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Why is the Government of Karnataka so active against Ola/Uber?

The Government of Karnataka is pursuing Ola and Uber to comply with the Karnataka on-demand transportation technology aggregator rules, 2016. They are quite vocally saying that aggregator rules weren’t present early and now they have framed the rules and hence all the aggregators have to comply. As per the government, the rules are to address many of consumer complaints they have been receiving about surge pricing, security of customers etc. But isn’t it curious that the Government is so hyper active on only this issue when it comes to the welfare of consumers, whereas they show usual apathy towards increasing accidents resulting in an alarming number of deaths happening on roads because of pathetic road conditions, worsening traffic conditions, parking woes, increased traffic violations etc.? 

Can this be due to conflict of interest because the Government is also in the transportation business?

The Government of Karnataka a few months back killed ZipGo operations, an app based shuttle booking service, saying ZipGo didn’t possess a valid license. Instead of supporting the company by framing new rules for the business such as ZipGo to operate which was well accepted by the public, the Government went against the interest of the public and forced ZipGo to stop operations. That is because there is a direct conflict of interest with BMTC which is run by the Government and ZipGo was operating in the same space.

Similarly, now the Government is running a highly profit making KSTDC airport taxi by charging an excessive commission to drivers. Ola/Uber are directly taking business away from KSTDC. In a way, KSTDC is not operating in the city, so it may not be a direct conflict of interest, but still the Government wants to level the playing field by forcing Ola, Uber to comply with rules which are more towards the traditional taxi business model. In a cause to address the surge pricing issue, the Government has come up with rules which don’t take into consideration changing technology or new business model innovations. They are using old rule books and trying to force fit new business to that.

In all this taxi drivers will be the worst hit. Forcing taxi drivers to install digital meters in the Ola/Uber business model makes no sense. Not allowing taxi drivers to take independent trips is going to hurt drivers big time. New license rule of drivers to take city permit and give up state permit will not go in the driver's favor. Ola/Uber's business is commission based. They cannot guarantee business to any drivers. Drivers, by taking city permits, will be forced to rely on business from Ola/Uber and will have no other avenue to earn money.

The hapless drivers are now in a situation where they don’t know whom to rely on. Whether they have to rely on Uber/Ola or Government? If Uber/Ola somehow decides to shut operation for even a month, there will be mayhem among drivers. Many drivers financial situation is very bad. While speaking to Ravi, who owns a Toyota Etios and is attached to Ola, he mentioned that he has a loan of around 6lkhs and his expenses run up to 30K pm. With no daily trips for last few days, he is struggling to meet the ends and is being forced to go for high interest short term debt from local money agents and is under tremendous stress. No doubt, with Ola/Uber taken out of service, contrary to Government helping consumers, consumers will face more difficulty of commuting in the city.

Finally, any progressive Government, should ensure that they support the business and keep the regulation to a minimum. They should shoulder the responsibility with the companyies of taking care of consumer interests by focusing on developing infrastructure, reducing corruption at RTO, ensuring strict rules for issuing driver’s licenses, hefty penalties for violation of traffic rules and building efficient public transport. Instead of these, the Government of Karnataka due to conflict of interest, because they are directly in to transport businesses is going on the path of license raj and coming up with an archaic license to force new age companies to comply to 90’s rules. Whatever government is doing is clearly not in the interest of consumers, drivers or companies. Everything seems to be only in the interest of the Government and its way of functioning

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An entrepreneur with 18 years of experience in product development and technology.

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