There’s no doubt that light-touch regulation and a reduction in red tape would help with both the ease of doing business and the ease of living. Replacing red tape with a “red carpet” for investors has been on the “to-do” list for some time. The recent Economic Survey had it as a central theme, elaborating on the need for the government to get out of the way.
The Union Budget tabled last week carried the theme forward by proposing a committee to explore ways to ease the regulatory burden on stakeholders in non-financial sectors. The committee, which is yet to be formed and there is little information on its members, is expected to present a road map within a year. That may or may not be a tall order but regulations in consumer-facing services need a review so that the user benefits.
Cab aggregators, for instance, must comply with rules and regulations that are clear and useful so that riders are not left high and dry. There’s some competition coming from new-age electric ride-sharing players these days, but their presence is still limited. While an increase in the number of meaningful service providers may help the sector become more user-friendly, that could take time.
While the current fleet of vehicles under the aggregator platform, including two-wheelers, three-wheelers, and cabs, is estimated to be around 2.5 million in the country, state governments have their own maths on this. For example, 21 cab aggregators and more than 100,000 vehicles are registered under the Delhi government’s Motor Vehicle Aggregator and Delivery Service Provider Scheme, as of last year. These cab aggregators also include those from e-commerce companies and delivery service providers, according to the state transport department. According to the rules, any cab aggregator, delivery service provider and e-commerce entity with a fleet of more than 25 vehicles must register under the scheme (which has electrification goals) to get a licence. Non-compliance could result in penalties ranging from Rs 5,000 to Rs 100,000 per instance.
While the registration of vehicles under this scheme serves a purpose, many of the practical hurdles that a passenger faces every day fail to get the attention of the authorities. Surge pricing — a concept of variable fare that a cab operator charges depending on the time of day, destination and the volume of traffic —has been a subject of debate around the world. India is no exception, with the antitrust body, the Competition Commission of India (CCI), also doing its bit on this. Aggregators, however, have maintained that the algorithm used by their apps decides the price without any human intervention. The jury may still be out on that one, but surge pricing is not the only problematic issue when dealing with cab aggregators. While hailing a cab, it is the absence of certainty and predictability that’s most worrying — any regular user of this platform in any city in India may have felt this.
The time between clicking on the app to reserve a cab and getting into the vehicle can be harrowing, depending on the mood of the driver (the partner, as these aggregators call them). The driver, typically considered a gig worker, decides which rides to cancel after they are confirmed by the app. No questions asked. They also have the liberty to remain silent, without reaching the pickup point or cancelling the ride. This category of driver partner often enjoys keeping the passenger on hold—again, no questions. Then there are other issues like refund, safety, cleanliness and talking while driving, but those can be kept for later.
Gig economy has been a focus area for the government ever since cab aggregators, e-commerce, and quick commerce became an integral part of our lives. Finance Minister Nirmala Sitharaman also announced steps in the Union Budget to make things better for gig workers by including them for healthcare benefits under PM Jan Arogya Yojana. Some clear guidelines and regulatory framework for the gig workers and the platforms that they work for could go a long way in addressing user grievances.
In a 2022 study of the cab aggregator ecosystem, the CCI had highlighted surge pricing, but had pointed out that the perception of “surge” was not necessarily adverse, given the convenience and other considerations that riders valued more. But it had advocated adoption of self-regulatory measures by cab aggregators to inculcate best practices and ensure a well-functioning ecosystem.
It’s been more than a decade that cab aggregators, whether foreign-owned or backed by large funding from foreign investors, have been around in India. It’s high time they implemented best practices in both letter and spirit. That should include paying drivers better and offering them a more flexible work schedule. Only then will users have a good ride.
Nivedita Mookerji @nivmook is the Executive Editor of Business Standard. Views are personal.