Monday, August 8, 2016

The Taxi Wars


Kali Peeli or Khali Peeli

Taxi Unions recently (21-June) went on a strike in Mumbai protesting competition from private operators like Uber and Ola accusing them, essentially, of offering lower fares and trying to drive them out of business [1] [2] [3] [4]. Now, of course, the right to strike exists to protest any perceived injustice, though, at the outset, I wonder if this strike can be justified or should garner any public sympathy, the chief complaint of which is increased competition. Isn’t that the now accepted business model the world over, that of free markets and competition, which invariably results in the best possible service offered to the consumer? The allegation made by these Taxi Unions (could also mean to include the Auto-rickshaw Unions, the meaning whereof should be clear from the context) seems to be that Uber (could also mean to include Ola and other private operators, though, from now on I will use the one word Uber to denote all such private Taxi operators) is committing some sort of a crime by offering these low fares. It reminds me of those dark days of State control and License Raj wherein an all-pervasive antipathy existed for private enterprise. Any challenge to a Govt. monopoly by private players offering better service at competitive rates, was almost seen as being anti-national.

Coming back to the striking Unions, let’s examine their chief complaint, that of losing business to Uber. By me, if the image, as being portrayed by these Taxi drivers, that of a hard-working and polite bunch, serving the people while at the same time charging reasonable fares is true then, I see no reason for their having to fret about an extra dose of competition. However, is this portrayal really accurate? To me, the firm answer is NO… In all the media coverage and public debates, this is the one obvious question no one is asking; why are these Unions so nervous about Uber’s entry considering that this is not the first time that they’ve gone on strike [5] and I daresay won’t be the last. The rest of the Article tries to get to grips with this issue.

To me, the problem lies within… From a myriad of personal experiences dealing with these Taxi drivers, I proclaim, I state, I assert that I am aggrieved. Further, I am sure that almost every Mumbaikar (which will generally extend to mean, depending on the context, any resident of India living in whichever city wherein these Union Taxi’s ply) would share in this angst. Although, you may have guessed the reasons by now, let’s put it in black and white. They are their frequent refusals to ply as well as their overall rude and overbearing behavior [6] [7]. Of course, the Unions may deny this but in their heart of hearts; we all know this to be true… I’m sure that if every Mumbaikar was made to testify, we'd be hearing story after story of Taxi drivers refusing to ply, behaving rudely, brushing off requests with utterances like ‘nahin jayega’, ‘Meter se itna jayda’, ‘nahin jayge tum kuch bhi kar lo hamari marji’, ‘doosra dekho’, ‘tum ne bola yana jana hain phir thoda aage kyo liya’, just a flat shake of the head and going off and so on and so forth… To add insult to injury, the tone is often times impolite to being downright rude. Again, as stated earlier, this is a pandemic, not only in Mumbai but across India and needless to say that these refusals to ply are a violation of the Motor Vehicles Act u/s 66(1)/192-A MV [8].

If it were one stray incident, I’m sure no one would be making much of a fuss. However, and let’s be honest here, this is the rule rather than the exception. Part of my motivation for writing this Blog is to give vent to my frustration and probably that of millions of Mumbaikars. Their whole attitude seems to be that they are doing a favor by plying you rather than being grateful for soliciting your business. Shouldn’t we all feel violated to some extent by this or are we now so immune that we barely notice. However, give it a thought; you hail a cab, and you hope that the cabbie will ply. The word I have used is ‘hope’ rather than the correct one being ‘expect’. Does it really make anyone wonder why people are choosing alternates? That’s the difference with Uber. I use Uber a lot and am pleasantly surprised by the polite way in which they talk. They hardly ever refuse except probably in exigent circumstances. Why do you think this is? At the outset, the question should rather be not why are Uber drivers polite as every service provider should be when availing the customers business but why are Taxi drivers so rude. Further, why have we been tolerating this for so long? As an aside, there is a Taxi stand close to my home wherein I find many drivers just idling around sitting in their Taxi’s reading newspapers or listening to music and when you approach them, they refuse. This is strange, isn’t it? The bizarre conclusion is that these Union drivers have procured a Taxi permit so as once awhile, depending on their liking, ply the customer but more often than not just use the Taxi as a lounge seat. As they say in Hindi ‘baat kuch hajam nahin huye’. Further, amongst the worst treated are foreigners. At the outset, they are shocked when faced with refusals, a concept that is alien to them. On top of that, many Taxi drivers (expect probably Mumbai) will try to fleece them by quoting a higher fare, not going by Meter, which mind you, they any which ways do to us regular folk. The main difference, of course, being the premium charged which is much higher for foreigners. To state the obvious, it leaves a bad taste and a poor impression of our country. So much for ‘Atithi Devo Bhava’…

