Budget 2013: More funds for JNNURM to boost commercial vehicle sector

N. Madhavan        Last Updated: February 28, 2013  | 14:29 IST

Indian commercial vehicle sector, which is going through a sharp slowdown, could not have asked for more from the Union Budget. Finance Minister P. Chidambaram gave the sector a boost by allocating Rs 14,873 crore to the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) for 2013/14.

This is nearly double the amount allocated for 2012/13.

A large part of this amount will be used to buy about 10,000 buses across the country. This will greatly help the commercial vehicle industry, which has experienced a fall in sales in the current financial year.

Bus sales during the first 10 months of 2012/13 have slipped 4.6 per cent to 36,609 units from 38,382 a year earlier. Sales of mini-buses were little changed flat at close to 39,000 units. These numbers should read a lot better next year once the fund-starved state transport undertakings take advantage of JNNURM funds and start placing orders for buses.

But this incentive will not wish away all the problems of the sector, considering the sharp downturn on the goods transport side. During the April 2012 to January 2013 period, truck sales plunged 24 per cent. Overall, sales in the medium and heavy commercial vehicle segment slumped 21 per cent.

That partly explains why stock prices of both Tata Motors and Ashok Leyland, India's biggest makers of commercial vehicles, remain more or less stagnant despite the announcement.

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