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New proposal: Costlier cars for greener India

If this proposal of a high-level government panel is accepted, buying a new vehicle could make your wallet much lighter in the years to come.

delhi Updated: Apr 12, 2012 00:00 IST
Moushumi Das Gupta
Moushumi Das Gupta
Hindustan Times

If this proposal of a high-level government panel is accepted, buying a new vehicle could make your wallet much lighter in the years to come.

To reduce the use of personal vehicles and check vehicular pollution, the sub-committee on financing urban infrastructure during the 12th Plan (2012-2017) – headed by urban development secretary Sudhir Krishna – has proposed a series of measures, including levying an urban transport tax on purchase of all new cars and two-wheelers. In its report submitted last month, the panel recommended 7.5% additional tax on purchase of petrol vehicles and 20% on that of diesel vehicles.

This measure, the panel estimates, would help generate Rs. 18,800 crore annually – which would be ploughed back into the proposed Urban Transport Fund, and used for financing and strengthening public transport systems across India.

The report will form part of 12th Plan document on urban transport, which is currently being finalised by the Planning Commission.

"The revenue generated through the proposed levies will be pumped back into the sector to improve city roads, the public bicycle system, parking system, bus rapid transit system and the city bus systems," UD secretary Sudhir Krishna said.

A working group on urban transport, set up by the plan panel, has estimated investments to the tune of Rs. 87,000 crore for upgrading and modernising the sector during the 12th Plan.

The committee has also proposed 4% green cess on all existing personalised vehicles. At present, public and private sector enterprises provide insurance at the rate of 3% of the annual insured value for cars as well as two-wheelers. The committee has proposed an additional 4% of the vehicle’s insured value to be collected as green cess. It is estimated that in the first year, the total collection in urban areas from this source would be around Rs. 18,000 crore. A green surcharge of Rs. 2 has also been proposed on petrol sold across India. This would help generate about Rs. 3,100 crore annually.

The committee has estimated that the total revenue generated from these three sources will be around Rs. 40,000 crore in the first year itself.

"The above levies will not only help generate a dedicated pool of resources for taking up urban transport projects, but would also serve as a great disincentive for use of personalised vehicles," the report said.

Public transport accounts for only 22% of urban transport in India, as compared to 49% in lower-middle income countries such as Philippines, Venezuela and Egypt.

First Published: Apr 11, 2012 23:53 IST