item amount (in rs) per year cost (in rs) kolhapur ahmednagar nagpur(rural) beed thane sangli dhule...

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69 4.5.4 Taking all 3 cost elements together, insurance, taxes and miscellaneous fixed expenses will come to Rs. (25,650 + 1,980 + 4,803), i.e., a total of Rs.32,433. 4.6 Annual expenditure on repair and maintenance. 4.6.1 As explained in para 3.5 of the last chapter since the estimation of repair and maintenance done by the Hakeem Committee was highly contested by the consumer organizations, this Committee decided to identify various elements of costs of repair and maintenance of a taxi on actual basis separately for taxis running on single shift and double shift basis. Such separate estimations are considered necessary as costly consumables viz., tyres, tubes, batteries and frequency of servicing would vary substantially for both types of taxis due to different quantity of usage. With an average run of 94 kms per shift, the total kms in a year on single shift basis will be (94 x 300) kms i.e., 28,200 kms. Accordingly, the total run in a year in double shift will be 56,400 kms. Most other expenses will remain same for both. The details of the cost estimated on account of repair and maintenance are given below: Item Amount (in Rs) Per year cost (in Rs) Driver's uniform (two pairs per year) 1800 1800 x 1.7 = 3060 shoes ( one pair) 800 800 x 1.7 = 1360 Driving license renewal 500 500 x 1.7= 850÷3 = 283 fees every three years, Permit renewal fees every 500 500÷5 = 100 five years Total 4803 Rs. No. Description Cost for Single shift 28,200 kms (Rs.) Cost for Double shift 56,400 kms (Rs.) a) Regular servicing including labor and spares. One servicing every 8,000 kms (4 services) (7 services) costing Rs. 6,000 per service. (Number of services rounded off to the nearest integer) b) Tyre cost Rs.4,000 per tyre x 5 = 11,280 22,560 Rs. 20,000 for 50,000 kms tyre life. (It is also in conformity with Meru / Uber taxi inputs). Hence, yearly cost on tyre expenditure is considered 24,000 42,0000

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Page 1: Item Amount (in Rs) Per year cost (in Rs) Kolhapur Ahmednagar Nagpur(Rural) Beed Thane Sangli Dhule Chandrapur Nanded Kalyan Satara Nandurbar Gondia Hingoli Navi Mumbai Karad Jalgaon

69

4.5.4 Taking all 3 cost elements together, insurance, taxes and miscellaneous fixed

expenses will come to Rs. (25,650 + 1,980 + 4,803), i.e., a total of Rs.32,433.

4.6 Annual expenditure on repair and maintenance.

4.6.1 As explained in para 3.5 of the last chapter since the estimation of repair and

maintenance done by the Hakeem Committee was highly contested by the

consumer organizations, this Committee decided to identify various elements of

costs of repair and maintenance of a taxi on actual basis separately for taxis

running on single shift and double shift basis. Such separate estimations are

considered necessary as costly consumables viz., tyres, tubes, batteries and

frequency of servicing would vary substantially for both types of taxis due to

different quantity of usage. With an average run of 94 kms per shift, the total

kms in a year on single shift basis will be (94 x 300) kms i.e., 28,200 kms.

Accordingly, the total run in a year in double shift will be 56,400 kms. Most other

expenses will remain same for both. The details of the cost estimated on

account of repair and maintenance are given below:

Item Amount (in Rs) Per year cost (in Rs)

Driver's uniform (two pairs per year) 1800 1800 x 1.7 = 3060

shoes ( one pair) 800 800 x 1.7 = 1360

Driving license renewal 500 500 x 1.7= 850÷3 = 283fees every three years,

Permit renewal fees every 500 500÷5 = 100 five years

Total 4803

Rs.No.

DescriptionCost for

Single shift 28,200 kms

(Rs.)

