give them a direct cash payment. This is similar to Punjab’s “Pani Bachao, Paisa Kamao” approach, where farmers earn money by saving water.
2. Link solar pump subsidies with groundwater availability:
The government should first check how much groundwater is available in an area before giving subsidies for solar pumps. In areas where groundwater is already severely depleted, high-capacity solar pumps should be restricted. On the other hand, in places like Eastern India, where groundwater is more available but electricity access is poor, solar pumps can be promoted more strongly.
3. Combine solar pumps with water-saving irrigation:
Installing a solar pump should also require farmers in water-stressed areas to use drip or sprinkler irrigation. These methods deliver water more efficiently and reduce unnecessary groundwater use. In simple terms, if farmers get cheap energy for pumping, they should also be encouraged to use water efficiently.
4. Encourage farmers to grow less water-intensive crops:
Simply providing solar pumps will not solve the problem if farmers continue growing crops that require large amounts of water, such as paddy and sugarcane. Government policies, MSP and procurement should encourage farmers to shift towards millets, pulses and oilseeds, which generally require less water and are better suited to changing climate conditions.
5. Promote community ownership:
Instead of expecting every small farmer to buy and manage a solar pump individually, solar irrigation systems can be operated by Farmer Producer Organisations (FPOs), Water-User Associations (WUAs) and village cooperatives. This can reduce the financial burden on small farmers and allow more people to benefit from the same solar irrigation system.
The aim should not be simply to “solarise every pump.” PM-KUSUM should make solar energy and groundwater management work together—reward farmers for saving water, restrict pumps in over-exploited areas, promote efficient irrigation, encourage water-saving crops, and involve communities in managing solar irrigation.
Conclusion
PM-KUSUM can help India move towards clean energy while increasing farmers’ income and reducing their dependence on diesel and expensive electricity. However, simply installing more solar pumps is not enough because it can also lead to excessive groundwater use. The scheme should therefore be designed according to the needs of each region, combining solar energy with incentives to save water, drip and sprinkler irrigation, and encouraging farmers to grow less water-intensive crops. In this way, India can ensure that the benefits of solar energy reach farmers without damaging groundwater resources for future generations.
