The month February of this year 2021 was filled with talks about one thing: The Union Budget. With various things going on in a country affected by a pandemic, the Indian Finance Minister at the time, Nirmala Sitharaman introduced the Vehicle Scrappage Policy as part of the budget. The Ministry of Road, Transport and Highways (MoRTH) keeps revealing more details about the policy as time passes. However, what is it actually? What does it mean and how does it affect your car and your vehicle insurance policy? Here is a look into the motor scrappage policy:
What is Motor Scrappage Policy?
The Motor Scrappage Policy is an official declaration released by the government related to the rules and regulations that have to be followed when you scrap a vehicle in India. Developed countries like US, UK, Canada, have had a detailed set of guidelines in this area for a while. However, India did not have one before the Motor Scrappage Policy.
As per the most recent announcements about the policy, vehicles that are old and unfit to drive on the roads will have to be scrapped. However, this will still be a voluntary process but will just be more organized and governed by a set of rules. For example, 15 or 20-year-old vehicles do not necessarily need to be scrapped. They will have to go through a test that determines their fitness after some time. Failing this test would mean that the vehicle has to be scrapped.
Highlights of the Vehicle Scrappage Policy Announcement
The automobile sector in India has been in troubled waters since the end of 2019. The COVID-19 pandemic that followed made things even worse for the industry as a whole. Even though sales in the post-Diwali season in 2020, gave the sector a major boost, the situation is still not entirely back to normal. The government claims that the scrappage policy is supposed to help the automobile sector in India. With older and unfit vehicles being phased out from the streets, people will demand for new vehicles. Moreover, scrapping older vehicles can help the environment as well by trying to eliminate the excess air pollution that older vehicles tend to add.
Here are a few highlights of the vehicle scrappage policy:
- The policy is aimed towards creating a system for scrapping unfit and old vehicles in India.
- The scrapping process will follow a set of rules and regulations and they will be made clear through an announcement by MoRTH.
- Vehicle owners will receive a fixed set of benefits for them getting their older vehicles scrapped.
- Scrapping unfit vehicles will reduce air pollution to a great degree.
- After scrapping is underway, people would be encouraged by the government to buy environment-friendly, safe, and better equipped vehicles.
How does it help with car insurance?
Any industry works on the basis of supply and demand. The same can be said about the automobile industry. However, along with the motor industry, the vehicle insurance sector is affected as well. Since, for every car there is an insurance policy, any major event in the automobile industry also affects the car insurance sector.
Since the aim of the motor scrappage policy is to promote people into buying newer cars, there is sure to be a boom in the purchases for car insurance. For a car owner, buying car insurance becomes much better for you. Paying car insurance for an older car could be like spending too much money. On the other hand, if you buy a new car, you can actually buy a new policy for a cheaper price. Moreover, since it is a new car, comprehensive policies would be the right choice to buy. This helps both the insurance industry and policy buyers. When you buy comprehensive or a third party car insurance, keep in mind that it is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.