Cost for Double shift56,400 kms

(Rs.)

a) Regular servicing including labor and spares. One servicing every 8,000 kms (4 services) (7 services)costing Rs. 6,000 per service. (Number of services rounded off to the nearest integer)

b) Tyre cost Rs.4,000 per tyre x 5 = 11,280 22,560Rs. 20,000 for 50,000 kms tyre life. (It is also in conformity with Meru / Uber taxi inputs). Hence, yearly cost on tyre expenditure is considered

24,000 42,0000

Page 2: Item Amount (in Rs) Per year cost (in Rs) Kolhapur Ahmednagar Nagpur(Rural) Beed Thane Sangli Dhule Chandrapur Nanded Kalyan Satara Nandurbar Gondia Hingoli Navi Mumbai Karad Jalgaon

70

Rs.No.

DescriptionCost for

Single shift28,200* kms

(Rs.)

Cost for Double shift56,400 kms

(Rs.)

c) Battery cost Rs. 5,000. Life 2 years. Hence per year cost

d) CNG / LPG Hydro-test cost Rs. 2,100 700 700for 3 years. Hence per year cost

e) Annual Fitness Renewal charges 1,500 1,500including fixing radium and painting number plate etc.

f) Meter calibration charges and meter 600 600testing and sealing

g) Miscellaneous charges for engine / 6,000 7,000suspension / gear box / clutch, etc Repairs and maintenance cost for life time for 15 years i.e. Rs. 90,000 for single shift and Rs. 1,05,000 for double shift taxis per year cost.

h) Total maintenance cost per year 46,580 76,860(sum of a to g)

Weighted average annual repair and Rs. 67,776maintenance cost will be (0.3 x Rs. 46,580) + (0.7 x Rs. 76,860)

2,500 2,500

4.7 Cost of living of the family of the taxi driver.

4.7.1 The estimates of cost of living for the taxi driver's family was adopted at Rs. 3,750

per month by the 1996 Taxi Fare Fixation Committee. This cost included the

basic living cost, medical expenses, house rent and retirement benefits. The

same was adopted and updated by the Hakeem Committee in 2012 as per the

change in the consumer price index (CPI) for industrial workers. When the

Hakeem Committee recommended 10% extra over the updated 1996 formula

based cost of living of Rs. 10,880 to Rs. 12,000 per month, the consumer

organizations took strong objection and the Government brought it down to Rs.

11,000 per month which is the rounded off updated figure of 1996 formula.

Thus, these costs have been accepted by both the taxi drivers as well as

consumer organizations. Hence, the present Committee has decided to adopt

Page 3: Item Amount (in Rs) Per year cost (in Rs) Kolhapur Ahmednagar Nagpur(Rural) Beed Thane Sangli Dhule Chandrapur Nanded Kalyan Satara Nandurbar Gondia Hingoli Navi Mumbai Karad Jalgaon

71

and update the said estimates as per the latest CPI index value for industrial

workers as the cost of living for taxi drivers.

4.7.2 As per the CPI data available on the website of the Labour Bureau, Government

of India, the CPI value for industrial workers for Mumbai center as on 30th June,

2017 is 290. The 1996 data of cost of living was based on the 1982 price series.

Hence, the Hakeem Committee had calculated the cost of living in 2012 bases on

the CPI figure of 204 (based on 2001 series) by applying the multiplying factor of

5.18 for the 1982 series and linking it to the 1996 estimates of Rs. 3750 which

was based on the 1982 CPI series. The present CPI figure of 290 is also based on

the 2001 price index series. Accordingly, the cost of living for a taxi driver in

Mumbai as on 01.07.2017 will be Rs. 15,470 per month and Rs. 1,85,640 per

annum. Needless to say, the same cost of living will also apply to the auto

rickshaw drivers in the Mumbai region.

4.7.3 There are 5 centers in Maharashtra where the CPI index figures are calculated.

To avoid difficulties of the R.T.A.s in calculation of the cost of living for their

respective jurisdictions, the Committee has decided to calculate the CPI index

figures for the remaining 4 centers in Maharashtra along with Mumbai which are

given in the table below:

* 204 x 5.18 = 1056.72, (CPI figure of March, 2012 considered by the Hakeem

Committee which decided the cost of living Rs. 10,880/-. Hence, living cost per

unit value of CPI figure works out to Rs. 10880/1056.72=Rs.10.29, say, Rs. 10.3.

