New Delhi, Feb 1 (IANS): A "desi" version of "Cash for Clunkers" has been announced by Finance Minister Nirmala Sitharaman which led to a massive jump in automobile stocks.

The long-awaited policy move that is expected to encourage new vehicle purchases was announced during the Budget 2021-22 presentation in Parliament on Monday.

However, the finer details of the scheme will be announced later.

"We are separately announcing a voluntary vehicle scrapping policy, to phase out old and unfit vehicles," Sitharaman said.

"This will help in encouraging fuel efficient, environment friendly vehicles, thereby reducing vehicular pollution and oil import bill."

According to Sitharaman, vehicles would undergo fitness tests in automated fitness centres after 20 years in case of personal vehicles, and after 15 years in case of commercial vehicles.

Consequently, the stocks of the auto sector jumped on Monday.

The sectoral index on the S&P BSE rose 4.21 per cent.