Uber Case and Public Policy Thoughts

A few years ago public transport in Delhi (as in most parts of India) was pathetic. The public transport buses were unsafe; especially for a girl who can be reasonably sure of being groped (at the least) if she dares to get into a city transport bus; especially alone. You had to rely on the local taxi stands to hire a taxi and they may not have a taxi available when you want. When you hail a taxi the driver would ask you where you are going. If your destination did not suit him, he would refuse to take you. When a taxi driver deigned to take you, he would refuse paying by the meter and make quote you a fare which is often 1.5 to 2 times the actual fair. When he used the meter, it would be a doctored one or he would take the most circuitous route to your destination if you were not familiar with the city. When you went shopping or visiting a friend there was very high uncertainty about getting a safe transport back. The auto rickshaw drivers also behaved the same fashion (They do that even today) .

When you get a taxi you had no idea who the driver was or what his name was. Often he brought along “his friend” along with him. If you asked him who that person was or didn't want this 'friend' to be in the car for your journey, the driver would get upset and refuse to take you. As you were desperate and had no other option you put up with these dramas. There was no authority with whom you could give a complaint. (You won't even consider complaining to the police) There have been many instances of such drivers misbehaving with passengers; especially ladies. Many of the regular black and yellow taxis still continue with such behaviour. A Canadian friend who has been visiting India for about two months told me that whenever she was travelling without an Indian friend with her, the driver refused accepting fare as per the meter.

The Metro has made a big difference in Delhi. In most other cities the metros are non-existent or limited. Then the radio taxis happened. Situation started to improve. With more and more operators joining the fray there was more competition and each of them added more features and services. Call centre support for cab booking and customer support, mobile apps, GPS tracking, online receipt, online payment and so on. With the improved supply you could be sure of getting a cab when you want. The service levels have significantly improved, there is more reliability and the quality and comfort of the vehicles too have improved. Although per kilometer charge is higher for these radio taxis, the total bill ended up being lower as the meters are not doctored and the driver is not taking circuitous routes. Even today the pre-paid cool cab charges from airport to my home in Mumbai ends up being more than the radio taxi charges including their service charge of Rs 60. With registered drivers of radio taxis who are also given some training and monitored to some extent customers feel safer than before. There had been hardly any major complaints about the behaviour of these drivers. I am not saying that everything is perfect. There are still areas for improvement.

Then the disaster hit. One unscrupulous driver has molested an unfortunate lady. It is an absolutely dastardly act. No doubt that the driver has to be punished suitably. We also have to improve the systems and processes to prevent such occurrences. But the knee-jerk reactions of administrative decision makers once again demonstrates the pathetic state of decision making founded on emotions and populism. This is not the first instance of ridiculous action by regulators and law enforcement agencies.

The Police has acted fast and has apprehended the culprit quite fast. This is commendable. DCP south has been giving twitter update on the investigation which is appreciable.  But one of the first policy decisions on this taken by the administration is banning Uber and similar services. Some states have followed suit in extending this ban to their states. By doing that, we have created a shortage in the market and this has opened avenues for un-scrupulous behaviour by cabbies. I am a regular user of taxis and I experience it. Many of my friends also share the same feeling.

Are the operations of Uber and OLA so dangerous that we need to ban it immediately? Not at all.

Let us look at this a little deeper. Uber had a system of driver verification. They relied on a document that was submitted by the driver. It appears that the character certificate that he submitted was forged and not issued by the Additional DCP as claimed in the certificate. Uber should have had a process of undertaking much more serious background check of its drivers and verification of the veracity of the documents that it receives. These service providers could also have better tracking systems. It will be easier for law enforcers and regulators to demand and monitor such good practices on organised entities like the radio taxi operators than enforcing such good practices by each cabby. By outright ban of these entities we are not reducing the risk rather increasing it.

A case has also been charged against Uber for cheating as they failed to take necessary measures to live up to the promises they have made.

