Jun 01, 2016

Policy should work with Uber and Ola, not against them

For months, the Karnataka State Transport Authority has been doling out piecemeal regulations to “deal with” these new generation taxi providers.


More than 50,000 taxis ply the roads of Bengaluru under the banners of cab aggregators Ola and Uber today.
For months, the Karnataka State Transport Authority has been doling out piecemeal regulations to “deal with” these new generation taxi providers. There is a crying need to formulate a comprehensive policy framework. Unfortunately, efforts to do this have been ham-handed and almost anti-technology and innovation.
In Bengaluru, around 1600 new cars are registered every day, which translates to around 4 lakh cars a year being added to the already 56 lakh vehicles on the road. Add to this a population growth of 5 lakh annually to the existing population of 11.5 million and it is not too difficult to fathom why the traffic and pollution stats have gone through the roof.
The city traffic comes to a grinding halt at peak hours where the peak speed is a crippling 15 kmph, leading to thousands of productive hours on the road being wasted. It is estimated that 200 million hours are spent on the road by employees of Bengaluru’s IT and ITES industries and the monetary cost of traffic jams exceeds INR 40,000 crores for these industries each year. It’s partly because Bengaluru has a road density of 8.2 km per square km, the lowest amongst the big cities in India. Delhi, for comparison, has a road density of 21.6 km per square km. On such a road network, Bengaluru supports more than 5 million vehicles, which translates to 1 vehicle for every 2 persons living in the city.
What about buses? The Bengaluru Metropolitan Transport Corporation (BMTC) operates over 2,000 routes with a fleet strength of about 6,500 buses, and provides around 5.02 million rides every day. There is limited opportunity to increase supply in the current public bus infrastructure without eliminating BMTC monopoly. Just adding more roads or flyovers will not solve the urban transportation problem, nor will it be solved by mass transit systems alone.

Image: Nikhil Raj/ FactorDaily
Image: Nikhil Raj/ FactorDaily

This is where Uber and Ola come in. The taxi industry plays an important role in bridging the supply deficiency in the current urban transportation system. Both the taxi industry and the city can benefit from the efficient use of vehicles supplementing the public transportation system. However, the current policy framework has regulated the growth of the conventional (non app-based) taxi industry, which has seen very little innovation in the last few decades. The advent of new technology based on-demand taxi aggregators provides a viable long term solution to bridge the supply gap left by the current options and a credible alternative to owning a vehicle.
The growth of this industry can be encouraged through the right policy framework, which has the potential to reduce pressure on private vehicle ownership (in the long term), reduce traffic and pollution and create employment opportunities. A new policy framework for taxi aggregators should allow for expansion by lowering the entry barrier and fostering innovation, while safeguarding public safety and quality of service. The following four points can be used as guiding principles, and any policy framework should be formulated keeping these points in mind.
Public Safety should be at the centre of the new policy. It should be enhanced by ensuring vehicles are inspected before being allowed to be part of the aggregator’s network. Drivers should be thoroughly screened before being inducted. Passenger should be able to raise the alert in case of emergency. An independent third party should be responsible for first time verifications and random checks to ensure high degree of compliance.
Competition improves alternatives for consumers and should be encouraged by lowering entry barriers for bike and bus aggregators. Flag-down, share taxis and autos should be legalized to encourage vehicle pooling. Existing regulatory framework for traditional taxi operators should be reformed. All players should be allowed to compete through flexible pricing and service differentiators which will benefit the consumers.
Innovation in the industry should be encouraged by ensuring outdated regulation doesn’t come in the way of launching consumer-friendly features or newer business models.
Quality of service should be raised by mandating zero tolerance policy towards bad customer service, and making sure that a transparent and efficient complaint resolution process is followed. Drivers should be trained to ensure a minimum service quality is provided to all passengers.
A policy framework with the above ingredients will help in accelerated growth of the cab aggregator industry setting the stage for the future of urban transportation in the city. This will not only ease the burden for the state government to provide public transport infrastructure to support the growing population but also create an efficient mechanism to cut pollution, congestion and parking by moving more people using fewer vehicles. And the silver lining will be a possibility to reclaim our city which we all fell in love with, all over again.
Hiren Doshi is an alumnus of the Takshashila Institution and works at Amazon India. These are his personal views. He can be reached at hirend@yahoo.com.
Lead Image: Nikhil Raj/ FactorDaily

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Hiren is a writer of FactorDaily.