Disrupting Ubernomics: Why K’taka govt could end up destroying cab-aggregators over public safety

Drivers who have benefitted from a steady stream of income over the past 5 years are now staring at losses, thanks to the new passenger safety rules upheld by the Karnataka HC.

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Till about five years ago, Bengaluru residents had no option but to hire an auto-rickshaw for everyday travel within the city. It was difficult to avail them late in the night, or in sparsely populated neighbourhoods. Demands for ‘one-and-a-half’ or ‘double’ the price on the meters were regular. Cabs were too expensive. This scenario changed drastically when Ola was launched in 2011, and then two years later Uber rolled in. These app-based cab aggregators offered various incentives for both the drivers and customers, which created a comfortable situation in a competitive market.

Cab-aggregator services like Ola and Uber also created a new ecosystem for drivers, giving them the opportunity to earn more.

Today, the entire ecosystem is at the risk of being lost. The Karnataka government’s rules for these services, some of which have been upheld by the Karnataka High Court, could be spelling financial doom for the drivers, rendering the technological disruptions meaningless.

New tech vs archaic rules

In early 2016, the Karnataka government issued a new set of guidelines termed ‘Karnataka On-demand Transportation Technology Aggregators Rule, 2016’ that cab aggregators had to follow. This included licensing, and several other rules meant to protect passenger safety. Read here on why some of the rules are seen as absurd.

Over the next few months, several Uber and Ola cabs were seized by the transport department for not complying with these norms. Eventually, Ola gave in to the norms and obtained licenses for some of their vehicles.

But Uber stood its ground. While it complied with some of the norms, on June 2, Uber filed a petition with the Karnataka High Court, stating that the government did not have the authority to regulate cab aggregators under the Motor Vehicles Act 1988, and moved court to expunge the rules.

Meanwhile, Ola filed an affidavit with the HC stating that Ola has complied with the norms, while Uber had blatantly flouted it. Recently, on November 10, the Karnataka High Court upheld some of the regulations while striking down a few others, and ruled that Uber must comply with the government’s rules.

But the real victims of the battle between Uber, Ola and the government have been drivers, mostly from low-income groups. It now emerges that several other rules imposed on the sector are affecting the independence of the drivers.

Angry drivers, concerned officers

The court’s verdict has angered cab drivers, who believe that their income-earning capacity will take a hit with regulations like the cap on working hours, the installation of electronic meters, panic buttons, cancellation of all-India permits and the time period for renewal of licenses.

The Additional Commissioner, RTO for Bengaluru, HG Kumar, however, says that the regulations were brought in keeping in mind public safety.

The 8-hour work limit

The rules state that cab drivers are allowed to work for a maximum of eight hours per day. This is not the actual number of hours the cab is driven, but the time for which the driver is online.

Drivers say that an 8-hour login time is not enough to get the number of trips they need in a day to make enough money.

“We work at least 11 to 12 hours every day and sometimes more. Some days we can choose not to work at all if we put in more hours the previous day. With the new rule, we cannot get as many trips. During the peak hours, we can get two to three rides due to traffic. There is always an uncertainty about how many rides we will get within eight hours of login time. We usually stay online throughout the day and accept requests as and when they come in,” says Sagar, an Uber cab driver.

The transport authorities too, however, have a compelling argument to make.

“We have received numerous complaints from people that due to the long working hours, the cab drivers doze off on the wheel. This puts the lives of both the driver and the passenger at risk. Our job is to ensure road safety, hence we have introduced the 8-hour login time,” Kumar says.

Scrapping the all-India permit

With an all-India permit, the cab drivers had the freedom to either drive for Ola or Uber within the city, and also ferry tourists to various destinations if they get the business. The new rule states that the drivers have to surrender the all-India permit and obtain a state permit if the drivers want to drive within city limits.

“Earlier, the choice was ours to make. Now we have to surrender the all India permit for a state permit. If we want to keep the all-India permit, then we will not be able to operate within city limits. This is a dampener on our earnings,” says Ravi, another cab driver.

Additional Commissioner Kumar says that vehicle permits fall under the state’s purview, which is different from all-India permit for tourist taxis. “How is it possible to violate laws? The cab drivers have to comply with them. They are just thinking about money and not concerned about complying with the law,” he says.

The fancy e-meter and panic button

According to the rules, all cabs must install electronic meters, printers and panic buttons.

The drivers are opposed to this as they have to pay up to Rs 45,000 to install the prescribed systems, and if they operate for both Ola and Uber, the cost would double as they would have to install two systems. And this, when the Uber or Ola apps already have an in-built billing system and panic buttons.

“After the regulations were introduced, Uber had installed electronic meters in 100 cabs. But the transport authorities rejected it and wanted us to install the expensive meters used in Meru and Airport Taxis. Those are very expensive,” laments Gajendra, an Uber driver.

These cab drivers earn around Rs 45,000-50,000 per month. But with the EMIs and fuel costs factored in, they end up with Rs 20,000-25,000 per month.

“We have families to sustain and the fees that we have to pay for our children’s education. With these new regulations, we will have next to nothing at the end of the month,” Sagar adds.

Kumar says that if the drivers collectively filed a complaint, the transport authorities would be willing to look into the matter and amend the rule, if necessary. He however insists that the transport department cannot compromise on panic buttons, although drivers claim that these could be tampered with.

“The regulation clearly states that they have to install tamper-proof panic buttons. There are so many options available now-a-days. The cab company has to look into it and not dump all of it on the drivers. Why should the drivers operate both services? Our worry is for public safety not the driver’s earnings,” Kumar said.

Road to nowhere

There is also a battle playing out between Ola and Uber here, with Ola accepting the government’s rules, giving the latter ammunition to fire at any dissent.

“Ola has complied with all our regulations and they have been doing well. Why can’t Uber do the same? They are making a big deal out of nothing. They had a month’s time to sort out the license issue. What were they doing all this while? Why isn’t Uber doing something to help them?” Kumar questions.

Drivers however point out that these rules will not harm Uber or Ola, but the drivers. “We don’t know why Ola is supporting the rules, perhaps because it does not matter to them. But this is hurting us,” says one of the drivers.

Sources in the industry however say that cab aggregators are actively engaging with the concerned authorities over the issues faced by the drivers.

The larger risk, however, is that the competitive market which had created a healthy environment for the businesses, the cab drivers and the customers may deteriorate if it is regulated within the present framework.