Budget 2021: Voluntary Vehicle Scrappage Policy proposed

February 1, 2021

The Finance minister of India, Nirmala Sitharaman, have proposed for the “Voluntary Vehicle Scrappage Policy”. This proposal was made during the presentation of the Union Budget for Financial Year 2022. The voluntary vehicle scrappage policy will help to scrap out the unfit and pollution-causing vehicles.

Highlights

The new policy will help in encouraging the fuel-efficient and environment-friendly vehicles.
Thus, it will reduce the vehicular pollution and cut the India’s huge oil import bills.
As per the proposed Vehicle Scrappage Policy, if any vehicle fails the fitness test more than thrice, it will be subjected to mandatory scrapping.
However, the government is yet to roll out the final scrappage policy.
The voluntary scrappage policy will be based on fitness tests.
Life has been set at 20 years in case of private vehicles while 15 years have been set for commercial vehicles.

Background

This announcement by the government has made just after government’s announcement of a scrappage policy for vehicles that are used by its various departments and public sector undertakings (PSUs).
The Ministry of Road Transport and Highways (MoRTH) also approved the vehicle scrappage policy recently for vehicles older than 15 years and that are owned by the government and PSUs.
This policy would apply to central and state government-owned vehicles from April 1, 2022.

Significance

The government have announced the policy with the viewpoint that, this scrappage policy will encourage the sales of new vehicles. Automotive manufacturers are also exploring the vehicle scrappage options. This might create ways to develop a separate industry which in turn will generate more employment opportunities.

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