Explanation:

Recently, the Ministry of Road Transport and Highways (MoRTH) has formulated a note for Cabinet – on creation of an ecosystem for voluntary phasing out of unfit and old polluting vehicles.

Reduce current account deficit

• The vehicle scrappage policy would help reduce Indian oil dependence. Oil imports form a major proportion of India’s import profile
• This would help reduce import of critical raw material from other countries helping improve India’s trade balances with such countries.
• The vehicle scrappage policy would help India emerge as a hub for automobile manufacturing as key raw material available from scrapping steel, aluminium and plastic were bound to be recycled, bringing down automobile prices by “20-30%.” This would help increase automobile exports from India.
• Increased exports, reduced imports would help reduce India’s current account deficit.

Improve capital account inflows

• This policy would spur investments in the automobile sector, which could also include capital investments from foreign automobile manufacturers.

Improve Balance of Payment position of India

• Reduced current account deficit and improved capital account inflows will invariably help improve India’s Balance of Payment position.
• The balance of payments of a country is the difference between all money flowing into the country in a particular period of time and the outflow of money to the rest of the world.

Hence all statements are correct.