Budget 2021: Money9 Budget Conclave dissects voluntary vehicle scrappage policy

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Finance Minister Nirmala Sitharaman on February 1 announced the ‘Voluntary Vehicle Scrappage Policy’. The voluntary vehicle scrappage scheme aims to incentivise phasing out old vehicles, which in turn could help curb pollution.

The Money9 Budget Conclave explores what this new policy means for the common man. The panel was moderated by Krishnakumar.

The fitness of personal vehicles would be checked in 20 years and commercial ones would be checked in 15 years. The vehicles can be traded for a compensation. But is India and more importantly, Indians, ready for this change? How would it impact the sector?

“We need to look at two schools of thought. For those who do not maintain their vehicles well, this is a boon and for those who maintain their vehicles well, it would be a hill climb. Take the example of the service retired people who have bought a car after years of service and maintain it well. Why should they buy a new car?” said auto expert Tutu Dhawan.

The government has introduced the scheme with an aim to curb pollution and oil imports. Sumantra Barooah, Executive Editor, Autocar, said: “At the macro perspective, it’s a positive intent. Look at it in totality. Emission reforms have been brought in, electric mobility is being promoted, efforts are being undertaken to enhance renewable sources of energy. No matter how many reforms the government brings in, as long as there are BS2, BS3 ,BS4 vehicles on the road, it would defeat the purpose. Look at the finer contours of the policy. Will it incentivise me enough to scrap the car?”

Would age be a factor as well?

“It boils down to personal choice. For younger generations, it would be good. For the older generation, it would not be so good. For those who have worked all these years, they might not be able to afford a new vehicle now,” he said.

While it would be interesting to watch how the common man takes to this new policy, the auto sector is celebrating at the prospect of higher vehicle sales.