NITI Aayog’s concerns on Vehicle Scrappage Policy

The Ministry of Road and Transport Highways recently released Draft Guidelines for Vehicle Scrapping Facility. The guidelines include land requirements, scrapping procedures, criteria for scrapping of vehicles. It applies to all automobile collection centers, vehicle owners, required audits and finances.

The federal policy think tank on November 21, 2019, raised concerns on implementation of the vehicle scrappage policy.

The Concerns

The think tank’s major concern was over the life or age of vehicles that allows an owner to scrap them. The policy offers that the vehicle can be scrapped if its registration certificate has not been renewed in 15 years of time period. According to the think tank, this might fetch economic losses to the owners.

The think tank also fears that India might face the same fate as that of the US after implementing Cash for Chunkers scheme. The scheme in the US provided financial incentives to the car owners who volunteered to scrap their vehicles. However, the US economy failed to stimulate even after spending 3 billion USD.

Key Provisions of the policy

The policy offers rebates on road tax for owners with certificate of scrapping. It intends to set up vehicle scrapping centers and also provides guidelines for the centers. The policy says that the vehicles can be scrapped if they are abandoned or impounded by enforcement agencies, if their registration certificates are not renewed for over 15 years, or if the vehicles are beyond repair and are damaged due to natural calamities.

Significance

The GoI launched the policy to boost the automobile sector that is facing deceleration in its growth rates lately. It believes that the policy will drive vehicle sales as it includes incentives. It also aims at protecting the environment by backing the dismantling and scrapping industries.

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