In the Union Budget 2021, the automobile sector received enough attention from the Central government. The two key budget announcements for the sector are new schemes for the public bus transport services and introduction of the voluntary scrappage scheme.
Apart from the vehicle scrappage policy, Finance Minister Nirmala Sitharaman has announced to raise the share of public transport in urban areas through expansion of metro rail network and augmentation of city bus service. The announcements in the Union Budget are likely to improve sales volumes in such a manner that the recovery in the sector will be swifter in the coming quarters than what was seen in the past two quarters.
FM Sitharaman has announced in her Budget 2021 that government will raise the share of public transport in urban areas by expansion of metro rail network and augmentation of city bus service. Rs 18,000 crore has been announced for a new scheme, to augment public bus transport. Innovative PPP models will be in place to run more than 20,000 buses.
20,000 buses will be purchased for 111 cities. There will be a thrust for bus transport for Tier 2 and Tier 3 cities, addition to all the state capital of the country.
State government will send proposal to central government for buying buses. The Centre will pay money for both buying the bus and running the bus, i.e. includes both CAPEX and OPEX.
The scheme will boost the automobile sector, provide fillip to economic growth, create employment opportunities for the youth and enhance ease of mobility for urban residents.
In the first nine months of FY21, sales of medium and heavy commercial vehicles dropped by 91% to 2,578 units according to SIAM data.
Beside this, the voluntary scrappage policy will strengthen the replacement buying of commercial vehicles.
