Truck rental firm gets Rs 500 crore from India’s Rs 4,500 crore demonetisation announcement

A truck rental firm is getting a Rs 500-crore subsidy from India to buy its goods, as the country marks the beginning of the year with its biggest cash injection in nearly two decades.

The move comes as the Narendra Modi government seeks to ease restrictions on cash in the country as a way of curbing the black money hoard that has ballooned under the demonetised note ban.

The company, Reliance Tractor and Hire, has received the subsidy from the Centre under the National Rural Employment Guarantee Act (NREGA), a government-run scheme to provide subsidies to the private sector for hiring vehicles for the purpose of moving heavy loads.

The subsidy was announced on Tuesday by the government in its second major round of financial support to the sector since demonetization took effect.

Reliance has already received a Rs 1.25-croor subsidy from NREGA since July, when it took over the business of leasing trucks and vans.

The government has also promised a further Rs 2.5-croon subsidy in a subsequent financial assistance package.

Reliance Tractors and Hires’ truck rental business has grown by more than 40 per cent in the last three years, said the company, which has a fleet of more than 500 trucks and trucks hauling goods between six and 12 containers.

The company, with its headquarters in Kochi, has been the largest operator of truck rental companies in the state for a decade.

The scheme will cover the cost of vehicles from 1.5 lakh to 7 lakh tonnes, the company said.

The incentives will be available to companies that provide at least 5 per cent of the vehicle rent to Reliance, and companies that offer at least 80 per cent share in the leasing.

A separate subsidy scheme for small- and medium-sized enterprises (SMEs) will also be available for the leasing of trucks and buses.

The NREGAB subsidy scheme is intended to help revive the economy after the sharp drop in growth in the financial year 2017-18 due to the introduction of the cash withdrawal limit in the cash-driven economy.