PM-KUSUM subsidy explained: central CFA, state share and farmer cost

People ask one question about the PM KUSUM subsidy: "how much do I get?" The honest answer is that there is no one number. The PM-KUSUM subsidy is a structure — a central share, a state share and a farmer share — and the structure is what you need to understand. Once you know the parts, any state slab makes sense.

What the PM-KUSUM subsidy actually is

The PM-KUSUM subsidy is government money that lowers the cost of a solar pump or a solar plant for a farmer. It is not a cash handout. Instead, it pays a part of the project cost so the farmer pays less out of pocket. The rest comes from the farmer, often through a bank loan.

PM-KUSUM runs in three components, called A, B and C. Component A is for land-mounted solar plants. Component B is for standalone off-grid solar pumps. Component C is for solarising pumps that are already on the grid, and it splits into C1 (one pump at a time) and C2 (a whole feeder at once). Each component funds something different, so each one shares the cost differently.

The cost the subsidy is based on is not a free-for-all. MNRE sets a benchmark cost for each pump size, or the cost is fixed by the lowest bid (L1) in a state tender. The subsidy percentages then apply to that benchmark or L1 cost — not to whatever a vendor wants to charge.

CFA, state share and farmer share — the three parts

The PM-KUSUM subsidy is built from three shares that add up to the full project cost. Knowing what each one means is the key to reading any state slab.

Central financial assistance (CFA)

Central financial assistance (CFA) in PM-KUSUM is the part the central government pays through MNRE. It is the same idea as a central grant. The central financial assistance is usually written as a percentage of the benchmark or L1 cost. The exact percentage depends on the component and the state category, so it is not fixed for the whole country.

State share

The state share is the part the state government pays, usually through its state nodal agency. Many states pay the standard share set in the scheme. Some states go further and stack extra subsidy on top, so their farmers pay even less. This is why two farmers in two states can pay very different amounts for the same pump.

Farmer share

The farmer share is what is left after the central and state shares are taken out. The farmer pays this part, often as a mix of their own money and a bank loan. In feeder-level solarisation, the farmer share can be close to zero, because the project is funded differently. Treat every share as a figure to verify, not a promise.

How the split changes by component (A, B, C1, C2)

The biggest reason the PM KUSUM subsidy has no single number is the component. The same words — central, state, farmer — apply to all four, but the split is different in each.

Component A is a land-mounted plant, often sold to the grid. It is not a simple three-way percentage split. The support comes through the way the power is bought and the capital is arranged, so the "subsidy" looks different from a pump grant. Read it as a project, not a per-pump slab.

Component B is a standalone pump that replaces a diesel pump. This is where the common framing of roughly 30% central, 30% state and 40% farmer is most often quoted. That framing is an estimate. The real figure is set by the latest MNRE order, the state policy and the tender, so verify it before you rely on it.

Component C1 solarises one existing grid-connected pump. Its split usually mirrors Component B — around 30/30/40 under common framing — but again this is indicative and must be checked with the state nodal agency. Component C2 solarises a whole feeder at once. Here the central share is often higher and the farmer usually pays little or no direct cash, because the feeder is funded as a single project.

Who pays what, by component (indicative)

The table below shows the common framing of who pays which share, by component. Read it as a map, not a price list. Every value here is indicative — verify with your state nodal agency (SNA), the latest MNRE order or the live tender before you quote it.

Caption: Indicative cost-share framing by PM-KUSUM component. Source: common framing of MNRE scheme guidelines and state policies — every figure must be confirmed with the state nodal agency or the live tender. These are not guaranteed percentages.

Illustrative split for a sample Component B pump

The bar below shows the common framing for one standalone Component B pump. It is illustrative only. The real split depends on your state and the current order, so verify it before you use it with a farmer.

Why NE and special-category states differ

In north-eastern and special-category states, the central share is usually higher, so the farmer there pays less than a farmer elsewhere. The reason is simple: these states have smaller budgets and higher costs, so the centre carries more of the load.

Under common framing, the special category state CFA can rise to around 50% of the benchmark cost, against the roughly 30% used in other states. That 50% is an estimate, not a rule. The exact central share for any state is set by the current MNRE order and the state policy, so confirm it with the state nodal agency before you quote it.

The takeaway is that the same pump can have a different subsidy in two different states — not because the scheme is unfair, but because the central, state and category settings are different. Always read the slab for the specific state you are working in.