One incident, I would like to share. Nothing out of the ordinary, just a simple case of refusal to ply, but as it happened it got me thinking. Some relevant background before I plunge into the story. Few people would know this, but the Taxi Unions have gotten the Govt. to subside their insurance premiums by as much as 50% i.e. they only pay half of the amount and the Govt. pays the other half [9] [10]. To me, this is favoritism as their competitors driving Uber cars have to pay the full premium. Nevertheless, and by me, this is a proud moment for private enterprise, that despite this disadvantage they are providing superior service without complaint. Now back to the incident… My one female cousin got off from work and was trying to hail an Auto to take her to the nearest Local train station. It was evening time and she had finished with her job and was heading back home. It was raining in Mumbai and she couldn’t get an Auto wallah (Hind slang for driver) to ply her with their typical refusals. Again, typically, their refusals were blunt to the point to being plain rude. Got me thinking… She works hard, pays her Taxes, a part of which goes to subsidize these Union drivers, who then go back on their duty to ferry her and behave rudely, and on top of that are the ones who are crying victim…

As an aside, while doing research, going through various newspaper articles, I happened to notice the name of one of these Taxi Unions. They are called ‘Swabhimaan sena’. An interesting word play on this name came to my mind that I want to share. The word ‘Swabhimaan’ means self-respect in Hindi and is popularly used in our religious and cultural discourse, it being a positive trait. Well, of course, I agree, self-respect is a virtue. However, and this is the fine point, can the behavior of these Taxi wallah’s be considered self-respecting or is it rather offensive and rude. By me, that fine line between Swabhimaan (self-respect) and Abhimaan (overbearing ego) has long been crossed with the result being the continual Apmaan (insult) of the common man.

Now, with regards to Uber drivers, can this question not be asked as to whether they can also be rude? Of course, it’s possible, though my experience with them has been quite good. However, the obvious solution to this problem already exists, which is to open up the Taxi ferrying business to competition giving the customer freedom of choice. With multiple new operators as well as the erstwhile Union drivers, the customer can pick and choose. In the old system, we were stuck with that one option viz. the Union driver. Readers may recall those heydays of a State controlled economy, wherein a Govt. organization had a monopoly, resulting invariably in poor service and rude Babus. A similar story is being played out here. Contrast this to the Uber case wherein a self-correcting mechanism is built in. We can give an Uber driver a negative rating vide which poor performers can be slowly weaned off. Now, I ask, what about these Auto Unions. Any plan to weed off underperforming, rude and dishonest drivers. I think not… No possible redressals exist for reporting rude behavior though they have a complaint number wherein you can call and complain about refusals to ply. Problem is how do you know the name of the driver. By law, they are supposed to wear a badge. However, in cases of quick refusal, it will be neigh impossible to note the badge Id before the driver beats a quick retreat. Further, many and I would guess most Taxi drivers do not wear the badge. Again, contrast this to Uber that has an app-based system wherein the driver who is plying you is positively identified to the extent that we even get to see his picture on our smartphone. In the Union case, as stated, it is difficult to note down the drivers badge in a hurry and as in many cases, the badge is not even worn, your best bet is to note down the vehicle number. You’d think that should suffice but, well, not quite so. One lesser-known fact is that in the in the vast majority of cases the original permit holders are not the ones actually plying the cab. The actual driving has been subcontracted or rented out to others who then drive that Taxi in shifts. Further, this subcontracting exists on a personal level, in most cases vide a word of mouth agreement and no one, not the Govt. or the Union to which the permit holder belongs is privy to this information. I repeat, no official record or any paperwork to positively identify the errant driver exists. Thus, it is pretty difficult to nail the driver unless you make a Police complaint and a full-fledged investigation is done. Honestly, how many of us will go through this rigmarole. Most people just ignore it, used to their daily dose of insults and go on with their lives and this vicious cycle continues.

