To revive economy,phase out old vehicles sooner: CM

The CM has now suggested that this age limit should be lowered further to phase out more vehicles.

Written by ZEESHAN SHAIKH | Mumbai | Updated: April 8, 2014 2:32:23 pm

With the Indian economy facing a slowdown,Maharashtra Chief Minister Prithviraj Chavan Saturday suggested that expediting the phasing out of old taxis and auto-rickshaws from the state’s roads would provide stimulus to the automotive industry by creating demand for new vehicles.

“The current phasing-out age for auto-rickshaws is 16 years and for taxi 20 years. We are looking at whether we can reduce this age further. This will have a double impact on checking pollution as well as giving a boost to the automotive industry by increasing demand,” Chavan said while addressing a gathering at the Indian Merchant Chamber in Mumbai.

In the face of stiff opposition by transport unions,the state government had in April this year decided that all rickshaws more than 16 years old and all taxis more than 20 years old would not be allowed to ply on the state’s roads.

The CM has now suggested that this age limit should be lowered further to phase out more vehicles.

“We are thinking of giving an assistance of Rs 25,000 in case of auto-rickshaws and Rs 1 lakh in case of taxis to those whose vehicles are phased out,” Chavan said.

The CM said he had put across this idea to the Centre,requesting it to work out the modalities of the scheme.

The downturn in the Indian economy has hit the auto sector worst. High fuel and interest cost have driven away first-time customers while an inflationary economy means the sector is unable to sustain the 19 million people who are reliant on it.

“My greatest fear is people losing jobs. There have been job losses in the automotive sector and we need to take efforts to revive this sector,” Chavan said.

Economists say such a scheme has been used by many global economies to boost the automotive sector. They,however,caution that the state should try this first on state-run enterprises like the transport corporations.

“This scheme has been used by various economies like China and the United States. In the US,it was known as ‘cash for clunkers’ programme. The Indian automotive industry is really in need of some fiscal support. However,it would have made more sense if it was applied on entities like the state-run transport corporations rather than individual owners of vehicles,” economist Ajit Ranade said.

At present,there are over 5.50 lakh auto rickshaws and 1.07 lakh taxis in the state. Around 10 per cent of these vehicles do not meet the 16/20 year age criteria.

In Mumbai,there are over 1.20 lakh auto-rickshaws and 46,704 taxis,out of which 16,000 auto-rickshaws and 5,000 taxis were to be phased out,creating demand for an equal number of new vehicles.

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