It has been also reported that the same driver used forged certificate to get a permit to drive his cab in the capital. Are we taking action against the department or the officer for dereliction of duty in issuing this permit without verifying the documents presented? With commercial taxi licenses, people like him manage based on such fake documents, (which is not verified at time of issue of taxi permit) if these drivers operate as an independent taxi operator and commit such crimes, tracking them would be even more difficult and this could turn out to be even more dangerous.

When we prescribe more documents and verification processes, we also have to establish convenient and speedy mechanisms to issue these verification for genuine applicants. The sad thing is that it is a herculean task to get any kind of clearance documents and validation of the clearances from government departments unless you have “connections” or willing to pay “speed money” directly or through touts. This makes the whole process a bottleneck and avenue for corruption and encourages bypassing of such verification. Therefore we also have to establish processes for speedy verification and validation processes. For example the Police can consider making online verification of certificates issued by it. Further, the Police also could make it possible to get verification done in an easy and fair manner. It could also have exception handling mechanism to take into account practical problems. For example I came to Delhi from Mumbai and took up a rented apartment and I wanted a police verification done on my Proof of Address. I was going from pillar to post and I had to take help of a senior bureaucrat who is a friend to help me. Imagine the plight of an ordinary person who comes to a metro in search of a job. May be wider acceptance of Aadhaar Card would address this issue to some degree.

We see such knee jerk behaviour very often. Let me quote some more examples. Remember the A 320 air crash in Bangalore soon after Indian Airlines bought these aircrafts? Our reaction has been to ground the whole fleet of 320 for a very long period resulting in severe loss to the airlines. We are the only country in the world which did that.

When there was complaint against the overcharging by some Micro Finance intermediaries the reaction has been to ban such companies instead of establishing good practices and enforcing the same. When we do this the only option left to the poor customers is to fall into the clutches of money lenders with usurious interest rates.

When there is complaint against ill treatment or malpractices by some NGO we have instances of the whole community of NGOs harassed and treated shabbily resulting in genuine players avoiding such initiatives.

The government instead of improving its services, taking ownership of its duties and being accountable for its mistake place the whole blame on the private service providers. Swaminathan Anklesiaria Aiyer's comment regarding the Coal Scam in TOI is quite relevant in this context.  “The Government was found guilty of wrongful coal allocations, but suffered no penalty. Instead mine operators not found guilty of anything had to pay huge fines to the guilty government. .. Investors are increasingly apprehensive that Indian Institutions no longer provide stable decisions or secure property rights”

The regulator and the law enforcer have to keep in mind that it has a balancing act to do. On one side it should establish good practices and enforce them. It should prevent monopoly behaviour, it should ensure good practices are followed for the safety, security and convenience of the user. On the other hand they have to keep in mind that regulations and regulating agencies also have a development role to play; helping and supporting service providers to establish good practices and to evolve and thrive rectifying their mistakes.

It should be practical in managing the evolution of the regulation and market practices. As Judge Learned Hand one of the very respected American judges observed “Justice is the tolerable accommodation of the conflicting interests of society, and I don't believe there is any royal road to attain such accommodation concretely.”

If we make rules that cannot be practically followed, then we will not have decent service providers but we will be at the mercy of shady operators who operates outside the law. When mistakes and failures do happen, the reaction should not swing to the extreme. If the error is technical in nature and does not reflect willful and repeated irresponsible behaviour that can potentially cause disaster to the community then the penalty should commensurate with the mistake and solutions should be implementable. We need to help these entities to improve and not kill them. What often happens is that the regulators go heavy on technical errors  making it difficult for many genuine service providers and leaving the ground open to the fringe players who act outside the regulated market or without any service standards at all. Very often these shady operators make these regulators to clear way for them consciously or unconsciously by eliminating decent operators. 

"We live in a stage of politics, where legislators seem to regard the passage of laws as much more important than the results of their enforcement." - William Howard Taft