Government mulls new stimulus package for commercial passenger vehicles

13 March 2009

The government is considering another stimulus package for the automobile industry hit by the current economic slowdown.

If approved, the proposal will lead to replacement of about 40,000 buses of state transport corporations (STCs).

According to a SIAM study, 32 state corporations run over 32,000 buses that are over 15 years old and fall under the overage category. These buses were not being replaced because since 1991 the centre had stopped giving capital grants for the STCs to replace the overage buses.

The new stimulus package will allow STCs, to replace a total of over 40,000 buses. All STCs will be given capital incentive of between 50 per cent and 75 per cent for replacing overage buses. These buses will have to be deployed in semi-urban, rural and in hilly areas, SIAM said.

Though these buses are meant for the semi-urban and rural areas, even high-end bus manufacturers like Volvo and Mercedes Benz can bid for the tenders, since individual states are free to decide on the type of buses they will require.

The SIAM study also found out that because of the paucity of buses, over 14-crore roads kilometres have remained uncovered till now.