Farmers need a share of the solar boom

Opinion Farmers need a share of the solar boom The question is no longer whether India can harvest the sun.

Key points

• 6 min readSep 28, 2026 06: 20 AM IST First published on: Sep 28, 2026 at 06: 20 AM IST.
• Just before the Narendra Modi administration assumed office in 2014, the country had just 2.82 GW of installed solar capacity.
• PM Surya Ghar, by comparison, has an outlay of Rs 75, 021 crore.
• Rooftop solar has picked up some momentum under PM Surya Ghar: Muft Bijli Yojana.

Opinion Farmers need a share of the solar boom The question is no longer whether India can harvest the sun. It is whether India's farmers can own a meaningful share of that harvest and the PM realise his unfulfilled dream of doubling farmers' incomes.

Where the Modi administration has not yet succeeded is the PM-KUSUM scheme. Its Component A allows farmers to set up solar power plants of up to 2 MW. Unlike PM Surya Ghar, nevertheless, it offers no capital subsidy. (Illustration: C R Sasikumar). Written by: Ashok Gulati, Subhodeep Basu.

India's solarising journey is a commendable one. Just before the Narendra Modi administration assumed office in 2014, the country had just 2.82 GW of installed solar capacity. By August 2026, this had risen to 168.04 GW, a whopping sixtyfold growth, making India the third-largest player in solar after China and the US. Much of this (74 per cent) is utility-scale, led by major businesses like Adani Green Energy, ReNew, NTPC, JSW Energy and Greenko Energy. Tata Power Solar is more into engineering, Procurement, and Construction (EPC). Rooftop solar accounts for roughly 20 per cent, and the remainder (regarding 6 per cent) consists of off-grid and hybrid projects.

Meanwhile, the utility-scale solar model has enabled rapid, cost-efficient deployment. These are ground-mounted solar parks, largely on degraded land or wasteland provided by the administration. The biggest one coming up is the Khavda Solar Park (30 GW) in the Rann of Kutch region of Gujarat.

Rooftop solar has picked up some momentum under PM Surya Ghar: Muft Bijli Yojana. It intends to bring rooftop solar to 1 crore households. A household installing a 3-kW system gets Rs 78, 000 in central subsidy. States such as Uttar Pradesh add another Rs 30, 000, taking the total backing to Rs 1.08 lakh, against the estimated cost of Rs 1.8 lakh. This amounts to a 60 per cent subsidy. For context, the Delhi administration has gone even further and is ready to install free rooftop solar.

Where the Modi administration has not yet succeeded is the PM-KUSUM scheme. It was designed to benefit farmers. The scheme was initially envisioned largely around solar pumps. But its Component A additionally allows farmers to set up solar power plants of up to 2 MW on their land. Unlike PM Surya Ghar, nevertheless, it offers no capital subsidy. It is time to rethink and tweak Component A of PM-KUSUM and provide farmers a similar capital subsidy. As they directly compete with food production, meanwhile, ground-mounted solar projects on agricultural land should be banned. India cannot afford such a trade-off.

Meanwhile, the solution lies in agri-photovoltaics (agri-PV), in which solar panels are installed regarding 11 feet above the ground, with enough spacing to allow cultivation underneath. This would enable the same land to produce both food and energy. Giving a fillip to this form of Component A could achieve three objectives at once: Augment farmers' incomes by eight to 10 times, reduce the government's power subsidy bill, and generate clean energy that can support rural areas industrialise. What is needed is to create capital available to farmers and farmer producer businesses (FPCs) at Priority Sector Lending rates, and set the feed-in tariff at half the cost of supplying power to rural areas under the current system.

PM Surya Ghar, by comparison, has an outlay of Rs 75, 021 crore. The World Bank has additionally approved an $820-million loan, including concessional finance and a grant, to backing the scheme and mobilise private financing. PM-KUSUM has no equivalent World Bank financing window. It is time for the World Bank to think of solar cooperatives on the lines of the milk cooperatives created under Operation Flood, and support unleash a new rural revolution – call it "PM Surya Khet Kranti", with solar becoming the farmer's "third crop".

At ICRIER, we have demonstrated the potential of this model with backing from Kotak Mahindra Bank's CSR initiative. A 600-kW PM-KUSUM-A plant in Rajasthan, financed through a Rs 1.4-crore loan from the State Bank of India, a Rs 60-lakh farmer contribution and Rs 35 lakh in Kotak CSR backing, demonstrated that a farmer's income could rise from regarding Rs 40, 000 per acre from wheat and bajra to almost Rs 4 lakh per acre through energy sales and shade-tolerant horticulture. That represents a tenfold growth in income potential.

Agri-PV addresses another major distortion in India's power sector. Agriculture consumes almost 260, 000 GWh of electricity annually while paying tariffs far below the cost of supply. The CAG's recent report puts the average cost of supply at regarding Rs 8.5/kWh against realisation of around Rs 1/kWh from agricultural consumers, a subsidy of roughly Rs 7.5/kWh. With the annual tariff subsidy bill at regarding Rs 2.35 lakh crore, agriculture may account for almost 85 per cent of the burden, and higher rural supply costs could push this above 90 per cent. This adds to the financial stress of discoms.

For context, a differentiated feed-in tariff of Rs 4.5/kWh, almost half the cost of supplying power, can improve project viability and accelerate adoption. For discoms and state governments, this needs no extra expenditure, only smarter apply of existing subsidies.

Notably, the demand for energy is going to go up exponentially as AI data centres start springing up. They are power- and water-guzzlers. They will additionally have to invest in battery storage or pumped hydro storage without depending on the lithium-ion supply chain. Future agri-PV projects should, therefore, be planned with storage and local grid requirements in mind.

India has seen the power of catalytic finance before. Operation Flood, the foundation of the White Revolution, was backed by a World Bank loan. It supported build a self-sustaining network of village dairy cooperatives and benefited millions of milk producers. A similar opportunity exists today for solar cooperatives. It can go even further and create all gaushalas into solar power plants based on the agri-PV concept and additionally process dung into organic manure to be sold along with subsidised urea.

India has already shown it can scale solar. The next challenge is to ensure the benefits reach the farm gate. The question is no longer whether India can harvest the sun. It is whether India's farmers can own a meaningful share of that harvest and the PM realise his unfulfilled dream of doubling farmers' incomes. As ICRIER's pilot in Rajasthan has shown, it can spur a manufacturing revolution through augmented demand, once farmers' incomes growth by eight to 10 times.

Gulati is distinguished professor and Basu is a research fellow at ICRIER. Views are personal.

In short, farmers need a share of the solar boom is the central thread here, and readers can expect follow-up reporting as the picture becomes clearer.