Motor vehicle insurance policy | IAS Target IAS Target

Vehicle Scrappage policy

25 Nov 2021

Category : Science and Technology

Topic: Vehicle Scrappage policy

Context: The Union Minister of Road Transport recently issued a directive on the disposal of vehicles at Lok Sabha.
This was first announced in the 2021-22 Union Budget. This bill includes an estimated 510,000 rupees of light motor vehicle (LMV) over 20 years old and an LMV of 340,000 rupees over 15 years old. In addition, India will also introduce a Global Positioning System-based toll system and abolish all toll houses within a year.
Goal: Reduce inventory of old and defective vehicles, reduce air pollutants in vehicles, and improve road and vehicle safety.
Rule:
Fitness test: Older vehicles must pass conformance testing before they can be re-registered. According to government guidelines, commercial vehicles older than 15 and private vehicles older than 20 will be discarded. Old vehicles are tested at the automatic fitness centre, and vehicles are tested according to international standards. The ministry has also established rules regarding registering demolition facilities, their authority, and the demolition procedures to be followed.
 Older vehicles must pass conformance testing before they can be re-registered. According to government guidelines, commercial vehicles older than 15 and private vehicles older than 20 will be discarded. Old vehicles are tested at the automatic fitness centre, and vehicles are tested according to international standards. The ministry has also established rules regarding registering demolition facilities, their authority, and the demolition procedures to be followed.
Vehicle tax refund: The state government will offer vehicle tax cuts of up to 25% for automobiles and 15% for commercial vehicles to give owners of old vehicles an incentive to dispose of old and inappropriate vehicles.
Vehicle Discount: The car manufacturer also offers a 5% discount to those who present a "demolition certificate", and there is no registration fee to purchase a new car.
Deterrence: As a deterrent, an increase in the re-registration fee will be charged for vehicles over the age of 15 from the initial registration date.

Earnings improvement:

Motor Vehicle Insurance Policy will increase sales of shrinking large and medium-sized commercial vehicles due to the economic slowdown caused by the bankruptcy of IL & FS (Infrastructure Leasing & Financial Services) and the pandemic of Covid 19. The Treasury is expected to receive a Goods and Services Tax (GST) of approximately Rs. 30-40 billion from this policy.
Discount: Recycling metal and plastic parts can significantly reduce the price of auto parts. The cheaper the waste, the lower the manufacturing costs of the automaker.
Reduce pollution: It helps improve fuel efficiency and reduce pollution. An estimated 17 medium and large commercial vehicles are more than 15 years old, as older vehicles pollute the environment 10 to 12 times.