CPICentre

CPI for the month of June,

2017

Linking factor with the 1982

series (2001 = 100)

Total(B x C)

Cost of Living =Rs. (D x 10.3*)

Mumbai 290 5.18 1502 Rs. 15,470/-

Nagpur 312 4.68 1460 Rs. 15,038/-

Nashik 291 4.94 1438 Rs. 14,811/-

Pune 274 4.96 1359 Rs. 13,998/-

Solapur 295 4.73 1395 Rs. 14,368/-

A B C D E

4.7.4 C.P.I. for different R.T.O. / Dy.R.T.O.s in the State.

Ministry of Labour & Employment Bureau of Government of India declares

Consumer Price Index Nos. (CPI) for Industrial Workers for every month based on

Page 4: Item Amount (in Rs) Per year cost (in Rs) Kolhapur Ahmednagar Nagpur(Rural) Beed Thane Sangli Dhule Chandrapur Nanded Kalyan Satara Nandurbar Gondia Hingoli Navi Mumbai Karad Jalgaon

72

2001 = 100. Consumer Price Index nos. are available for 5 cities in Maharashtra,

Namely : Mumbai, Pune, Nashik, Nagpur & Solapur. R.T.A.s of the respective

centers will adopt the above mentioned cost of living. The R.T.A.s of other

districts can adopt the figures of the center closest to their head quarters. In

future, the R.T.A.s of the 5 centers can calculate the cost of living for their

respective jurisdictions based on the above formula and the other R.T.A.s can

adopt the cost of living as per the above mentioned formula relating to the CPI

center which is geographically closest to their headquarters. All the R.T.O. & Dy.

R.T.O. offices in Maharashtra are allocated as per their geographical location

under the 5 cities for which CPI nos. are available, as shown in the chart given

below. Accordingly, they will adopt the CPI value of the respective center and

the living cost per month.

Allocation of R.T.O./Dy.R.T.O offices to CPI centers.

Mumbai Pune Nashik Nagpur Solapur

Mumbai(Central) Pune Nashik Nagpur (City) Solapur

Mumbai(West) Pimpri-chinchwad Malegaon Nagpur (East) Latur

Mumbai (East) Baramati Shrirampur Wardha Osmanabad

Borivali Kolhapur Ahmednagar Nagpur(Rural) Beed

Thane Sangli Dhule Chandrapur Nanded

Kalyan Satara Nandurbar Gondia Hingoli

Navi Mumbai Karad Jalgaon Bhandara Parbhani

Vasai Aurangabad Gadchiroli Ambejogai

Panvel Jalna Amravati Akluj

Pen Akola

Ratnagiri Yeotmal

Sindhudurg Washim

Buldhana

4.7.5 Hakeem Committee had estimated that on a conservative basis, about 70% of

the taxis in Mumbai (MMRTA) region operate two shifts daily. Accordingly, the

cost of living per taxi per year on single shift basis will be = (Rs. 15,470 x 12) = Rs.

1,85,640 and with 70% taxis operating in double shift, the weighted average cost

of living per taxi per year would work out to(Rs. 15470 X 12 x 1.7) = Rs.(1,85,640 x

1.7), i.e., Rs. 3,15,588/-.

Page 5: Item Amount (in Rs) Per year cost (in Rs) Kolhapur Ahmednagar Nagpur(Rural) Beed Thane Sangli Dhule Chandrapur Nanded Kalyan Satara Nandurbar Gondia Hingoli Navi Mumbai Karad Jalgaon

4.8 Fare fixation of taxis operating on CNG in Mumbai (MMRTA region)

4.8.1 Based on the approach adopted in chapter - 3 and the preceding discussions in

this chapter, it can be seen that the applicable values of the relevant cost

parameters for determination of the fare structure of taxis operating on CNG in

Mumbai (MMRTA) region are as given in the following table:

