Business

Why the Problems of Uber, Ola Drivers Are Far From Over

While online taxi companies may simply be reproducing old exploitative structures, the question that seems to have been forgotten is: What kind of public and private transportation system does India want?

What transport system suits India's urban fabric? Who should decide? Credit: Reuters

What transport system suits India’s urban fabric? Who should decide? Credit: Reuters

The ‘driver-partners’ of taxi-aggregating apps Ola and Uber may have called off their strikes in Delhi, National Capital Region (NCR) and Bengaluru for now but the issues that have been raised over the last month are yet to be wholly resolved.

The drivers have argued that their steady incomes were falling over the past six months as Ola and Uber added more cars to their network. Moreover, their incentives for completing a certain number of rides started decreasing drastically. Crucially, a number of drivers felt that they were often kept in the dark or not informed about changing incentive structures. As incomes plummeted, most drivers found it extremely difficult to shell out a certain portion of their monthly earnings as equated monthly instalments (EMIs) for loans from banks, relatives or loan sharks that they have taken for purchasing their cars. All these grievances, combined with the lack of traditional redressal mechanisms, created a perfect recipe for massive protests against cab aggregators.

Nullifying regulation

Uber and Ola, in India and elsewhere, often resort to cat-and-mouse tactics with regulatory authorities. There are no regulations in place for monitoring surge pricing and the overall cab sharing services offered by the cab aggregators. Several state transport departments have started drafting, or in some cases modifying, contract carriage permits (the law under which traditional taxis operate in India) with only Kolkata providing a provisional licence to Ola and Uber so far.

Uber has been quick to call such regulations and paperwork “unnecessary…and that which takes us (Uber) to the analog era.” The ride-sharing app also promptly started an online petition, urging Bengaluru residents to support their ride sharing services. At the time of writing this article, the petition had reached about 35,000 of the desired 50,000 signatures.

Cab-aggregating platforms are engaged in what scholars Frank Pasquale and Siva Vaidhyanathan call “corporate nullification”—a practice where corporations, who are beneficiaries of the ‘gig economy’, wilfully negate state laws and regulations or interpret the laws on the basis of some unfounded idea of public good, only to serve their narrow self-interests. The trick, or ‘innovation’ in gig economy lingo, corporates employ to bypass regulation is to generate rapid and widespread support for a service that often flouts existing rules and regulations. Corporations flouting existing rules or coercing the government to amend them to suit their needs is not new. However, what is new is this veneer of ‘innovation’ that shrouds these discussions.

What is the problem, as some would ask, if these companies are “nullifying” existing laws and pushing for reforms that guide the mismanaged cab services in Indian cities? The problem is that it sets a dangerous precedent for breaking local laws on the basis of a hazy, undefined idea of ‘universal business practices’. Besides, nullifying laws is easier in a country like India where existing urban transport services are on the verge of collapse, laws take time to be framed and regulations are lax. These companies are aware that regulators, urban planners and governments will be under a lot of pressure from the burgeoning urban middle class to continue such services, legally or illegally.

When pushed to answer for their negation of Indian laws, cab-aggregating apps say that pre-existing “burdensome regulations” have benefited neither the industry nor the commuter. Whether existing laws have contributed to the problems in the traditional taxi businesses is unclear, but Uber and Ola were quick to exploit this confusion and the structural problems of the traditional taxi services. In effect, they contributed to the discourse of dismantling ‘archaic’ laws, laws that perhaps had little to contribute to the problems plaguing traditional taxis.

App-based cab services have always defined themselves against the image of traditional taxi services characterised by lack of convenience, overpriced rides, rickety cars and ill-mannered drivers. The unintended effect of this nullification is that traditional taxis are now being increasingly seen as relics from a previous generation. Even though Uber and Ola maintain that both traditional and tech-dependant services can coexist, their actions give the impression that the latter are efficient because they do not follow ‘archaic’ laws. By clamouring to cut down regulations since they represent stifling old-world analogue practices, they are virtually asking traditional taxi services to operate in an ‘unequal’ environment. This signals nothing but the impending decline of traditional cabs at the hands of digital players.

Digital exploitation

The taxi business as it exists now in most Indian cities is exploitative. Most drivers do not own the vehicle they drive. They are paid a salary every month that often depends on their daily earnings. Fines and extra charges incurred on the road are often the responsibility of the driver. More often than not, drivers end up working more than 12-hour-shifts to make enough money. Poor wages and long hours on polluted, choked and chaotic roads take a toll on their physical and mental health.

For all the innovation that Uber and Ola keep talking about, they seem to have reproduced, and in some cases, reinforced the exploitative structures of the previously existing taxi services.

