Market will find its way

Market will find its way

Government must not intervene in the battle between cab aggregators and drivers as long as the law is not broken.
In the recent battle between cab aggregators and their drivers, the consumer seems to have been forgotten. Should the government intervene? But before we ask that, does it make sense to ban cab aggregators?.
Uber and Ola, the top players in India, have about 32,000 cabs plying in Chennai, according to a union member who participated in the recent drivers’ strike. Assuming a low average of six trips a day, as not all cabs ply daily, the city’s commuters make close to 2 lakh trips a day with them. Given the kind of presence cab operators have across the country — Uber has about 2.4 lakh drivers at any point — it may not be a great idea to ban such services.
Should the government then regulate prices so that drivers earn better? Protesting driver unions in Chennai have demanded that the government fix a minimum of Rs. 100 for the first 4 km in a standard ride.
However, if two competing ride services help bring prices down for the commuter, why meddle with that model? Yes, for drivers who have spent savings or taken loans to buy a new car hoping that earnings will remain high, it is a let-down.
‘This is business’
One argument in favour of the drivers is that they may not be informed enough that the terms of business constantly change. Signing up with cab aggregators means entering a business partnership. The drivers bought, and continue to buy, new vehicles even as the terms of engagement have been changing over the last few months. For drivers across operators, the terms have changed from a minimum number of trips per day to a minimum fare amount per day and now operators have fixed a certain number of trips a week for drivers to enjoy incentives or ‘boosts’. One Uber driver said: “This is business. No one is forcing me to drive. If I don’t, someone else will.”
In an ideal world, the cab aggregator would ensure that everyone got a good deal. But if that does not happen, the government has no business intervening as long as players act within the limits of law.
After all, regulators don’t prevent a player from reducing prices just to protect revenues of other players. However, when service providers collude to fix prices above competitive levels, thus harming the consumer, the government should step in to break the cartel.
Otherwise, let the market decide. If Ola does not change its terms of engagement with drivers, Uber may lure drivers away with better terms. If Uber refuses to drop its commission for every trip, as drivers now demand of it, its drivers may leave.
On the flip side, even if commuter prices in a competitive environment charged by cab operators go up to astronomical levels, the government should not enter the picture. The market will find its way.