UNFARE PLAY

The Kejriwal govt’s draft policy to regulate Uber/Ola is regressive and anti-innovation

How badly the Delhi government has got it wrong with its draft policy to regulate app-based taxi aggregators is evident from the fact that it targets the particular innovations that make the apps so disruptive. To be sure, the DelhiHighCourthasorderedareviewof thepolicy;but, it has also come out in favour of government-determined fare caps, a key provision of the draft policy. Forcing taxis on the Uber/Ola platforms to have meters and fare caps is just a way to ensure that they are not able to cross-subsidise—via surge-pricing for high-demand routes—the competitive fares that they offer to the bulk of the passengers that ride with them. The Delhi government may benefit from its populism, but it needs to realise fare surges climb down as cabs flock to high-demand routes and, in any case, most passengers choose to wait for surge to end to book a ride. Moreover, GPS-based fare calculation is a surer,morerigging-proof methodof determiningridecharges.Itdoesn'tcost much for autorickshaw and black-and-yellow taxi drivers plying in Delhi to rig even electronic meters.

The policy also forbids private vehicles from using the apps for carpooling—with UberCommute and Ola CarPool, a private vehicle could be used for car-pooling along routes the vehicle-owner took on a daily basis. While this meant that idle/unused transport capacity was being harvested,entirelydispensingwiththismeansalossof productivitygainsforthe economy. A government licensing regime for Uber/Ola cabs will also mean that the threat of a cap on overall/annual licences will always lurk, undermining the casual, unrestricted entry that the apps had fostered.