Drivers with cab aggregators routinely work 14- to 16-hour shifts in order to make the best of the incentives given by the company. On several occasions, passengers including me have had to request the Uber or Ola driver to park the running car beside the road since one has seen her/him dozing off since they were on day and night long shifts, perhaps to meet some unrealistic targets set by the company.

One would expect that a company that prides itself on ensuring the best for their driver-partners would have best practices in place as far as health and life insurance are concerned. However their records on these matters is abysmal. Uber has not yet stepped up to help the family of Nazrul Islam, the Uber driver who got killed when a BMW rammed into his car, in January in Delhi.

Several transport unions, who represent the traditional taxi services in Indian cities, have been trying to implement a rudimentary group health and life insurance for the drivers. However they have not been successful in doing so due to several reasons. Uber and Ola’s record on such matters is not great either. On paper, they do have tie-ups with insurance companies but their provisions are not transparent. Drivers in the recent strike have been demanding that companies arrange for adequate insurance policies that are completely transparent.  

Traditional taxi services have also been accused of running a taxi mafia that charge exorbitant prices for short distances and often refuse to go to locations that would be inconvenient for the driver. While this is true, Uber and Ola’s innovation of ‘surge pricing’, that has been declared illegal in certain cities, often results in similar outcomes; albeit chalking it up to the logic of innovation.  

It is true that surge pricing in cities with good road networks and uninterrupted GPS service may in fact encourage supply and stabilise waiting time. However, India’s poor roads, horrible traffic conditions and unreliable internet make surge pricing beneficial only to some commuters, and almost never to Uber and Ola’s driver-partners. Surge pricing is often applicable during office-rush hours, when people are going to or coming back from work. This makes the ride for the driver-partner more frustrating as s/he has to wade through traffic snarls and crowds on the road. In other words though Uber and Ola’s ‘surge pricing’ is an efficient model in theory, India’s unique urban conditions make them another mafia, if only distinguished by their use of technology.

Woes of small towns

If unrestricted growth and clout of Uber and Ola in India’s megacities is a problem, then the threat is greater in India’s mid-sized cities where these cab aggregators are growing fast. Ola is present in 106 cities already and Uber isn’t very far behind either.

Cities like Nagpur, Indore, Lucknow and Vizag have creaky physical infrastructure that are not equipped to deal with rapid surge or shocks to the system. Motorised and non-motorised transport often share road space in these cities, and with increasing vehicle ownership, the crisis is set to worsen. Introduction of cabs to these cities, often without long-term transport planning and government oversight, will precipitate further problems that will be difficult to address. Cabs in mid-sized cities will be popular both from the driver and commuter’s point of view—cabs offer a somewhat viable employment opportunity for many people, and also provide a reasonably comfortable ride for many passengers, especially the old and infirm, who would otherwise have to brave rickety public transport.

Taking a leaf out of the urban development policies of successive governments, Uber and Ola seem to have overlooked the specific needs and vulnerabilities of smaller settlements. It is still not clear what the economic impacts are of introducing app-based cabs in mid-sized cities but chances are that they might distort the poorly functioning transport infrastructure of these localities. Even if cab services need to be introduced in these places, they need to be part of a holistic plan to improve the city’s overall public transport infrastructure. The government’s own data suggests that safety and congestion, two key problems in India’s mid-sized cities, are best met through bus-based public transport systems. Indore’s laudable yet haphazard Bus Rapid Transit System (BRTS) and Lucknow’s cycle track stand out as eyesores because they do not function as collective units of a transport system; they are a world unto themselves. Cab-aggregating companies seem to be going the same way.

Despair not, since there are models that seem more suited to India’s urban fabric. Through a combination of both home-grown and local government initiatives, a last-mile connectivity in many places has already been established in many big and small cities through e-rickshaws. Not only has it helped the middle class and the poor reach their homes from railway or bus stations at reasonable prices, but it has also given rise to a lot of local, small-scale employment. At least one ‘innovator’ has taken note — Ola is vying for a share of the e-rickshaw pie.

Innovation—down to earth

Ola and Uber may well be right that India’s cities need more and not less taxi services, and that traditional taxi, auto services and app-based services can coexist. But that is not something that these corporations with vested interests in an augmentation of taxis can decide. It is for the central and the state governments, and I would argue, also the city governments to decide if it is in the long term interests of their specific contexts.

Innovation is not the problem. But it needs to be tempered with feedback and research from the woman/man on the road and behind the steering wheel, and not the data analytics centre or the corporate boardroom.

Anurag Mazumdar is a doctoral student of Geography at the Ohio State University.