The Union Road Transport and Highways Ministry is likely to prescribe a cap on fares in its new city taxi policy to check surge pricing by cab aggregators like Uber and Ola. The policy is, instead, likely to make digital meters mandatory for all taxis.
The Ministry has called a meeting of cab aggregators, expected to be held next week, to discuss the new pan-India city taxi policy.
“The cab aggregators cannot charge ten to eleven times higher fares. We want to fix an upper cap on taxi fares. We are looking at a taxi policy from a citizen-centric approach with strong enforcement regulations,” a senior Ministry official told The Hindu . Emphasising the need for a transparent fare mechanism, the official said, “The cabs cannot regulate fares on the basis of demand and supply.” He added that taxis could be asked to install digital meters from authorised dealers. “The present GPS-enabled phones are not fully accurate in gauging the distance travelled,” he said.
Strict measures The Centre’s proposal to cap taxi fares comes in the wake of strict measures initiated by Karnataka and Delhi against taxi aggregators for charging excess fares through their surge pricing models.
While Karnataka has disallowed cab aggregators from charging passengers more than the standard fares, Delhi Chief Minister Arvind Kejriwal had reacted sharply at such pricing policies during the recent Odd-Even exercise in the capital. On April 27, Mr. Kejriwal had also said such fare hikes based on higher demand, would be banned permanently.
Aggregators’ defence
“Transportation is a public service and affordability to passengers is a must,” said Siddhartha Pahwa, group CEO at Meru Cabs.
“While large number of taxis and passengers make a case for free pricing based on demand and supply, in reality, while aggregators have full view of the demand and supply, the passenger doesn’t have the capacity to look at the supply side which leads to a monopolistic situation. So, fare bands should be there in the medium-term.”
However, Mr. Pahwa favoured retaining the existing GPS-based system deployed by cabs, terming it “99 per cent accurate”, with some checks and balances.
The Transport Ministry official said aggregators use cabs with all-India permits or luxury cab permits, allowing them to use the ‘surge pricing’ model at present.
Govt. to address issue
The government will address this as cabs working with aggregators will be required to secure a city taxi permit under the new proposed policy.
At present, all-India taxi permit vehicles are not allowed point-to-point pick-ups and drops within the city.
The Centre will also widen the distinction of taxis, presently categorised as air-conditioned and non-air conditioned cabs.
“We want to expand the definition to create more classes of taxis such as hatchbacks, SUVs, etc to cater to all strata of the society,” another Ministry official said.
“When demand for rides outstrips the supply of cars, surge pricing kicks in, increasing the price… It’s a bit of economics 101: supply and demand adjust in response to price changes,” Bhavik Rathod, general manager of Uber South had said in a company blog post in April, defending the strategy deployed by aggregators like Uber around the world.