Now let’s get to the part of fares. What do you think? Are the fares charged by the Unions fair? Are they high or low, or just about right? Opinions will vary of course. However, at least from the Taxi driver’s point of view, they are low. Difficult to make ends meet in these times, they would claim. Just as a side note, for the Taxi Unions, fares are fixed by the Govt. as opposed to private players who are free to fix fares as they deem fit. It would thus be tempting to give the Union drivers a dollop of our sympathy though I will ask the reader to reserve your judgment until the end. Anyways, here’s an idea… Let the Govt. do away with fixing fares altogether and let each operator be free to fix rates as they please. In essence, let’s establish a free market doing away with Govt. control and let the basic laws of supply and demand determine the price. Socialism vs. Capitalism and, to me, the wining system has long since been established. In fact, I’m going to go out on a limb and state that if these Taxi Unions want to increase fares, let them do so. The Govt. shouldn’t interfere as long as a healthy and competitive market has been established. The alarmed reader may well claim that this will surely result in fares going through the roof, making Taxi services neigh unaffordable, thus exacerbating the problem rather than mitigating it. I disagree and tell you what, all the evidence on record for when the Govt. has dissolved State run monopolies and opened up to private competition; in market after market, industry after industry, sector after sector, services have improved and prices have gone down. Let’s look at the telecom industry as an example. Post liberalization, telecom penetration has grown exponentially and today we are enjoying one of the lowest telecom rates in the world from they being one of the highest in yesteryears. I am equally confident that in this case too a similar story will play out.

Initial reports are encouraging, to say the least. Uber and Ola in their competitive spirit have reduced the fares to around Rs. 6 per km [11]. This is cheaper not only than Taxi fares but also cheaper than Auto fares. Of course, they have a minimum fare of Rs. 50 or thereabouts, so the comparison is not exact. However, for long rides, Uber comes out cheaper than even the humble Auto rickshaw, while providing you travel in four-wheeler AC comfort. Isn’t this magical what competition can get you. Let me give my own example. I travel to Pune often and take an Auto from the Railway station to my place. Cost me around 120 bucks by Auto Meter. However, rarely do these Rickshaw guys ever go by Meter. They charge anywhere from 150 to 200, depending on mutual negotiation skills. Now for a trial, I once walked some ways to the main road and caught an Uber. As an aside, the reason I had to walk some distance to catch the Uber cab is hooliganism by Union drivers. They do not allow Uber cars up to the Railway station itself. The Uber driver risks damage to his car and I daresay to him if he attempts an entry. These Union drivers have ‘gheraoed’ (bounded) the station as if it’s their personal property [12] [13]. Everyone from the Police to our Politicians know this but no one is doing anything about it. Goes to show the hold the Unions have on our polity. Anyways, I took the Uber and it cost me 110. Now, that’s what a free market does…

One complaint I’ve heard about Uber is that they have surge pricing. When the demand is high and there are not enough drivers to ply, say on rainy days or during festivals, Uber jacks up its fares. Now, is this wrong; by me, not necessarily... Again, my friends realize the concept of a free market. Price goes up when demand increases and supply decreases. This is to be expected. The surge allows more drivers to be incentivized to take their Taxis out of the road, in the rains or at peak times. When this surge increases substantially, more drivers come on the road to take advantage of the higher income to be earned, increasing the supply and reducing the price back to its equilibrium. Nothing but the basic law of supply and demand doing its magic. Now, for those who are queasy about flexible fares, don’t you be thinking Auto wallahs don’t have surge pricing. They have 24/7 365 surge pricing in most cities other than Mumbai. You have to tell them where you want to go and they decide the fare in advance, which will always be, for obvious reasons, more than the Meter. Further, during the monsoons that surge can easily double or more in value. These Union drivers plainly are not the Socialist angels they are portraying themselves to be…