Item of Cost Amount Remarks

i Annual cost of (return on) capital Rs. 31,900 see para 4.3.2

ii Annual depreciation Rs. 27,867 see para 4.4.2

iii Comprehensive Insurance, taxes and Rs. 32,433 see para 4.5miscellaneous fixed costs

iv Annual cost of repair and maintenance Rs. 67,776 see para 4.6

v Annual provision for the cost of living Rs. 1,85,640 see para 4.7.2of the family of the driver of the taxi (15,470 x 12)

vi Average number of revenue earning 23,100 kms see para 3.4.3 &kms in a shift per year (assuming 300 3.8.2working days): (77 x 300 ) kms

vii Average kms run per kg of CNG 18 kms see para 3.4.5

viii Average percentage of idle distance run 18% see para 3.4.3by a taxi in a shift

ix Annual provision for cost of living for Rs. 3,15,588 see para 4.7.51.7 drivers per taxi

x Annual average revenue earning kms 39,270 kms see item (vi)for 1.7 drivers per taxi (23,100 kms x 1.7) above

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4.8.2 Fixed cost per km - Based on the above data, the fixed cost per revenue earning

km is accordingly worked out as given in the table below:

a) Annual return on Capital Rs. 31,900

b) Annual depreciation Rs. 27,867

c) Annual comprehensive insurance + Taxes + Miscellaneous fixed expenses Rs. 32,433

Item Amount

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74

4.8.3 Variable cost per km -

The fuel cost constitutes the variable cost in operating a taxi. It was represented

to the Hakeem Committee that though the taxis use CNG, a very small quantity

of petrol is required to initially start the engine. It has been estimated by the

Hakeem Committee in 2012 that the cost on account of this would not exceed

3% of the cost of CNG. This Committee has accepted the said norm as it is.

Accordingly, the variable cost per revenue earning km is calculated below:

a Average kms run per kg of CNG. (see para 3.4.5) 18 kms

b Average percentage of idle run. (see para 3.4.3) 18%

c Average revenue earning kms obtained from 1 kg 14.76 kmsof CNG: (18 x 0.82) kms

d Present cost of one kg of CNG Rs. 43.45

e Cost of one kg of CNG plus required quantity of Rs. 44.75petrol: Rs. (1.03 x 43.45)

f Variable cost per revenue earning km: Rs. 3.03Rs. (44.75 / 14.76)

Item Amount

Item Amount

d) Repairs & maintenance Rs. 67,776

e) Cost of Living (Rs. 1,85,640 x 1.7) Rs. 3,15,588

Total fixed cost (a + b + c + d + e) RS. 4,75,564

f) Total revenue earning kms per year 39,270 km

g) Per kilometer fixed cost = Rs. 4,75,564 ÷ 39,270 Rs. 12.11

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4.8.4 Minimum fare.

Accordingly, the total cost (fixed plus variable) per revenue earning km for taxis

operating in Mumbai (MMRTA) region is equal to Rs. (12.11+3.03) = Rs. 15.14.

The basic fare per km may, therefore, be fixed at Rs. 15.14. The minimum fare

may be fixed at 1.5 times the basic fare, namely, Rs.(1.5 x 15.14) = Rs. 22.71,

rounded off to Rs. 23. As explained in para 3.20, the basic fare is not to be

rounded off. Accordingly, the amount payable by the passenger will be obtained

by multiplying the distance travelled with the basic fare which should then be

rounded off to the nearest rupee, subject to the minimum fare indicated above.

For example, if a passenger has travelled 4.5 kms, the fare will be calculated as:

Rs. (15.14x4.5) = Rs. 68.13, rounded off to Rs. 68 which will be the amount

payable by the commuter. On the other hand, if a passenger has travelled 1.2

kms, the actual fare for him will be (Rs. 15.14x1.2) = Rs.18.17; but since it is less

than the minimum fare of Rs. 23, the commuter will be required to pay Rs. 23.

4.8.5 It can be seen from the above calculations that the contribution of different cost

elements to the basic fare of Rs. 15.14 per km are as below:

a Annual return on Capital 31,900 0.81

b Annual depreciation 27,867 0.71

c Annual comprehensive insurance + 32,433 0.83Taxes + Miscellaneous fixed expenses

d Repairs & Maintenance 67,776 1.72

e Cost of Living 3,15,588 8.04

f Per kilometer fuel cost 3.03 3.03

Basic Fare per kilometer 15.14 15.14

Item of cost Cost per km

(Rs.)

