Ola, Uber and their drivers in Delhi: evaluating industry sustainability and future requirements

by Parth Parikh

The digital revolution of recent years shook up the existing social fabric of the country. From young billionaires and CEOs, to profit generating and economically stable drivers, new socio-economic classes have mushroomed across tech centres of the country, and are spreading to the ‘non-metro’ cities as well. However, despite the rosy picture painted by big MNCs like Ola and Uber for the average working Indian, the shocks and stresses felt by the aggregator taxi industry due to the recent coronavirus lockdown highlighted the need for welfare intervention by the State for the weaker sections. Apart from one-time grants and toothless legislations, the State needs to implement institutional policies that empower the still weaker classes like the Ola-Uber taxi drivers who, despite the digital boom professing its egalitarian aspirations, still remain largely helpless. 

The Ola-Uber taxi aggregator system is a hallmark industry born out of the Fourth Industrial Revolution. These aggregators, having few assets and investments, use data, networks and informationto create operative environments for consumers and providers of taxi services to meet and interact. They also employ a large number of people as their drivers, with Ola having fifteen lakh cabs operating in 250 cities.Uber, too, is not far behind with seven lakh drivers across 58 cities. This ecosystem of Ola-Uber drivers has been examined by a number of sociologists as a new emerging lower-middle class that generates a stable salary with minimal skill requirement. This article aims to undertake a critical evaluation of this new ecosystem in the capital city of New Delhi and its salient features, and conclude with recommendations for its upliftment.

Types of livelihood systems based on asset ownership

There are different kinds of asset bases owned or shared by the taxi drivers, such as human, social, and physical capitals. Social capital includes associations and unions like Sarvodaya Drivers Associations of Delhi (SDAD), and support networks in villages, among others. On the other hand, human capital consists of Driver’s licence, driving skills, navigation and directional familiarity, among others. However, the primary driver of differences between drivers is centred around ownership of physical capital: the Taxi itself. 

Based on this ownership, there are three primary kinds of livelihood systems existing in the ola-uber industry. 

The first is the system of taxidars. A taxidar is a businessperson, police official, or a professional who attaches a car he owns with Uber and Ola and, instead of driving it himself, employs a driver on a minimal fixed salary. In this system, the benefits that aggregators like Ola and Uber intend for the person driving the car, i.e. the driver, in the form of financial incentives, go directly to the owner of the taxi. 

The second system consists of drivers who do not have registered assets and hence raise money from the market at extremely high interest rates to buy the cars they drive themselves. They are much better off than the drivers in the first system as they receive the aggregator’s benefits, but still struggle to pay off their loans against sky-rocketing interest rates.

The third system includes drivers who have assets like land which they have sold or mortgaged to buy the cars they attach and drive themselves. They are the best-suited across all systems as they get the benefits the aggregators provide as well as pay appropriate interest rates with the bank.

CHALLENGES FACED

There are a number of hurdles faced by the Ola-Uber drivers in the capital city. 

The primary long term challenges revolve around the toll of long working hours on polluted roads on their physical and mental well-being; monetary and time cost incurred due to heavy traffic as a result of bad road management; and high challan costs due to difference in speed limits of private and taxi vehicles. Additionally, over the past few years the drivers have seen a steady drop in their incomes due to more cars being added to the aggregator’s network and an accompanying rollback of incentive policies and initiatives initially introduced by the aggregators to attract them.

Subsequently, the latest and most significant shock faced by this industry has been the Covid-19 pandemic. The taxi industry has been one of the most adversely affected industries both by the lockdown, and the subsequent hesitation of the public to venture outside their homes. Apart from their consumer base going to ‘near-zero’ for months—which has still not reached its pre-pandemic levels—the current rising fuel costs have also substantially increased their operating costs.

As a result, drivers are unable to pay their loans/EMIs and face threats of seizure, harm to property and/or family etc. In response to their grievances, the Delhi Government had given all drivers a one-time grant of Rs. 5000, while the Central Government had passed the 2020 Guidelines. However, both seem extremely short-handed in helping the drivers deal with their immediate financial needs.

LAWS AND REGULATIONS

After a number of strikes by drivers’ unions like the SDAD calling for regulations for the aggregators, the Union Government in November passed the Motor Vehicle Aggregator Guidelines 2020  under the Motor Vehicles (Amendment) Act, 2019. The guidelines aim to provide certain protections and rights to the drivers such as health insurances ensured by the aggregator for not less than Rs. 5 lakh, fixed base fair of Rs. 30 to compensate for dead mileage (Cost incurred by driver for reaching the customer), and cap on commissions charged by aggregators at 20%. It also mandates that the aggregators must conduct training programs for its drivers: once when they join as an initial training program to ensure basic driving skills, and subsequently once every year as a ‘refresher training program’. In response to the toll of driving long hours on the driver’s physical health, the guidelines put a limit of 12 hours beyond which a driver cannot drive in a single calendar day. If the 12-hour limit is breached, the aggregator must provide a mandatory 10-hour break.

The Guidelines also provide an enforcement mechanism which has the power to suspend or cancel the aggregators licence in case any imposed condition is violated. If a licence is suspended more than thrice in a financial year, it will be deemed cancelled and the aggregator will have to cease its operations immediately. 

RECOMMENDATIONS

 Although the guidelines are a step in the right direction, there is much to be done to effectively uplift the worsening condition of these drivers considering the contemporary challenges. 

Immediate/ Short term

The first immediate recommendation would be to provide access to credit to the drivers in order to help them negotiate with the industry’s shocks and stresses more comfortably. One method of achieving this would be by giving land rights to the drivers, most of whom live in unauthorised colonies across the city. Institutional recognition of their residences would boost their credit creating abilities as it would enable them to raise money from financial institutions at appropriate interest rates by using the residences as mortgages and security. 

Second, the Finance Ministry should release a clarification to recognise the drivers as part of the Micro, Small and Medium Enterprises (MSME) of the country as it would allow them to revamp their operations by availing the interest and collateral free loans announced by the government to help build back the economy.

Third, the speed limits of taxis should be raised to match that of the private cars as this would drastically reduce the losses they face daily due to such arbitrary additional restrictions.

Long term 

The first long term recommendation would be setting up, or making a policy that mandates the aggregators to set up a proper grievance redressal mechanism for the drivers where they can raise their concerns or problems. This should be done considering the immense inequality in economic, social and political power of the aggregators as compared to the drivers.

Second, though the 2020 Guidelines are promising, no ground-level execution of the protections has taken place. There should be an oversight mechanism that ensures proper execution of the guidelines and makes sure they don’t exist just on paper.

Third, there have been a number of protests post the enactment of the guidelines criticising the minimal base fare they have stipulated. As the dead mileage cost of each region is different, a dynamic base fare must be calculated keeping in mind localised fuel costs, traffic losses, consumer demand at the time etc.

Parth Parikh is a 5th-year undergraduate student pursuing B.B.A.-LL.B. (Hons.) from Jindal Global Law School. 

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