Union Budget 2021-22: What is vehicle scrappage policy and what it means for private car owners?
New Delhi | Jagran Business Desk: Finance Minister Nirmala Sitharaman on Monday presented the Union Budget 2021 and announced a sharp rise in capital expenditure for the next fiscal year to Rs 5.54 lakh crore, from Rs 4.39 lakh crore in 2020-21. Among other reforms and new policies, Nirmala Sitharaman also announced that the government is intended to bring a voluntary vehicle scrappage policy, which is aimed at phasing out cars and commercial vehicles which are older than 20 or 15 years, respectively.
Presenting the Budget for 2021-22 in Parliament, Sitharaman said that under voluntary vehicle scrapping policy, personal vehicles would undergo a fitness test after 20 years while commercial vehicles would require it after completion of 15 years. However, the details of the Voluntary Scrappage Policy will be declared within 15 days.
What is Vehicle Scrappage Policy and what does it aim to achieve?
Finance Minister Nirmala Sitharaman while announcing the voluntary vehicle scrappage policy said that the policy will help in encouraging fuel-efficient, environment-friendly vehicles, thereby reducing vehicular pollution and oil import bill. Under the policy, any private vehicle that’s older than 20 years will have to undergo a fitness test, which will be conducted at automated fitness centres and will also determine whether the vehicle is fit for roads or not.
The policy would cover over one crore light, medium and heavy motor vehicles, Road Transport, Highways and MSMEs and will lead to new investments of around Rs 10,000 crore and create as many as 50,000 jobs. These over one crore old vehicles are estimated to cause 10-12 times more pollution than the latest vehicles.
The new policy would also lead to recycling of waste metal, improved safety, reduction in air pollution, lower oil imports due to greater fuel efficiency of current vehicles, and stimulate investment. The demand for new vehicles will also grow and automobile industry will reach Rs 6 lakh crore from the present Rs 4.5 lakh crore, Union Minister Nitin Gadkari said.
What is the fitness test?
According to the policy guidelines, after the end of the 20-year or 15-year period, vehicles will have to undergo a fitness test and acquire fitness certificates in order to remain qualified to run on roads. Each fitness test will reportedly cost Rs 40,000, which is in addition to the road tax and Green Tax announced that every vehicle owner will have to pay while mandatorily renewing your private vehicle’s registration after the 15-year period. The fitness certic=ficatees will be valid for 5 years only, after which another fitness test will be required at the same cost.
What is the Green Tax?
Last month, the government had said it plans to impose green tax on old polluting vehicles soon in a bid protect environment and curb pollution while vehicles like strong hybrids, electric vehicles and those running on alternate fuels like CNG, ethanol and LPG will be exempted. The revenue collected through the green tax will be utilised for tackling pollution.
Under the scheme, transport vehicles older than eight years could be charged green tax at the time of renewal of fitness certificate at the rate of 10 to 25 per cent of road tax, as per green tax proposal sent to states for consultations after cleared by the ministry.
Posted By: Talibuddin Khan