Application-based taxi services have given employment to tens of thousands of drivers in the national capital alone. Consumers, taxi drivers, economy and environment, all have benefitted from these services. Far from cutting back on them, they should be encouraged
This columnist has been using mobile application-based taxi-hailing services for a long time now. In a city like Delhi, unlike in Mumbai and Kolkata, taxis cannot be hailed. But services such as Uber and Ola have transformed the taxi-hailing market. The services offered by them are easy and affordable. They have transformed lives, both for commuters and driver-entrepreneurs.
One can argue that radio taxi services led to the change, but it was rare to find a taxi driver who was happy with its services. Uber has been operating in India for over a year now. However, it went down with a well-publicised and unfortunate rape incident. The development was at the core of a policing crisis. The accused was a serial-offender and should not have been given a character certificate.
However, it was also a case where the company, which was trying to grow very fast, could (knowing the cracks in the Indian system) have done a better job itself. Its attempt to pass the buck was out of line.
That said, on talking to some drivers over the past few weeks, it was remarkable to find the impact these services have had on their lives. Some drivers, such as those driving on the mid-end UberX service, are by their own admission easily making over `75,000 a month. By simple socio-economic definitions, the arrival of application-based taxi services has put these drivers into the ranks of India’s upper middle class people.
It was also interesting to learn that there are more than 60,000 registered drivers for application-based services in Delhi alone.
It’s true not only for drivers with mid-ranged cars like the Maruti Swift Dzire and the Tata Indigo, but the sheer economic impact of the service is unbelievable. Earlier, the drivers used to work for a contractor (thekedar) and were rarely paid on time. Also, the middleman used to keep a large part of their fees. Now, the drivers get paid every week, and while occasionally they crib about the imposition of service tax, they admit that things are better than before.
Most of the drivers have bought their own cars. This was possible only due to the generous deals and easy financing options that are now available. Some of the drivers who have been associated with such services for over a year now, claim to have managed to pay off a majority of their car loans. Their monthly incomes have tripled or even quadrupled.
Drivers now say that they can afford to send their children to an English-medium school while paying their full fees. Drive to the airport and some drivers will tell you about their first flight that they took recently. In fact, many drivers who said they supported economic handouts a few years ago, are increasingly becoming economic conservatives with their rising incomes.
It is apparent though, that some taxi-hailing services are subsidising rides for consumers with outrageous sums of money that they raised from private equity investors. The money that the consumer pays for the service is in part transferred to the driver. The driver also gets a ‘bonus’ over and above the fare for every ride.
The people who invest money as private equity investors are usually among the world’s richest individuals. In a matter of speaking, services like Uber, at least for the moment, are the best example of transfer of wealth from the rich to the poor in the most capitalist way possible, with a hint of
forced socialism. If the service provider works harder, he/she gets paid more.
This is the kind of service that people like. It is the same thing in e-commerce. Though it only impacts the consumer, if a large private-equity fund is indeed subsidising a purchase on a website, why should one not avail itIJ Indeed, one day, good times might end and fares on taxi-hailing apps might go up, and the prices on e-commerce sites too. But as long as they are economical, one really has to be stupid not to take benefit of the service.
The model is so beautiful, one can understand why rent-seeking taxi drivers’ unions, across Europe and Paris in particular, are protesting against these services. Taxi driver unions that have kept the number of taxis incredibly low in large metropolitan areas, coupled with absurdly high fares, are being pummelled by Uber, which is providing employment to hundreds of young people and keeping thousands of consumers happy.
Politicians, particularly those of the left, who are beholden to these unions, have decried the service. They have failed to understand that they will possibly lose more votes than they will gain if they act rant and act against these excellent services.
It is not just about the economic impact of services like Uber, which has quite clearly been dramatic in India. It is also about the easy availability of well-maintained, new and clean cars that has taken many private cars off the road. This brings up a particularly vexing issue in the capital, which is that of pollution.
When a car owner uses a taxi instead of a car, it means one car less on Delhi’s already congested road. One taxi, coupled with Delhi’s rapidly increasing Metro system, can easily take four to six cars off the roads daily. Given that an estimated 900 new cars are added to the National Capital Region’s automotive fleet daily, there will be a dramatic reduction of congestion.
Tens of thousands of cars are thus potentially taken off the road daily, thanks to these taxi-hailing applications. Reduced road congestions equals reduced pollution due to traffic.
Some drivers fret that the State Government in Delhi will ban the use of diesel-powered vehicles that they drive for intra-city purposes, as a ban can be enforced by the National Green Tribunal. The argument is a flawed one, as these services reduce congestion. And, while they should be encouraged to move to cleaner energy options such as natural gas, everyone will be a loser if the rule is imposed with a heavy hand. Such decisions, like the well-intentioned yet fatally flawed Bus Rapid Transit system corridor in south Delhi, could have the perverse impact of actually increasing vehicular pollution rather than reducing it.
Delhi’s consumers, taxi drivers, the economy, and tangentially the environment, have all benefitted from the arrival of these taxi-hailing applications. Far from cutting back on them, they should be encouraged.