Saturday, July 22, 2006

The Economics and Politics of Autorickshaws

I live in Noida, a suburb of Delhi. Noida is in Uttar Pradesh and is one of the fastest growing urban areas in the country, due in part to its proximity to Delhi. Gurgaon, in Haryana is a parallel example.

Over the last 1 year or maybe even more, there is a lot of problem regarding Autorickshaws between Noida and Delhi.

Delhi Autowallahs refuse to go to Noida and Noida Autowallahs refuse to step in Delhi. While I am personally not affected by this much, since I have my own mode of transport since 1998, it has affected me whenever my car broke down, and it does affect many more people of Noida and Delhi.

I once did a bit of research of my own into this and discovered some astonishing (or not) facts.

Delhi requires licensing of Autos, as for any other vehicle. However, unlike private vehicles, which can be registered in practically any number, public carriers follow a quota system. Under this, only a certain number of vehicles are allowed on the roads of Delhi, ostensibly to make sure that the pollution and road-space norms are not violated in the metropolis.

So, because of this, the number of Autos has remained roughly constant in Delhi, over many years. The Delhi government, through its Road Transport Authority refuses to issue any new Auto registrations in Delhi, except if the old Auto is de-registered and taken out of circulation. So, when Delhi switched over to CNG Autos a few years ago, the number of Autos remained roughly the same.

Buying a new Auto in Delhi seems impossible. At the same time, driving one in Delhi seems fairly lucrative. That is why a 3-year old Auto, along with Delhi registration number , is available for the princely sum of Rs. 1,75,000.

All went fine for a long time, till the UP govt. released a new quota for Autos in Noida. A new auto in Noida costs, all inclusive, Rs. 1,16,000. Why does a new auto cost 33% less than a 3-year old Auto? This is so because this the price of a new auto! The Delhi price is a very high price, which is primarily due to the premium paid for a Delhi registration.

Because of the high rates of Autos in Delhi, Autowallahs overcharge. They need to recoup their investment. They are notorious for their overcharging, something that I have experienced personally. A 21 Km Distance, for which one should be charged appx Rs. 80, is conveniently overcharged at Rs. 150-170. People pay, because everyone overcharges, and there is no convenient alternative to them in Delhi for personalised public transport. Buses are overcrowded and Metro is not everywhere, as of now.

When the Noida Autowallahs entered Delhi, they charged a more resonable price. While the running cost for both the guys is the same, one's fixed cost is much less. This made a dent in the collections of the well-entrenched Delhi Autowallahs. They screamed MURDER. Local politicians and Autowallah Unions colluded and in the garb of not-from-Delhi Autos, made sure that the police caught these Noida Autos in Delhi and levies a heavy fine and even goes to the extent of impounding them. Had these Noida Autos overcharged, as their Delhi counterparts, the Delhi guys would have had no/much less problems.

So the Noida Autowallahs gathered their Unions and their politicians and made sure that life for any Delhi Autowallah in Noida was worse than hell. Thrashings, on being caught, are common.

Let's look at this chain of corruption and collusion.

1. The Delhi politicians provide "protection" to Delhi Autowallahs. In return, they get their palms greased. They also get fairly militant support from the autowallahs. Have a look at the backside of most autos and you can see some or the other auto union poster, which is in turn affiliated to some political party.

2. The Delhi politicians make sure no new quotas are released. This creates an artificial scarcity and makes sure that in abscence of competition, prices of Autos can be kept artificially high through cartelisation. Most of the Autos are owned by a small number of large businessmen and politicians, even though they may be registered in various names (Benaami). These businessmen grease the politicians' palms further. Most of the autowallahs you see, drive the autos on a daily rent basis (ranging from rupees 250 to rupees 400 per day).

3. The artificially high rate of autos makes these drivers overcharge. The consumer suffers as he has to pay more.

4. They make sure that any attempt at competition is kept strongly at bay.The consumer suffers as he has to change autos at the border of Noida/Delhi. Sometimes, even that is not a easy task. Imagine carrying a young baby in strong sun or rain and doing that.

5. Violence and goondaism are further sub-effects.

The solution for overcharging has been proposed as helplines, which are ineffective at best. Nothing really works. All overchargers pay bribes to Policewallahs, which further fuels corruption.

The solution is open quota for autos which can break the artificial monopoly/oligopoly of a few businessmen, which induces cartelisation. Once that happens, rates of autos, as well as rates of auto-travel will fall to realistic level.

And Noida autos should be allowed in Delhi, of course by paying a small annual fee and vice-versa for Delhi autos who wish to go to Noida. That will take off some urbanisation pressure from Delhi. Many people feel that Noida commuters are a harried lot.

In fact, a side effect is that call-center cabs, which travel empty on at least 1-2 journeys per day, are doing a roaring side-business by ferrying consumers who gladly pay 10 rupees for a 15-20 km ride in A/c comfort!

A similar story is on these days between Delhi and Noida buses. More on that, later!

1 comment:

  1. i think that point no 2 is the root cause of all these problems, and as is obvious rickshaw mafia and politicians have a symbiotic relationship the quota raj is unlikely to end in all forms!!!