A deep dive into the Karnataka auto ban: Are aggregators the only losers in this deal?

With inputs from Aarathi Ganesan

The autorickshaw ban in Karnataka caused quite the hubbub over the last couple of weeks. Its announcement on October 6 was much discussed on social media with netizens stating that such a ban was inevitable considering the exorbitant rates that apps were charging. As it turned out, autos continued to ply even after the ban started on October 11 and that too while quoting the similar fares. The only difference – the bulk of the money went to the drivers rather than the platforms.

Of course, the ban was short-lived since the Karnataka High Court issued an interim order October 14. Aggregator autos have resumed in the state until November 7, when the matter will be heard by the court again. However, the few days when the ban was imposed beg the question of who really suffered in this situation. MediaNama spoke to some Bengaluru commuters, auto drivers and experts studying the gig economy to understand how the government order panned out in reality.

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Hailing an auto became a task for some

The auto ban was enforced from October 11 for drivers of platforms such as Ola, Uber and Rapido. For JP Nagar resident Gargi Ranade, the three days of this enforced order were an uncomfortable time when she could not find autos on apps. Ranade said hailing an auto was “basically impossible” because autos either wouldn’t stop or refused to go where one asked them to go.

“I think the public transport in general is so bad here that I simply had to pay ₹ 100 for 900m because there’s no other way of getting there,” she said.

While the ban had raised difficulties for her and her peers to get public transport, she said that app prices had in fact reduced during the ban. Before the ban, Ranade had she used to pay fares between ₹ 75-120 as the app quoted.

Meanwhile, auto rides via app seemed to continue as usual in other parts of the city. In some regions like Indira Nagar, 2.5 km Rapido rides that would usually cost around ₹ 100 reduced to ₹ 76 approximately. One auto driver in conversation with MediaNama said that the ban had in fact worked in his favour in terms of fare.

The driver (name withheld) spoke about how his fares via the apps failed to cover the money he spent on fuel just to reach the pick-up point. Since Bengaluru auto drivers are known to not follow the meter system, they quoted prices freely during the ban. This helped them cover costs like fuel. He claimed that ultimately only the companies lose out when such a ban is placed, either due to losing autos or due to lesser pay-outs from cheaper rides.

Do drivers have nothing to lose during an auto ban?

Despite this optimistic view, it’s not entirely true that auto drivers have escaped unscathed from the ban. On the same day that the order was enforced, six auto drivers had their vehicles seized by the RTO officers in Jayanagar. According to the New Indian Express (NIE) drivers were penalised and had their vehicles confiscated while the companies were served notices that said their auto services were illegal. As per the report, authorities warned auto drivers against accepting bookings on apps.

However, Mohammed Inayat Ali, General Secretary of the Karnataka Local Union (East Drivers’ Trade Union) and National Vice-President of the Indian Federation of App-based Transport Workers (IFAT), told MediaNama that the drivers refused to accept the penalty.

He estimated that around 200-250 drivers gathered at the RTO office that day to protest against the fine levied on the drivers. Protesters blocked the road and demanded that the companies be held accountable for the continuation of rides.

“If you are going to levy a fine, direct it towards the company,” he said.

Eventually, they got their vehicles back and authorities agreed to send the fines to the companies instead. Similarly, Deccan Herald reported that hundreds of drivers were fined during the ban. As per the report, the government could not ban the apps due to an ongoing court case but had asked drivers not to rely on the apps for rides.

However, Ali said that the ban did not really affect auto drivers although some continued to accept rides as usual via the apps. He said most union members viewed the ban as a “political gimmick.”

“On ground the ban has no particular impact on drivers since autos are not dependent on Uber [and] Ola apps,” he said.

Instead, the gig worker’s nexus appears divided not on the wages front but on the plying of motorbikes as public transport. The union leader said that the option of Rapido-like ‘bike taxis’ negatively impacted auto drivers’ incomes. He questioned why the government had allowed bike-riders that are essentially private individuals to enter the transport business.

