The plans of the Ministry of Road, Transport and Highways to include app-based taxi aggregators in the Motor Vehicle Act may effectively go against the interests of the end users by potentially decreasing the cab density on the road along with standard increased prices, according to experts. If taxi aggregators like Ola and Uber are included under the Act, the state governments will be able to impose an upper fare cap for such taxi operations, which will end the surge pricing model.
Till now, the app based taxi operators operated outside the ambit of the Act as they were not, strictly speaking, taxi operators, but rather intermediaries or agents who provided a bridge between the cab driver and the user.
According to ministry sources, the government is understood to be working on a draft proposal that seeks to bring such companies under the regulatory mechanism of the Motor Vehicles Act. “The main point of contention that led the ministry to start formulation of this proposal was the surge pricing employed by such taxi aggregators. Also, many cab operators run cabs with an all India tourist permit but the government now wants them to operate their cabs on a city permit. It is seen that operators like Uber and Ola at times increase the fares by up to four times during surge pricing hours. This fluctuating fare adds to frustration among users,” a ministry official aware of the developments told this newspaper.
Experts are of the opinion that the move to classify app-based taxi booking services as intermediaries will ultimately act against the interests of the users.
“Surge pricing increases revenue for the company and the drivers, while making more cabs available for people during high demand periods. Revenue from surge pricing helps companies offer heavy discounts and cheaper fares. In the long run, fare caps imposed on such services will only prove to be detrimental to the industry and the users. There won’t be as much cabs available on road as before,” Aditya Sharma, Gurgaon-based consultant at Deloitte, said.
On the other hand, cab operators feel that the government’s proposal will hamper the interests of the drivers and operators. “I purchased a car specifically to run it on the road with Ola. I have to pay EMIs for my car every month and fixed upper caps on fares will impact my financial situation. The city permit proposal is also against existing drivers,” Hari Ram, an Ola cab driver, said.
Noida-based IT professional Jatin Kataria said: “It would surely be good if we didn’t have to pay increased fares but there is a logical reason behind it. After a late night out with colleagues, I would rather pay more for a cab than wait for auto rickshaws which charge a bomb to take me to Delhi.”
Emails sent to the ministry for an official response on the matter remained unanswered.