Centre Approves Economic Stimulus Package Equivalent to Rs 39,000 Crore, Offers Rs 10,000 Crore Support to Airline Industry
Government Approves Measures to Cushion Airlines, Improve Road Connectivity, and Tackle Air Pollution
The Union Cabinet has approved a series of measures aimed at supporting the aviation sector, reducing air pollution, and improving road connectivity across key economic corridors. The combined investment in these initiatives exceeds Rs 39,290.6 crore.
Among the key decisions, the Cabinet approved a Rs 10,000-crore Aviation Turbine Fuel (ATF) Price Stabilisation Fund to support scheduled Indian airlines amid elevated global fuel prices triggered by the West Asia crisis. The one-time budgetary support will be provided to oil marketing companies (OMCs) as interest-free advances to enable stable ATF pricing for airlines operating both domestic and international services.
The government said the mechanism will introduce a fixed-price arrangement for aviation fuel, reducing airlines' exposure to sudden spikes in fuel costs and providing greater predictability in operating expenses. The support will compensate OMCs when international ATF prices rise above a benchmark level, with recoveries to be made when fuel prices moderate.
Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data
Tackling Air Pollution
The Cabinet also cleared a two-year vehicle replacement scheme for the Delhi-NCR region aimed at reducing air pollution and accelerating the adoption of cleaner transport technologies. The programme, with a total outlay of Rs 9,585 crore, including Rs 5,041 crore from the Centre and an estimated Rs 1,601 crore in tax concessions from participating states, will incentivise owners of BS-IV and older trucks and buses to replace them with BS-VI-compliant or electric vehicles.
| Scheme Component | Centre's Outlay | Participating States' Concessions | Total Outlay |
|---|---|---|---|
| Vehicle Replacement Scheme | Rs 5,041 crore | Rs 1,601 crore | Rs 9,585 crore |
The scheme will be implemented through the National Capital Region Planning Board in coordination with Delhi, Haryana, Rajasthan, and Uttar Pradesh.
Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline
Road Projects
On the infrastructure front, the Cabinet approved four major national highway projects worth over Rs 24,200 crore. These include:
- The Rs 8,300.79-crore coastal highway project between Rameshwar and Paradeep in Odisha
- The Rs 7,597.16-crore widening of NH-63 and NH-563 in Telangana
- The Rs 4,415.60-crore upgradation of NH-347B in Madhya Pradesh
- The Rs 3,936.05-crore four-laning of the Khagaria-Purnea section of NH-31 and NH-231 in Bihar
The projects are expected to improve freight movement, strengthen regional connectivity, and support economic activity across multiple states.
Investor Takeaway
The government's economic stimulus package may have a positive impact on the airline industry and energy sector.
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