“The government does not see private vehicles in this line of work as an issue but they can see the fare as an issue,” he said, adding that drivers’ earnings have remained more or less the same during the ban.

When asked what issues driver unions would prefer government to consider, Ali talked about:

Curbing the 40-50 percent commission taken by the app companies in each ride.
Creation of a government app and a Welfare Board for drivers that will actually benefit workers and the administration.
Ensuring a social welfare code for drivers as per the existing aggregate law. Ali suggested that the government cancel the license of companies who refused to do so.
Regular breaks for drivers after approximately every four hours.
Minimum wages for drivers working on such platforms

Uber says none of its drivers suffered during the ban

Although Ali estimated that an equal number of Ola and Uber auto drivers had to deal with challans during the ban, an Uber spokesperson said the company had not received any information of fines. During the hearing before the High Court, worker representatives had complained about the administration penalising drivers for accepting rides via the platforms. Accordingly, the court ordered companies to pay fines worth ₹ 5,000 for every penalised driver.

“However, we have received no information of any of our driver suffering a fine,” said the spokesperson, who wished to remain anonymous.

MediaNama also asked the company about the functioning of the app and their response to a state-determined fare. To this, Uber gave the following statement:

“We welcome the court’s order, which recognizes that auto drivers have the right to operate using aggregator platforms. It also recognizes that platforms like Uber can charge a booking fee, which allows them to cover their costs and continue to provide their services… Commission caps threaten the viability of this vibrant e-hailing sector, which will impact the tens of thousands of auto drivers who rely on it for their livelihoods and will result in the shrinking of this fledgling category.”

Similarly, MediaNama also wrote to Rapido with the following questions:

What kind of an impact has the ban had on Rapido?
Some people said that they could book rides even when the ban was in place since October 11. How is the possible?
What is the company’s response regarding fixed fares for aggregators?
How is this likely to impact drivers in the future?

Responding to the first two questions, Rapido said, “We are currently focusing on solving customer challenges & completely abiding by the government rate card… We are abiding by the government rules and going ahead to provide service to our customers.” The company declined to comment on the other queries. As of October 19, fares of Rapido rides went from ₹75-100 to ₹36 for a 2.5 km distance.

Conversations with company officials indicated that all platforms are “crunching the numbers to reduce its fare” while trying to lessen its “impact on the company.” Earlier, the court has allowed aggregators to charge an additional 10 percent over and above state-government approved fares, along with the applicable GST, till the government fixes fares as per the law.

Was there any point to the ban at all?

Considering how the administrative and legal chaos barely reflected on the ground-level, onlookers must wonder whether there was any benefit to the ban at all. According to Soujanya Sridharan, researcher at Aapti Institute, this is a question worth considering.

“What are the implications of using a ban as the uniform mechanism to enforce this rule [regarding lower fares]? And bans in so many ways offer little engagement. When you say on Friday that this ban will be effective from Monday, what is the time? How is it going to be enforced?” she said.

As per the institute’s research, Sridharan said the ban was “probably not the most effective way to deal with the underlying issue,” i.e., whether Uber and its other platforms have been charging their users in excess of the mandated meter fair limits.

Moreover, the aggregator scheme and the local laws do not recognise autos as a product that can be aggregated through platforms. Due to this, the vehicles operate in a grey area of the law since 2015-2016, which is approximately when Bengaluru started getting autos, through platforms, said the researcher.

Aggregators not the bid baddie here

Aside from this legal complexity, Sridharan pointed out that aggregator platforms play the primary role of matching demand and supply for drivers and passengers.

“Platforms, despite and notwithstanding their extortionist tendencies in this context, have also expanded business avenues for gig workers in some sense,” she said.

This notion was reinforced by Ali as well, who said the app does help drivers in many ways. Similarly, some researchers argue that the presence of platforms has helped regularize auto services in cities where metered fare is also not a norm. In cities like Delhi and Chennai or Kolkata where the meter system is not the norm, platforms have helped standardize the fares. Moreover, the apps provide gig workers with more options for getting rides.