Also, does not Uber embrace modern technology to give a superior experience to the customer? The customer doesn’t have to roam the roads finding a Taxi; the Taxi comes to him. You could well be living in an area some distance from where regular Taxi’s ply, but no matter. Using a GPS enabled Smartphone (incidentally Smartphone penetration in India is skyrocketing and could well be ubiquitous in the near future), you can call the cab to your location. Let’s not underestimate this… For e.g., I know of many families living in the newer developing suburbs of Pune, which are on the outskirts of the city for whom, unless they have their own vehicle, they would be stranded without Uber services. No regular Autos ply there. If we were to go by these Union demands and ban Uber, many of these families would be left stranded.

In addition, there are many other techno-savvy aspects of your Uber ride worth mentioning. For e.g., you get to know the drivers name, see his picture on your phone, can track your ride, can have a close friend or relative track your ride, Uber itself knows where your Taxi is and some apps even have an SOS button in case of emergencies. Thus, there is an added level of safety as you, some member of your family, as well as Uber knows about your ride status and can positively identify the driver. Further, the ride being tracked both at your, the driver’s and Uber’s end provides for a transparent billing system doing away with Meter tampering issues. In addition, there is the option of paying the monies directly using some online transfer app like Paytm instead of having to ferret out cash and haggle over change. Of course, needless to say, no such service offered by the regular Unions. You have to go hunting for a Taxi and of course go through the whole rigmarole of trying to negotiate a fare suffering through a few refusals before you find someone willing to ply and so on...

If there is a problem with your Union taxi ride, you’ll have to be quick to note down the driver’s badge number, assuming he is wearing one. In most cases, your best bet will be to note down the vehicle number. However, as alluded earlier, vide this subcontracting scheme, as the original permit holder is rarely the driver of the vehicle there is no way of positively identifying the driver. The only option is to involve the Police and hope they do a detailed investigation into all the drivers who had access to the key and such. Why oh why don’t the Taxi Unions embrace modern technology? To me, theirs represents a regressive mindset, a stubbornness to accept change. For e.g., for the longest time, these Unions opposed even the simplest technical innovation i.e. of electric Meters. We had those mechanical contraptions that read ‘1.00’ and then there was that chart for the multiples. Again a hot bed for misuse. It took years of cajoling to finally get them to electric Meters [14] [15]. Don’t know how long it will take them to have GPS tracking, doorstep service, driver identification etc. The rate at which they are going, probably never…

There is one often repeated and negative aspect of Uber that in all fairness I should address. It’s about drivers being accused of molestation of female passengers. Of course, this is disgraceful and the errant drivers should be punished to the fullest extent as applicable in law; no two ways about that. However, many are calling for a complete ban on Uber because of this. Now, if you ask me, I think this is unfair to Uber. Why punish the whole company for the misdeed of one of its employees. By me, someone who wants to commit a crime will do so irrespective of job affiliation. What is to be realized is that an errant Union Taxi driver can also behave lewdly, tease, molest, harass and assault. In fact, many such cases have been reported [16] [17] [18] [19] [20] [21] [22] [23]. Now, I daresay no one is calling for a ban on these regular Taxi guys for that one errant driver. If not, then again, why only for Uber. Further, as I have oft stated, if any incident does happen, at the very least, Uber can help the authorities with driver details and such. In the Union case, again as stated, it is quite difficult to identify the errant driver and my gut feelings tell me not to expect any real help from the Unions either in nailing the miscreant. An interesting thought to consider. I want to talk about a different but still related case. In a Police Chowky in Marine Lines, a posh area of downtown Mumbai, a girl was raped by a constable. Now, of course, the constable should be severely punished for this, but I don’t think anyone is calling for a ban on Mumbai Police… So again, let’s take a reasonable stand, punish the perpetrator not his family, his neighbors, his academic institution, his place of work etc.

