Budget 2023: FM reinforces need for old vehicle replacement

Finance Minister Nirmala Sitahraman presents the first budget of 'Amrit Kaal' on February 1. Finance Minister said the Budget for 2023-24 hopes to build on the foundation of the previous budget and blue print for India@100. This is the last full budget of the second term of the Modi government ahead of the general elections in 2024. In her speech, Sitharaman said the government’s focus is on wide-ranging reforms and some policies implemented through ‘Sabka Prayas’. Here are the top pointers from FM Sitharaman’s Budget speech.

With an aim to spread awareness about the auto scrappage policy for phasing out of end-of-life vehicles, finance minister Nirmala Sitharaman reaffirmed that replacing old polluting vehicles will be an important part of "greening the country's economy". She affirmed that while there will be more fund allocation for this policy, central government will support state governments to scrap old vehicles and ambulances.

“In furtherance of the vehicle scrapping policy mentioned in Budget 2021-22, I have allocated adequate funds to scrap old vehicles of the Central and State Government. Replacing old polluting vehicles is an important part of greening our economy,” stated Sitharaman, while presenting the  Union Budget 2023-24 in the Lok Sabha of Parliament.

The scrappage policy is a programme that encourages vehicle owners to scrap vehicles older than 15 years old and purchase new ones instead. One of the key advantages of such a policy is that it helps in curbing air pollution by removing older and more polluting vehicles from the roads.

Ministry of Road Transport and Highway (MORTH) in September 2021 implemented the policy for setting up automated fitness testing stations and registered scrapping facilities. The move was necessitated to enable a digital and user-friendly implementation of the scrapping scheme in order to phase out unfit and polluting vehicles in an eco-friendly manner.

“After supporting the replacement of vehicles by the central government, states will also be supported in replacing old vehicles and ambulances," added FM in her speech.

Industry stakeholders reckon that funds infusion in the scrappage policy is a "remarkable step" and is in the right direction to achieve India’s goal of being "carbon neutral by 2070". Some are also hoping that replacing old government vehicles with new ones would translate into growing order books of auto companies, increased output and create jobs.

Amit Lakhotia, Founder & CEO, Park+ noted, "The revised vehicle scrappage policy will ensure that Indian roads no longer support old & polluting vehicles. Furthermore, this step will translate into growing order books for auto companies and trigger job creation."

Similarly, Dr. Sudhir Mehta, Founder & Chairman, Pinnacle Industries & EKA Mobility, opined, "The new scrappage policy will positively impact the entire value chain by creating more demand in the sector and giving a boost to the economy. Adequate funding to scrap old government vehicles and ambulances will create additional demand for small & medium commercial vehicles, which will also lead to more job opportunities in the sector."

It may be recalled, Sitharaman, during Budget 2021, had announced a voluntary vehicle scrappage policy in the Union Budget to phase out old vehicles and to boost the sales of new vehicles. During that time, she stated that under the voluntary vehicle scrapping policy, personal vehicles would undergo a fitness test after 20 years, whereas commercial vehicles would need to take it after completing 15 years.