| Centre may allocate Rs 4,000 cr to help states buy more buses | |
| Prashant K Sahu / New Delhi January 6, 2009, 0:32 IST | |
 Move aimed at stimulating demand for commercial vehicles.
The Centre is likely to allocate Rs 4,000 crore towards financing state transport undertakings to replace their ageing bus fleets over the next six months.
The scheme, announced as part of the second stimulus package last Friday, will involve changing the scope of work covered under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM).
“Currently, the scheme does not allow spending for urban transport systems like state transport corporations (STCs). The ministry of urban development is being modified to cover STCs,” said a senior government official.
Under JNNURM, the Centre, state and local bodies pool funds to improve urban infrastructure like roads, sewage and other services associated with rapid urbanisation.
The details of the scheme are likely to be announced in a week or two, sources said. This will be a one-time measure to help the STCs buy buses up to June 30, 2009.
The move is also aimed at stimulating demand for commercial vehicle manufacturers like Ashok Leyland and Tata Motors at a time when demand from private truck operators has dipped sharply because of the economic downturn.
The mode of funding is being finalised. The options are to give a fixed percentage of total cost as a grant to states, with the local bodies funding the rest. But given that many local governments are not in a position to offer financial assistance, the Centre is also exploring the option of extending loans that will not involve contributions from the states or local bodies.
At present, the JNNURM schemes for urban bodies, which have a population of over 4 million, get a 35 per cent central grant, and a 15 per cent state grant. The remaining 50 per cent is the share from an urban local body or loans from financial institutions. Public sector banks are likely to be roped in to provide financial assistance.
A state government official said the scheme should cover projects under implementation like in New Delhi as part of an effort to improve the public transport system before the Commonwealth Games in 2010.
Bus sales account for about 17 per cent of the medium and heavy vehicle sales of 270,994 units in 2007-08.
However, in October and November 2008, both Ashok Leyland and Tata Motors reported sharp declines in production because of inventory build-up. Between April and November 2008, production of M&HCVs dipped 14.6 per cent against a decline of 3 per cent in the same period last year, showed data provided by Society of Indian Automobile Manufacturers.
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