Now, coming to the role of Govt., from them, I believe, some serious out of the box thinking is required. Here’s an idea from my side, let's end this Socialist style Permit Raj of controlling the number of Taxis on the road. If all the evidence contrasting a State controlled Socialist economy vs. a Capitalist economy based on free markets and competition has proven one thing undeniably, it is that markets always do a better job at price discovery. A Babu (Govt. bureaucrat) sitting in his office, even assuming he is incorruptible, which many would claim to be neigh impossible but still if we were to so assume, cannot possibly envisage the entire markets dynamics of millions of customers vis. a vis. the number of Taxis to be plied. It’s just not humanly possible… Rather than putting the blame on him, let’s just do away with these permits. Anyone who wants to ply a Taxi gets a permit. Let’s evaluate the two extremes of this scenario. If the number of Taxi’s increases significantly, many Taxi operators will find it difficult to get business. They may quit and move on to other jobs. The supply automatically decreases back to the equilibrium. The reverse is also true. If the number of Taxis is much lower i.e. supply is lower than demand, fares will go up which will incentivize others to ply. Simple market dynamics… In the same vein, let’s do away with fixed fares. Fares are any which ways hardly fixed with Taxi Unions going on frequent strikes to raise them and many a time the fares are decided between customer and Taxi operator in advance with the Meter not being used (in most cities of India other than Mumbai).

Let’s also consider one added advantage to the Govt. of private Taxi operators, viz. Tax revenue. The Uber Taxi ride is a ‘white’ ride. What I mean by this is that the ride officially exists on Uber’s system as well as your and the driver’s phone. Further, if the monies are paid by Paytm, an independent record of that transaction is also established. What this does is lets the income earned by the drivers be tracked by the company which can then be made accessible to the relevant Tax authorities on demand. Now, I am not claiming that all Uber drivers will report their earnings on their Tax returns but at least the record exists. Conversely, for the Union drivers, obviously, no such record exists as all transactions are in cash. Even if they were to earn enough to come in the taxable bracket there is no means by which this can be ascertained, and thus, I daresay, no Union driver will declare this income. Back to the Uber case, even if the Uber drivers don’t pay Tax despite having a white record of the transaction and the Tax Dept. decides to ignore this loss, at the very least Uber itself, which earns part of the fare revenue, will surely pay Tax to the Govt. This Tax amount should be substantial considering their huge setup. Now I ask, is it not that the regular Union drivers evade their Tax by transacting in cash only and thereby also contribute to the black economy of this country. Shouldn’t the Govt. in fact encourage companies like Uber considering the added Tax revenue they can now expect? One of my heroes is Margaret Thatcher, the late British PM, who so valiantly got her country out of the Socialist stagnation of the 1980’s towards competition and free markets. By her, companies should contribute to the Govt. allowing the Govt. to spend on social projects rather than the Govt. having to spend the hard-earned money of Taxpayers to keep sick and uncompetitive businesses afloat. A famous quote of hers seems relevant here; “The problem with Socialism is that you eventually run out of other peoples' money.” [24]

Thus, I proclaim to thee that
  • for being perennially rude
  • for umpteen times refusing to ply
  • for having no comprehensive mechanism to deal with complaints
  • for not embracing modern technology like GPS tracking, driver identification etc.
  • for heaven’s sake, opposing even basic upgrades like electric Meters for the longest time
  • for being subsidized by the Govt. but still crying victim
  • for childishly complaining when someone else offers a better service at a cheaper rate
  • for blackmailing the people and the Govt. by going of frequent strikes with naïve demands of banning the competition
  • for militant Unionism in disallowing other operators under threat of damage to their vehicles or themselves from entering major customer thoroughfares like Railway stations
  • for refusing, in most cities, to ply by Meter
  • for the overall crime of insulting the people of India
  • for not mending ways despite years and years of patience

You, Sirs, are found guilty of being in contempt of ‘we, the People’. Your frivolous demands stand denied. I state that you are on the wrong side of history and are not part of this new India that is shedding off the Socialist baggage of yesteryears to rise, a phoenix from the ashes of its past.

To the people of India, I say, let us all take a stand today… Let us encourage companies like Uber that are striving towards better service with a smile and let a new era of competition begin…

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References
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