Budget 2021: Voluntary vehicle scrapping policy to phase out old, unfit vehicles

Union Finance Minister Nirmala Sitharaman on Monday announced the voluntary vehicle scrapping policy to phase out old and polluting vehicles. Presenting the Budget for 2021-22 in Parliament, Nirmala Sitharaman said, “We are separately announcing a voluntary vehicle scrapping policy, to phase out old and unfit vehicles. This will help in encouraging fuel efficient, environment friendly vehicles, thereby reducing vehicular pollution and oil import bill.” 

She added, “Vehicles would undergo fitness tests in automated fitness centres after 20 years in case of personal vehicles, and after 15 years in case of commercial vehicles. Details of the scheme will be separately shared by the Ministry.”

Earlier Union Road Transport Minister Nitin Gadkari had said last week that the policy to scrap more than 15-year-old vehicles owned by government departments and PSUs is likely to be notified soon and will be implemented from April 1, 2022. The policy is already approved by the government.

"The minister... approved the policy of deregistration and scrapping of vehicles owned by the government department and PSU, which are above 15 years in age," the Ministry of Road Transport and Highways had said in a statement. "It is to be notified, and will come into effect from 1st April, 2022," the statement had said.

On July 26, 2019, the Union government had proposed amendments to motor vehicle norms to allow scrapping of vehicles older than 15 years in a bid to spur adoption of electrical vehicles.

"We have submitted the proposal and I am expecting that we will get approval as early as possible for the scrapping policy," Gadkari had said on January 15.

Gadkari had also said that once the policy is approved, India will become an automobile hub and there will also be reduction in the prices of automobiles. He had said recycled material from old vehicles will help reduce the prices, adding that the automobile industry's turnover, which is Rs 4.5 lakh crore with Rs 1.45 lakh crore exports, will get a boost.

Last week, the Union government approved a proposal to tax older vehicles that are polluting the environment. It was described as the ‘green tax’ and it seeks to tax vehicles older than a fixed number of years (depending on the category). Before the proposal is notified, it will be sent to state governments for a consultation.

In May 2016, the government had floated a draft Voluntary Vehicle Fleet Modernisation Programme (V-VMP) that proposed to take 28 million decade-old vehicles off the road. 

The Union government also announced a Rs 18,000 crore scheme to augment public transport in urban areas. In the first paperless Union Budget, Finance Minister Nirmala Sitharaman said there will be 100 % electrification of broad gauge rail tracks by December 2023.

She also said a record Rs 1,10,055 crore will be provided for railways, of which Rs 1,07,100 crore will be for capital expenditure in 2021-22.