Business, Economy, Government

Scrappage policy file leaves FM’s desk

The Old Vehicle Scrap policy got a push on Feb 7 after Minister of Road Transport, Shipping and Highways Nitin Gadkari sent it to the Cabinet for approval.

Once the policy gets the approval, it will be sent to the GST council.

Commercial and transport vehicles that are over 15-years-old will be certified unfit for the road. If the policy is implemented, nearly 28 million vehicles will be scrapped.

Gadkari said that PMO is enthusiastic about the proposal as it would put an end to pollution caused by old heavy vehicles.

The policy file was lying on Finance Minister Arun Jaitley’s desk for nearly two years due to prolonged deliberations on GST provisions between Centre and states.

Under the Voluntary Vehicle Fleet Modernisation Programme (V-VMP), the policy’s official name, old vehicle owners will get a relief of about Rs. 5 lakh if they purchase a vehicle costing over Rs. 15 lakh.

“We propose a discount of about Rs. 2 lakh from manufacturers at the time of purchase while about Rs. 2.5 lakh concession in taxes by state and central governments for those purchasing new commercial vehicle on surrender of old vehicle. Tax concession would be as recommended by the GST Council,” said Gadkari.

If the policy is implemented, tax revenue from the automobile sector would increase by Rs. 10,000 Crore. The industry turnover would quadruple to 20 lakh crore from 4.5 crore.

Ministry of Steel Trading Company (MSTC) recycling units would be set up under the government’s Sagarmala project. Sagarmala project is a port-led development program introduced to equip India’s coastline and enable it to contribute to growth. The policy would benefit an automobile-intensive trade port like Chennai.

The policy would cut harmful emissions, increase sales for automobile manufacturers, improve overall fuel efficiency in the economy, reduce the import of oil, multiply government revenue through taxes levied on purchase of new vehicles, and reduce the dependence on steel imports as the old metal would be melted for recasting.

The resistance to this policy comes from pensioners, medium-income and cash-strapped owners who wish to maintain the vehicle and refuse to replace their old car with a new one by spending saved up cash or by taking a loan.

Exchange schemes run by automobile companies and the argument that purchasing a new vehicle would offset the maintenance cost doesn’t beat the significant at-a-time investment the buyer would have to make.

Commercial vehicles bought on or before March 31, 2005 would be scrapped, according to the draft policy.


Business, Economy

PM Modi lauds India’s climb up the Ease of Doing Business Index

Prime Minister Narendra Modi today claimed that his mantra of “Reform, Perform, and Transform” has elevated India to a higher ranking on the World Bank’s Ease of doing business index.

This year, India ranked 130 out of 189 countries by climbing four places on the index.

In an interview with Network 18, Narendra Modi said, “Our systems, processes, forms were so complicated. These have been reformed, so our rankings are going up. These small things need to be improved. Even today there exists licence raj in some areas. That needs to go. This is an important reform that is happening at every level — administrative, governance, legal.”

India improved its position based on policy changes for starting a new business, obtaining construction permits, and accessing electricity.

Although the report states that the number of days it takes to start a new business in India is 29, the wait has been reduced to 12 days from 29 in the past year, according to the Department of Industrial Policy and Promotion (DIPP).

Till last year, it took almost eight months to get a construction permit in Delhi and five months in Mumbai, as reported by World Bank. The government introduced online construction permits in Mumbai and Delhi to hasten the clearance procedures and to cut red tape.

Speaking about the reforms that gave India a better ranking, Narendra Modi said, “Usually it is one or two things that are talked about, but today growth is being talked about in all sectors. Electricity production has gone up and so has demand. Infrastructure work is also growing rapidly and that happens when there is demand in the economy. From all this it looks like we have moved ahead to better days.”

India has failed on parameters such as accessing credit and paying taxes. The other areas in which India ranks poorly are registering property, trading across borders, enforcing contracts, and resolving insolvency.