Metros and buses plying on the streets of Delhi NCR are packed with people for the fourth day in a row, as the drivers of taxi hailing services like Uber and Ola continue their strike.
Lakhs of cabs are off the streets, and people are taking to public transport, which already is a damp squib in the national capital region. The drivers have been complaining about the unfair pricing and bad working conditions, and that has opened up some innate problems in how Uber and Ola function.While the prices for the commuter will inevitably increase, it’s high time that companies like Uber and Ola get their act together, along with the government’s approach towards them.
Companies like Ola and Uber, primarily have just a capital raising model and not a ‘real’ business model. For Ola, this has been evident by the fact that, though being a tech startup, their innovation is rarely the reason for their success. But, lobbying is. Continual lobbying in order to get blobs of cheap investments has kept Ola on the roads while competing with global giant Uber. Now, they have also started to knock on the doors of government and bureaucrats, instead of letting their own ideas drive them to success. Interestingly, Ola and, for that matter, Meru are mainly owned by foreign private firms, but with Indian faces at the top who themselves have little ownership in the companies.
The drivers believe that the incentives that they receive are built by the effort that they put by meeting the targets, but they don’t understand that such payments come from equity capital and will vanish one day.
Ola’s business model has always been based on the belief that they will always get funding and that capital will be present. But since there is no foreseeable profitability, the capital is also drying up. Ola is threatened by Uber, which in itself has a very unsustainable model but at least have better fundraising avenues. There is no proper regulation on their pricing nor is there any monitoring of the driver payments. Companies cannot build an ecosystem based on untenable methods.
There is a need for the government to take actions as well. Apart from regulating the taxi aggregators, there is a need to look into the taxation system on roads. While private vehicles have the luxury of paying road taxes and get toll permits for a regular amount of time, a commuter on Ola or Uber has to pay it every day while going to the office. This is especially true for a big place like Delhi NCR, where people travel from Gurgaon to Noida crossing two state borders, and that burns a whole in the pocket. If the government wants to see lesser cars on the roads of one of the most polluted cities in the world, there needs to be a proper regulation in place, if the government does not want to play ducks and drakes.
Additionally, the government should treat the drivers of Ola and Uber differently than single cab owners. There is a need for proper agreements in place between the company and the drivers. Incentive agreements need to be properly detailed to the drivers. Predatory pricing will anyway have to stop one day or the other. That being said, it is basic old school profiteering from protectionism is a quasi-socialist country. While they should not and will not continue their loss leader pricing, it is up to the consumer to take to the pricing. While the consumer has to accept that in a semi-liberalised country like India where there are more exceptions than laws, foreign aggregators will play the devil, but it is also up to those devils to con the less price sensitive people.
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