Does India need a “Cash for Clunkers” scheme?

Schemes like ‘cash-for-clunkers’ in the US have been a success in the US! Similar schemes in India will not only encourage car owners to sell their old cars, but it will also push the drive with cash incentives to help car-owners to replace their old ones with more efficient cars! The National Bureau of Economic Research estimate that the program resulted in 360,000 automobile purchases in the US during July and August 2009.

Schemes like ‘cash-for-clunkers’ in the US have been a success in the US! Similar schemes in India will not only encourage car owners to sell their old cars, but it will also push the drive with cash incentives to help car-owners to replace their old ones with more efficient cars! The National Bureau of Economic Research estimate that the program resulted in 360,000 automobile purchases in the US during July and August 2009.

The National Green Tribunal (NGT) extended its stay till July 13 (2015) on its order banning 10-year-old diesel vehicles from plying in Delhi-NCR. One big factor for all the uproar for car-owners in NCR seem to be that the ban does not give them enough time to switch to another vehicle. It may be imperative that diesel is the prime source of air pollution in Delhi. But interestingly, most big vehicle scrappage programs around the world, similar to US’s ‘cash for clunkers’, happen to offer different incentive for car switches.

While the ban has raised questions for car users in Delhi, there have been scrap drives for older vehicles in the US with several incentive schemes. The Car Allowance Rebate System or CARS, popularly known as the ‘cash for clunkers’ scheme was floated as a $3 billion US federal programme with a clear aim to offer economic incentives to Americans for purchasing fuel-efficient vehicles and trading off less fuel-efficient old vehicles. It was vigorously promoted offering a stimuli to the economy by boosting auto sales, and putting up better, greener and efficient vehicles on the road.On the success of the program, the DoT reported that the programme resulted in 690,114 dealer transactions submitted, requesting a total of $2.877 billion in rebates.

The National Bureau of Economic Research estimates that the federal government paid automobile dealers between $3,500 and $4,500 each time a customer traded in an used old and less fuel-efficient vehicle to purchase a better and fuel-efficient vehicle. The rebates totalled up to $2.877 billion were passed on to customers as a purchase incentive. The program was tailored to boost automobile sales and stimulate the economy.

Similar scrapping schemes have been carried out in Europe— France, UK (with finance of upto £2000 by private car manufacturers), Germany and Italy with varying incentives/time frames for cars and other vehicles. With the car-manufacturing giant Japan, the government announced a series of incentives for its car industry which include a 250,000-yen ($2,000) scrappage incentive.

Is it time for India to invest in schemes similar to ‘car clunking’ and make a signature start as a green initiative for curbing pollution and set an example for other metro cities?

What do you think?

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