Vehicle scrapping states will receive an incentive payment from the central government of Rs 2000 crore 

The central government will give a subsidy of Rs 2000 crore to the states for the scrapping of used and outdated vehicles this year. To make the vehicle scrappage policy notified by the Ministry of Road Transport and Highways popular, the money will be given to the states on a first-come, first-served basis, but for this purpose, the states need to make a full setup of the registered vehicle scrap facility (RVSF) and an automated testing station.

According to the vehicle scrap policy, all government vehicles older than 15 years are to be scrapped compulsorily. States have different timelines in terms of the duration of private and commercial vehicles. According to the Finance Ministry's policy guidelines related to the assistance to be given to the states, based on the notification of the Ministry of Road Transport and Highways, states giving additional motor vehicle tax exemption will be given assistance of up to Rs 200 crore. This assistance is expected to address the complaints of the states that they are suffering losses due to additional exemptions in motor vehicle tax, and due to this, they are not able to promote the vehicle scrap policy.

According to the guidelines of the Finance Ministry, Uttar Pradesh, Madhya Pradesh, Punjab, Karnataka, Kerala, Tamil Nadu, and Andhra Pradesh are among the states that will get Rs 200 crore. Bengal and Haryana will get Rs 100 crore, and Jharkhand, Uttarakhand, Chhattisgarh, Bihar, and Delhi will get Rs 50 crore this year. On scrapping 15-year-old government vehicles, including buses of the Transport Corporation, states will get Rs 50,000 per vehicle for up to the first 500 vehicles. After this, incentives of Rs 60,000 will be given for 501 to 1000 vehicles and Rs 75,000 for 1001 to 2000 vehicles. Under the same formula, Rs 90,000 will be given for 2001 to 4000, Rs 1,20,000 for 4001 to 6000, and Rs 1,50,000 for more than 6000.

For example, if a state scraps 3000 vehicles in RVSF, it will receive a total of Rs 22 crore. Similarly, in the scrapping of non-government vehicles, Rs 5000 will be given per vehicle for the first one thousand vehicles. Then, after every one thousand vehicles, the amount will increase by Rs 2500 gradually. If the number of vehicles exceeds 5000, the incentive amount will be Rs 20,000 per vehicle. The government will also assist the states in setting up automated testing stations. 250 high-priority districts have been identified for these centres. These will be announced separately by the Ministry of Road Transport. States will have to ensure the operation of these centres.