Transport Regulator‘s’ aplenty

‘Ola, Uber and other cab aggregators suspend the practice of surge pricing in states of Delhi and Karnataka, more states may also see this suspension’. This was the highlight of many news reports in the week of April 18, 2016. The news reports further stated the plans of the Centre and the state governments to set up a public transport regulators in each state to oversee the functioning of cab aggregation companies, define commercial car-pooling to remove
ambiguity, set limits on surge pricing to protect customers and make KYC mandatory to ensure passenger safety.

It directly point towards the much needed reforms in the regulatory environment for public transport in India. While a “regulator for public transport” is an essential step forward, more thought needs to go in to having it for the taxi aggregators alone.

In India, the initiation of reforms is prescriptive, often initiated due to public uproar. This decision of having a stand-alone regulator for cab aggregators is one such example. It is to be noted that the passengers that avail these services, are smart phone owners ranging from middle to higher income group. While the state governments show an urgency to regulate this cab market, similar initiative has been wanting for other modes likes buses (both intercity and intra-city), trains, etc. which are near to the common consumer.

Currently many Indian states have bus transport services that are exclusively operated by the state road transport corporations for more than 20 years. While they offer subsidised services, this monopoly has led to rent-seeking and amassing of huge operational losses by the corporations. The disbanding of this monopoly is a political issue and therefore often not touched by the government, who prefer to undertake segregated reforms as is the case above.

Coming back to the cab aggregators, price surge mechanism is a common practice for these aggregators across the globe and part of their business mechanism. It is therefore useful to rationalise the regulatory action and look towards capping the limit of price surge rather than doing away with it totally and dis-incentivising the drivers. There is a need to balance politics along with economics.

Transport experts have often indicated to the need of adopting a holistic outlook to public transport, rather than in silos by looking at multi-modal transport both at the intercity and intra-city level. CUTS International has advocated for a similar approach of having a ‘Transport Regulator for States’ through the work done in one of its project in passenger transport. Steps could be first taken to apply this approach at the intercity level while developing a strategy to cover the intra-city transport as well at a later stage.