Moreover, Sarayu Natarajan, Founder of Aapti Institute, pointed out that Ola, Uber and Rapido Services added another channel rather than the physical hailing of an auto. As such, the platform reduced the stream of work for platform workers and provided consumer convenience in terms of booking and payment.

“It’s not a black and white in a very direct sense, to say that somebody’s happy versus not,” she said.

Despite this, incidents like the one at Jayanagar showed that eventually the cost of such bans is footed by “the most vulnerable category” which is the gig workers themselves. As such, the researchers suggested interrogating bans are effective at all.

Governments were aware of cab pricing issues since September

On September 9, 2022, the Competition Commission of India (CCI) issued an advisory to cab aggregators that recommended self-regulatory measures for the platforms to address the issues of surge pricing and lack of transparency. The advisory was based on CCI’s market study that found aggregators were indulging in personalized pricing. This means that the aggregators had personalized data about riders that enabled them to indulge in price differentiation.

“The information collected from a survey of a diverse spread of 2000 consumers/riders across four different cities on multiple parameters revealed the perception of riders that the pricing computed by CAs [cab aggregators] takes into account several factors, including distance travelled, number of trips, type of ride, mode of payment, nature of mobile handset used, etc., which may play a role in price determination,” said the study.

Regarding surge prices, the study said that at times the surge was higher than expected by the riders. It noted there is no clarity as to how surge prices are calculated and how high they can be. In some cases, surge pricing has gone as high as 2–5 times the base fare,

especially during storm, traffic conditions and other unforeseen emergencies, said the study. However, state governments mentioned in this report said despite the obvious benefit to aggregators and its impact on consumer interests, surge pricing may still “help in attracting drivers to integrate with the aggregator.”

Report detected non-transparency issues: Riders’ and drivers’ surveys and the controlled experiment undertaken for the study pointed towards non-transparency regarding the unique pricing for each ride, a rider receiving different fares for an identical entry and destination point in subsequent rounds of the controlled experiment, etc.

The study referred to Clause 9.6 of the Motor Vehicle Guidelines 2020 to state that the aggregator has to ensure “transparency in its operations including but not limited to functioning of the app algorithm, proportion of fare payable to the driver, incentives given to driver, charges received from the driver and such other information as may be notified by the state governments, by making disclosures on the Aggregator’s Website and App and updating such disclosures, as per requirement.”

However, these are model guidelines while the final implementation depends on the state governments. Additionally, the study observed that there is “a lack of a level playing field,” since aggregators are not subjected to the same regulatory costs as traditional taxi operators.

Thus, while noting these issues in pricing, the CCI recommended that the aggregators consider proper regulations to address the “aberrations.” It also called for greater transparency “on the quantum of surge as well as the sharing of such surge among drivers and cab aggregators.”

Government still dragging its feet on gig worker welfare

Despite the ban making news in recent weeks, government action on surge pricing is nothing new. In 2016, Uber had suspended surge pricing in the state so that the government would stop impounding company cabs. However, it was only a temporary truce called during a hearing at the Karnataka High Court, challenging the state’s transport rules. Even then, drivers said these issues will not be resolved until the companies talk to their “partners,”

Back in July of this year, Karnataka’s labour department said it was drafting a rule for the welfare of gig and platform workers after consulting stakeholders like Ola Mobility Institute, a think tank, and the National Law School of India University, reported Economic Times. The rule was to be readied within a month and implemented after the central government notified the date for the implementation of the new labour codes. Yet months later, nothing has changed for gig workers in the area.

As Ali mentioned before, drivers are still waiting for a minimum wage and the rivalry between autos and two-wheeler rides worsens. On August 16, 2022, the New Indian Express reported how passengers too could suffer from this status quo. The publication reported how a group of auto drivers attacked a Rapido driver and passenger for opting to use the bike taxi rather than a rickshaw.

Similar reports of attacks on gig workers are reported frequently across India, stressing an urgent need to regularise drivers.

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