Cost for

39,270 kms (Rs.)

4.8.6 Formula for future revision of fare for taxis in the MMRTA region.

It would be seen from the above analysis of the proposed fare structure that

there are cost elements, viz., price of the taxi, meter, driver's uniform, repairs

and maintenance etc. which are market driven while the taxes are fixed by the

government from time to time and insurance premium is determined by the

sector regulator. Market driven cost elements are thus primarily influenced by

the inflation factor among other factors. Hence, expressing these disparate cost

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76

elements in terms of specific multipliers or divisors will not always yield

consistent results, because the respective weights of various cost elements in

the final fare per km do not remain constant over time. For example, bank loan

rates are driven by the market and may not always move in tandem with the

fixed deposit rates or in the same proportion. Thus, the depreciation and cost of

capital may not move at the same rate. Similarly, while cost of living invariably

rises with inflation, the bank interest rates may fall or rise. Hence, a single

divisor or multiplier for a particular cost factor (as recommended by the Hakeem

Committee) may not give consistent outcomes each time. Hence, this

committee proposes to determine the formula for calculation of each cost

element and the overall fare per kilometer for black and yellow taxis as follows:

(i) Cost of capital per annum =P(0.35xL + 0.65xF) ÷ 100

Where 'P' is the weighted average latest price of b & y taxis;

'L' is the median average interest rate of nationalized banks for car loans;

'F' is the interest rate of 1 year fixed deposit in a nationalized bank.

(ii) Depreciation per annum = 0.95 P ÷ 15

(iii) Insurance per annum = As per actual cost of the comprehensive insurance.

(iv) Motor vehicle tax (prorata) per year = Amount of one time tax ÷ 15.

(v) Professional tax for permit holder per year = As per actual annual rate of

professional tax.

(vi) Permit renewal fee (prorata) per year = Renewal fee ÷ 5.

(vii) License renewal fee per annum = (Renewal fee ÷ 3) x 1.7.

(viii) Drivers' uniform and shoes per year = Rs. (1800+800)x1.7.

(This cost may be reviewed once in 3 years.)

(ix) Annual repair and maintenance cost:

wCurrent annual repair and maintenance cost per single shift use = Rs.

46,580.

Repair and maintenance cost as a percentage of weighted average taxi price

= (46,580÷4,40,000) = 10.58%, rounded off to 10.5%.

wCurrent annual repair and maintenance cost for a taxi running in 2 shifts =

Rs.76,860.

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Repair and maintenance cost as a percentage of weighted average taxi price

= (76,860÷4,40,000)=17.47%, rounded off to 17.5%.

wWeighted average annual repair and maintenance cost = Rs.67,776.

Repair and maintenance cost as a percentage of weighted average taxi price

= (67,776÷4,40,000) = 15.40%.

wAccordingly, annual repair and maintenance cost = weighted average taxi

price x 15.40% = 0.154P.

(x) Annual cost of living (1.7 drivers) = Rs.(2001 series CPI value x 5.18x 10.3) x

12 x 1.7.

(xi) Annual revenue earning kms (1.7 drivers) = 39,270 kms.

(xii) Fixed cost per km = Rs. [(Total of (i) to (x)) ÷ 39,270].

(xiii) Variable (fuel cost) per km = Rs.[(CNG price per kg x 1.03)÷14.76].

(xiv) Black and yellow taxi fare per km = Rs.(xii + xiii)

4.9 Fixation of fare of taxis operating on different fuels in the State outside

Mumbai (MMRTA region).

4.9.1 Taxis operating in the State outside Mumbai (MMRTA region) are run on petrol

or other fuels like diesel or LPG. It is possible that some taxis may in future

operate on CNG as and when CNG will be made available in those areas. As

mentioned in para 3.15.6, this Committee recommends 77 kms and 72 kms as

the revenue earning kilometers per shift in the non-MMRTA municipal

corporation areas and other areas respectively based on the average distance of

94 kms and 88 kms covered respectively. However, the percentage of idle

distance travelled is kept at 18% for both as in the case of Mumbai region.

