Modi government readies $4B stimulus to boost economy
What's the story
The Union Cabinet has approved a ₹39,290 crore ($4 billion) package of projects and initiatives aimed at stabilizing aviation fuel prices, reforming urban transport, and developing national highway infrastructure. The package includes the establishment of an Aviation Turbine Fuel (ATF) Price Stabilization Fund with an outlay of ₹10,000 crore. The fund is intended to stabilize ATF prices for domestic operations at ₹75.6 per liter.
Price stabilization
Jet fuel accounts for 40% of an airline's operating expenditure
The ATF Price Stabilization Fund was created due to a 2.5x increase in ATF prices. Union Minister Ashwini Vaishnaw announced the decision, noting that the government has capped domestic operation ATF prices at ₹75.6 per liter. The announcement led to a surge in Interglobe Aviation's shares, which operates India's largest private airline IndiGo. Jet fuel accounts for nearly 40% of an airline's operating expenditure.
Fleet modernization
₹5,041 crore scheme to replace old trucks, busses in Delhi
The Cabinet also approved a ₹5,041 crore scheme to phase out old trucks and busses in Delhi. The initiative aims to replace over 1.9 lakh trucks and 16,000 busses with BS-VI-compliant models or electric vehicles. Under the scheme, eligible vehicle owners will get a 5% interest subvention on vehicle loans as well as monthly fuel vouchers for five years through oil marketing companies.
Tax concessions
State governments to provide motor vehicle tax concessions
State governments will provide 100% motor vehicle tax concessions and waive registration fees for new vehicles under the scheme. However, this is only applicable if owners scrap their old vehicles or shift them to non-NCAP cities before buying BS-VI or electric replacements. The move is part of a larger effort to modernize Delhi's transport fleet and reduce vehicular pollution in the capital city.
Highway development
Several highway projects across states approved
The government also approved several major highway projects across states. These include the ₹8,301 crore Rameshwar-Konark-Paradeep Coastal Highway project and the ₹3,936 crore four-laning of the Khagaria-Purnea section in Bihar. The Cabinet also approved the four-laning of NH-63 and NH-563 in Telangana at a cost of ₹7,597 crore as well as upgrading NH-347B in Madhya Pradesh at an estimated cost of ₹4,415 crore.