Preeti Sharma Menon
Auto drivers in Mumbai have gone on strike against the almost 700% rise in permit costs. The taxi unions are sympathetic to the cause as they too are affected, while their competition – the aggregator services are not asked to conform to any laws and don’t have to bear any permit/license costs.
A strike on essential services causes annoyance. But since no one wants to hear the woes of auto/taxi drivers they have chosen to use this extreme measure to bring attention to a lurking crisis in the door-to-door transport sector. It’s not easy being an auto/taxi driver or in Mumbai, or anywhere in India for that matter. A driver spends 10 hours on the road and is lucky if he makes INR 15000 at the end of the month. That’s about $215 a month. And this large sum is now seriously at risk due to the un-fettered, un-regulated Aggregator Taxi Services eating away the traditional business.
For those who care to understand their issues and to prepare for the impending crisis, it’s a must to understand the taxi business.
First there were metered taxis and autos…
The State allots permits to individuals to ply auto rickshaws and B&Y taxis. These individuals must have badges – which they get after police verification and proof of domicile in Maharashtra, they must own the vehicle, which has to run on CNG, they have to install meters, and work on the rates fixed by the government. Drivers who can’t afford to buy a vehicle rent out autos/ taxis . So there are “chalaks” who drive hired vehicles, and “malaks” who drive their own vehicle.
And there were tourist taxis…
At the same time there are tourist taxis – these vehicles are owned by tourist companies. They can use any fuel, they can charge any rates. They can hire and fire drivers at will, and are not accountable to giving any records of the drivers. They are not allowed meters as they are not supposed to ply point-to-point, they have to take full day bookings, 8 hours or more.
Then came the fleet taxis…
Around 2006/7 Meru, Mega, Easycabs, and many fleet taxis launched a model that was a mix of metered taxis and tourist taxis. Like tourist taxis the company owns the taxis, but like metered taxis they ply point-to-point.
The transport laws were not ready for fleet taxis so these companies did “jugad”(as they always do in India), they paid large amounts to B&Y taxis to lease out their permits. They then bought new vehicles in the company name, against the leased permits, which was incidentally not legal. They expanded the chalak-malak concept and hired drivers with badges on a cost sharing basis – the driver paid a daily sum for using the car, paid for petrol and kept whatever he earned over and above that.
State governments caught on that the B&Y drivers were making large sums selling/leasing their permits, so they began officially auctioning permits at astronomical rates to fleet taxi companies. Initially the fleet taxi companies vied with each other to get these permits but in short time, less than 7 years, the bubble burst. The drivers were irregular, absenteeism and attrition threw the carefully laid projections out of the window. The operational costs – call center, driver management, fleet maintenance just killed the business. Many companies died, some branched into the old fashioned tourist taxi model, some hobbled along.
And then came the aggregators…
Ola, TaxiForSure, Uber have captured the market space today. They don’t own cars, they don’t hire drivers, they don’t have any infrastructure or operational costs and they don’t follow any laws. In fact, they have thrown the Motor Vehicles Act right out of the window.
What they do is connect the customer to the driver, which sounds really noble, like social service right? It gets better – they also charge customers half the actual rates! If it takes INR 20 in a B&Y taxi, they charge INR 10. Yet they pay the driver INR 18. How? They have investors who have poured in billions, and in the absence of capital and operational costs, they give discounts to the customers.
Well that’s good then – investor money going into customer pockets. Alas, there is always a catch. Or dare I say catches.
The aggregators are giving such cheap fares because they need right now to grow market share – the discounts are coming from their marketing budgets. When their market share grows from 2000 cabs to 10000 cabs, their valuation goes up proportionally!
The investors are happy their wealth is growing, and more investors queue up for the same magical growth. But the growth is merely imaginary numbers, of vehicles they don’t own, of a topline that they are actually underwriting. It’s neither assets nor profits.
Sooner or later, they will have to stop the discounts. In Mumbai they are already charging top dollar at peak times. When they stop the discounts, their rates will be much, much more than what we are allowing the B&Y taxi drivers.
Okay, but why not enjoy the honeymoon while it lasts? Actually it’s not a honeymoon, it’s a nightmare. The vehicles that join aggregators are tourist taxis – they are not allowed to ply point-to-point but they just do. They do not conform to CNG, don’t have meters. The drivers don’t need to have a badge so they don’t have any police verification. The customer is risking his/her life with a totally unknown, untraceable driver and vehicle, as well as pouring pollution down our collective throats.
And what’s worse is, it’s cannibalizing the market and leaving autos/taxis without work. An entire regulated, transport system is at risk, that too to be replaced by a rogue system that is just not answerable to the law.
There is an urgent need to amend the transport laws – the aggregator technology which is a boon for connecting customers and drivers, should be promoted and should be deployed for all door-to-door transport. At the same time, all autos/taxis should be treated the same, all should comply to the same strict norms of safety and pollution control. It really is time to do away with permit taxis, tourist carriages, and other vestiges of the British Raj and create a level playing field. Once that is done we can get on to the critical task of improving the skills of commercial drivers.
Preeti Sharma Menon is an Aam Aadmi Party’s spokesperson based in Mumbai