Home » india news » Hate surge pricing on Uber & Ola? Too bad! A new policy has given surge pricing a go-ahead

Hate surge pricing on Uber & Ola? Too bad! A new policy has given surge pricing a go-ahead

Vishakh Unnikrishnan | Updated on: 10 February 2017, 1:37 IST

In July, the Minister for Road, Transport and Highways Nitin Gadkari said that under the present provisions of the "outdated" Motor Vehicles Act, there was not much regulatory control over taxi aggregators like Ola and Uber.

The Ministry had then constituted a committee to look into a policy for regulation and fix guidelines for taxi aggregators. This week they released that report providing to some extent, simplified guidelines.

They also 'approved' the use of apps by aggregators, which basically meant that Uber and Ola were running illegally till now. (If legislation worked that way, then we all can love whoever we want irrespective of their gender and wait until Section 377 is repealed.)

The highlight of report is the new tariff pricing. Notwithstanding the Delhi High Court's order on removing surge pricing as well as state governments like Karnataka that issued a ban on surge pricing, the report by the committee, which was subsequently approved by the ministry, allows for surge pricing.

Here are the new laws on tariff:

1.The committee recommends 'dynamic pricing' to be allowed to effectively match demand and supply. It capped 'maximum tariff permissible to be up to three times the minimum tariff' - this means a three times surge.

2. The committee also wished to increase the availability of taxis during the night time, ergo maximum tariff may be allowed up to four times that of minimum tariff from 12 midnight to 5 am in morning. These tariffs now need to approved by the State Transport Department.

3. The Committee strongly recommends that the tariffs of Deluxe Taxis should not be regulated and be allowed to be determined by market dynamics. This would mean other than the basic cheapest option (UberGo for Uber and Olamini for Ola), aggregators can charge as much as they want for higher end options (like UberX and OlaPrime). This adversely might place a lot of pressure on the cheaper options, limiting the availability of cars.

The committee also had some other recommendations:

1. The drivers' photo identity along with the registration number of the taxi should be clearly visible to the passengers. Also, the taxi should have GPS.

2. The aggregators should get the app validated from Standardisation Testing and Quality Certification (STQC). Aggregators should also take measures including a firewall for the security of the personal data of the passengers. Neither the Uber nor Ola app possesses the Standardisation Testing and Quality Certification which would also mean it is not possible to deduce how safe a user's data personal is. Uber has already faced heavy criticism in various countries for compromising on user's information including credit card details.

3. According to the committee own conclusion, the report states, "taxi permit regime in India is highly onerous and is limiting the growth of the taxi and shared mobility industry." The samereport though, states a rather ridiculous obligation - "Based on the excise duty criteria and the fact that over 87% of the cars are less than 4 metres length, the taxis may be segregated into economy(less than 4m) and deluxe (more than 4m) categories." Way to go on 'simplifying the taxi regime.'

4. The aggregators should also provide a grievance redressal mechanism and should also have an emergency response centre to handle SOS alerts by passengers. The app should also have adequate safety features for the passengers such as sharing the ride details.

5. Taxi aggregators are now legally allowed to pool. The report states, "sharing of seats may be allowed on aggregator-based taxis with express consent of the passengers"

6. To encourage yellow taxis, the committee also allowed them to ply on the aggregator form. Private vehicles will also be able to 'easily convert' into 'commercial permit types,' as per the committee.

Surprisingly, the report also states in its own findings that in most of the cities no new permits for 'city taxi' (yellow taxis) have been issued after 1998!

First published: 17 December 2016, 3:37 IST
Vishakh Unnikrishnan @sparksofvishdom

A graduate of the Asian College of Journalism, Vishakh tracks stories on public policy, environment and culture. Previously at Mint, he enjoys bringing in a touch of humour to the darkest of times and hardest of stories. One word self-description: Quipster.