Date:02/06/2005 URL: http://www.thehindubusinessline.com/2005/06/02/stories/2005060201360700.htm

Back `Tax sops, loans for new vehicles may not help phase out old ones'

Our Bureau

Chances are that people will grab the concessions and acquire new vehicles more for earning depreciation than for helping the Government reduce the size of the fleet of old vehicles

Kolkata , June 1

THE truck operators are not convinced that making soft loans available for purchase of new vehicles and granting tax concessions, as contemplated by some State governments, will help these governments achieve the objective of phasing out pre-1990 built commercial vehicles as a means to curb pollution.

Soft loans and tax concessions will no doubt boost purchase of new vehicles but will not necessarily facilitate phase out of old vehicles at the same time. Chances are that people, normally averse to buying and operating a commercial vehicle, will grab the concessions and acquire new vehicles more for earning depreciation than for helping the government reduce the size of the fleet of old vehicles.

"Facilitating purchase of a new vehicles and phasing out of an old vehicle are totally unrelated and non-complementary," according to Mr Chittaranjan Dass, Vice-President, All-India Confederation of Goods Vehicles Owners' Association.

Mr Dass draws attention to another point. The owners of vehicles of 1990 vintage generally deploy their vehicles for transportation of bricks, sand and such other low-value high-volume items and their operations are localised in nature. Their earnings too are low. No amount of tax concessions or soft loans can persuade these owners to buy new vehicles as the nature of their operations will not bring them enough money to service the loan of a new vehicle. But these owners may be tempted to replace their 1990 vehicles with an even older vehicle of, say, 1985 or even 1980 vintage.

The Centre, therefore, has to devise such schemes as would help these owners upgrade the age and class of their vehicles, emphasises Mr Dass, suggesting the setting up of a special purpose vehicle (SPV) which will buy any old vehicle, beyond the prescribed age, at a reasonable price, get the registration of the vehicle cancelled to ensure that the vehicle has been scrapped physically, arrange for its reconditioning and offer it, with a warranty of performance, to other levels of users. The SPV could also arrange for loans for the buyers of such vehicles. The owners of such a vehicle may be given a tax concession and any tax under VAT, if applicable, waived.

Mr Dass says he will soon meet the Transport Ministers of the States that are planning to arrange for soft loans and tax concessions to encourage buying of new vehicles and explain to them the problems with their decisions.

Mr G.P. Singh, President of All-India Motor Transport Congress, recently met the West Bengal Transport Minister and expressed his reservations over the State Government's proposed policy to help owners purchase new vehicles to replace their old ones as a step towards curbing pollution.