The Centre has set out Rs 2,000 crore to encourage states to recycle obsolete vehicles.

The Union government would pay an additional Rs 2,000 crore to states under the Special Assistance for Capital Investment scheme to encourage them to trash old vehicles and provide tax breaks for those who do so.

The government announced the ‘Special Assistance to States for Capital Investment’ scheme in the 2022–23 budget, with an outlay of Rs 1.05 lakh crore. The scheme provides financial support to state governments in the form of a 50-year interest-free loan for capital projects.

The Centre has now allocated an additional Rs 2,000 crore under the scheme to encourage states to discard condemned government vehicles or vehicles older than 15 years and to grant tax breaks to individuals who scrap old vehicles.

The finance ministry stated in a letter to states last month that a new sector, road transport, had been designated for granting incentives related to mandated reforms by states under the scheme.

An incentive for discarding old vehicles has been added to the scheme, with Rs 2,000 crore set aside for dismantling state government vehicles older than 15 years, waiving liabilities on old vehicles, and granting tax breaks to individuals who scrap old vehicles.

The entire outlay under the scheme has increased to Rs 1.07 lakh crore, up from the Rs 1.05 lakh crore declared in the Budget.

So far, the government has authorised Rs 77,110 crore under the plan, with the states receiving Rs 41,118 crore.

The scheme, which has a budget of Rs 80,000 crore, intends to incentivize states to invest in capital projects. Furthermore, states are encouraged to pursue changes such as privatisation or disinvestment, digitization, urban reforms, optical fibre cable projects, and rural road construction.


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