The Pradhan Mantri Surya Ghar – Muft Bijli Yojana (PM-SGMBY- Free Electricity Scheme) was launched with the stated objective of reducing electricity costs for domestic consumers by connecting them to solar energy, and was specifically claimed to benefit the poor and middle class. However, after one year of implementation, an examination of the scheme from the perspective of low-income families reveals a significant gap between its intended purpose and its actual impact on the ground.
The most important conclusion is that this scheme is structurally unsuitable for low-income families. The scheme’s basic model is based on individual rooftop solar installations, while a large proportion of poor families live in rented houses, temporary shelters, slums, or multi-story shared housing, where they do not own the roof and the technical feasibility is lacking. Consequently, a significant portion of these families are excluded from the scheme from the outset.
The second major finding relates to the initial investment. Despite subsidies, the amount consumers have to pay themselves to install a solar system is beyond the financial means of low-income families. Bank loans, formal documentation, and guarantee requirements pose an additional obstacle for this group. Consequently, the actual benefits of the scheme remain limited to relatively affluent households.
The financial feasibility analysis further reinforces that the scheme disproportionately benefits households with moderate to high electricity consumption. Break-even (the number of years it takes for electricity bill savings to recover the money spent on installing solar panels) and Net Present Value (NPV) (total financial gain or loss a household makes over the solar systemās lifetime, after accounting for all costs and savings) results show that very low-consumption household, typically low-income families, take more than 20 years to recover their upfront investment, and often experience negative NPVs over the project lifetime. In contrast, households with higher electricity usage recover their costs within 5ā10 years and generate substantial long-term financial gains. This clearly indicates that rooftop solar under the current subsidy is economically viable primarily for those households with higher electricity demand.
Sensitivity Analysis (testing how the results are impacted if certain assumptions change, such as Interest rate on the loan, Electricity Consumption, Tariff rate variations) also highlights that electricity consumption, not the Interest rates or Tariff slabs, is the dominant driver of the financial feasibility of the system installation. Even when the Interest rate or tariff rates vary, very low and low consumption households remain financially unviable, while on the other hand moderate to high consumption households continue to perform well across all scenarios.
Overall, the analysis demonstrates that without significantly higher subsidies (that would reduce the upfront cost), alternative delivery models, or targeted support mechanisms, the scheme is unlikely to provide meaningful or sustainable economic relief to low-income households with low electricity consumption needs.
The concept of “free electricity” for low-income families is fraught with contradictions, the biggest of which lies in its very claim of being “free.” In reality, the scheme does not provide completely free electricity, but rather offers subsidized relief up to a limited number of units. Fixed charges, net metering conditions, and maintenance costs add to the financial burden on low-income families. Since these families already have low electricity consumption, the savings from solar energy are also limited, reducing the economic attractiveness of the scheme.At the administrative and institutional levels, the processes of DISCOMs (electricity distribution companies) are particularly challenging for poor families. The complexities of net metering, inspections, and payment adjustments demand time, money, and patienceāresources that low-income families have in limited supply. The reliance on digital portals, technical jargon, and private vendors makes the scheme even more inaccessible for this segment of the population.
Viewed within the broader context of energy poverty, the scheme does not directly address the fundamental problem faced by low-income households: affordable, reliable, and consistent electricity supply. Their priority is not technological investment, but rather secure and stable electricity at the lowest possible cost. In this sense, the scheme appears to promote market-based access to energy rather than energy justice.
In its current form, the scheme has emerged less as a solution for the poor and more as an opportunity for the relatively affluent. To truly make it pro-poor and inclusive, the policy needs to move beyond the individual rooftop model and prioritize community solar projects, tenant-friendly frameworks, complete or near-complete financial assistance, offline support mechanisms. Only then can this scheme become a genuine source of energy relief and social justice for low-income families.
Read and Download the Report here: A REVIEW OF PRADHAN MANTRI SURYA GHAR MUFT BIJLI YOJANA SCHEME