How a farmer works out their cost (for farmers)

For farmers

A farmer works out their cost in three simple steps. First, find the benchmark or tender cost of the pump size you need. Second, subtract the central financial assistance. Third, subtract the state share. What is left is your farmer share — the amount you pay, often with a bank loan.

Here is a worked example using common framing only. Say a pump has a benchmark cost of ₹1 lakh. With a roughly 30% central and 30% state split, the subsidy covers about ₹60,000, and your farmer share is about ₹40,000. This is an illustration. Your real cost depends on your state, your category and the current order.

Before you pay anything, do two things. Confirm the live slab for your state with the state nodal agency or the official PM-KUSUM portal. And get the cost in writing from a registered vendor, based on the benchmark or tender cost — not a number a salesperson invents. If the figures do not match the official slab, stop and ask.

Why the EPC cares about the structure (for EPCs)

For EPCs

For an EPC, the subsidy structure is the bid. The central and state shares decide how much the government pays you, and the farmer share decides how much you must collect from the customer. Misread either one and the project economics break. The subsidy is not a discount — it is the cash flow.

Two parts of the structure hit your business hardest. First, the farmer contribution: you have to collect that 30–40% (or whatever the live slab is) from the farmer, and that collection is where many projects stall. Second, the L1 cost: in a tender, the lowest bid sets the cost the subsidy applies to, so your margin lives inside that L1 number. Our Component B/C bid economics guide goes deeper on this.

The practical point is that the subsidy gates your money. You cannot price a job, plan cash flow or promise a farmer a figure until you know the live split for that state and component. Treat the structure as the first thing you check, not the last.

How the PM-KUSUM subsidy is claimed and disbursed

The PM-KUSUM subsidy is usually paid out after the pump is installed and verified, through the state nodal agency or the DISCOM. It is not paid upfront. The vendor or EPC installs the system, files a claim with proof, and the central and state shares are then released.

The flow is roughly: the farmer applies and pays their share, the vendor installs the pump, an inspection confirms the work, and the claim is filed with photos and documents. The central share comes from MNRE through the agency, and the state share comes from the state. Each state runs this slightly differently, so verify the exact claim steps with your state nodal agency.

Because payment follows installation and proof, clean records matter. A missing photo, a wrong document or a skipped inspection step can hold up a claim for weeks. The PM-KUSUM hub covers the wider process; the key idea here is that the subsidy is earned at install and released on proof.

Why the numbers move

The PM-KUSUM subsidy figures move because two different bodies set them and both update over time. MNRE revises the central framework and the benchmark costs, and each state revises its own share and any extra stacked subsidy. A figure that was right last year may be wrong this year.

State stacking is the clearest example. Some states add a large extra subsidy on top of the scheme. Haryana, for instance, is commonly cited as offering around 75% farmer subsidy on solar pumps in some windows — but that figure is an estimate and it changes with the budget and the tender. See our Haryana PM-KUSUM guide, and still confirm the live number with HAREDA.

This is why every percentage on this page is labelled "verify". The only safe number is the one you read today from the state nodal agency, the latest MNRE order or the open tender. Treat any quoted percentage — including ours — as a starting point to check, not a guarantee.

How SuryaHub helps EPCs handle the subsidy

For EPCs, the subsidy structure turns into real work: collecting the farmer share, filing the claim and tracking the government steps that release the money. SuryaHub keeps the subsidy claim and farmer-contribution accounting and the government workflow in one place, so no step that releases the PM-KUSUM subsidy is missed. SuryaHub is pre-revenue; the only real pilots are Suryantra Energy and RGESPL, and every figure on this page is a scheme fact to verify, not a guarantee.

Related guides

Frequently asked questions

Sources & references

The subsidy framework, components and benchmark cost basis come from primary government sources. Every percentage and slab on this page is indicative — always confirm the current figure with your state nodal agency, the latest MNRE order or the live tender before you act.

• Ministry of New & Renewable Energy (MNRE) ↗

  Scheme guidelines, benchmark costs and the CFA framework. Verify the current order.

• National Portal for PM-KUSUM ↗

  Component details, state links and the live application process. Verify current slabs.

• HAREDA (Haryana state nodal agency) ↗

  A state example of stacked subsidy and tenders. Confirm current figures with your own SNA.