4.9.2 We have estimated 18 km as the mileage per kg of CNG for the taxis operating on

CNG in Mumbai. The same could be adopted for taxis, if any, operating on CNG

outside Mumbai region. Based on the general conversion factor that 1 kg of

CNG is equivalent to 1.4 litres of petrol, the equivalent rate for petrol vehicles in

Mumbai should be 18/1.4 or 12.86 km per litre of petrol. Considering the better

conditions prevailing outside Mumbai in terms of intensity of traffic, we can

reasonably estimate 13 km per litre of petrol for taxis there. The kms per litre of

diesel and kms per litre of LPG should be ascertained by the local officers of the

Motor Vehicles Department through test checks on a sufficient number of taxis

using these fuels.

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4.9.3 The applicable values of the relevant parameters for determination of the fare

structure of taxis operating in the state outside Mumbai region with effect from

implementation of this report will be as follows:

Otherareas

Sr.No.

ItemMunicipal

Corporationareas

i Annual return on capital Rs. 31,900 Rs. 31,900

ii Annual Depreciation Rs. 27,867 Rs. 27,867

iii Annual burden of other fixed costs. (Insurance, taxes & misc. expenses) Rs. 32,433 Rs. 32,433

iv Annual cost of repair and maintenance Rs. 67,776 Rs. 67,776

v Annual provision for the cost of Annual living cost ofliving of the family of the driver of relevant CPI center as perthe taxi para 4.7.3

vi(a) Average kms run per liter of petrol 13 kms 13 kms

vi(b) Average kms run per kg of CNG 18 kms 18 kms

vi(c) Average kms run per liter of diesel To be determined by M.V.Dept. officials by test checks

vi(d) Average kms run per liter of LPG To be determined by M.V. Dept.officials by test checks

vii Average number of revenue earning 77 kms 72 kmskms per shift

viii Average percentage of idle distance 18% 18%run by a taxi

4.9.4 Formula for revision of fare for taxis outside MMRTA region.

Cost items from (i) to (ix) and (xi) of para 4.8.6 will apply without change. As

regards item (x), outside Mumbai region, the cost of living as applicable to the

relevant CPI center will apply. Similarly, for item (xiii) the variable (fuel) cost per

revenue earning km will change depending on the fuel used and its mileage per

unit. The respective R.T.O.s / Dy.R.T.O.s can accordingly derive the basic fare per

km for black and yellow taxis operating outside Mumbai region.

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79

4.10 Fixation of fare for prepaid taxis operating from airports and railway stations.

4.10.1 Hakeem Committee in 2012 had rationalized the fare structure for the prepaid

taxis plying from airport & other places, and recommended the following fare

structure.

Services from airport.

Distance in kms. Suggested incentive

Upto 12 kms. 30% of normal fare subject to minimum of Rs. 20/-

12 to 25 kms. 25% of normal fare subject to minimum of Rs. 50/-

25 to 50 kms. 23% of normal fare subject to minimum of Rs. 90/-

Above 50 kms. 20% of normal fare subject to minimum of Rs. 160/-

Services from major ST stands and railway stations.

Distance in kms. Suggested incentive

Upto 4 kms. 30% of normal fare subject to minimum of Rs. 9/-

4 to 12 kms. 25% of normal fare subject to minimum of Rs. 17/-

12 to 20 kms. 23% of normal fare subject to minimum of Rs. 42/-

Above 20 kms. 20% of normal fare subject to minimum of Rs. 65/-

This incentive is given to the taxi drivers operating from these locations to

compensate for the long waiting period and empty return trips that they often

encounter. The Government accepted these recommendations of the Hakeem

Committee and directed the R.T.A.'s to implement them. This fare structure

rationalized the additional fares subject to a specified minimum over and above

the normal fare.

4.10.2 This Committee also called for and perused the present fare structure actually in

operation at the domestic and international air terminals at Mumbai and major

railway stations. It is observed that the fare structure prevalent at the

international terminal is different from that at the domestic terminal which is

aligned with those of the major railway terminals for long distance trains. Both

the fare structures as are prevalent now w.e. from 1st June, 2015 are as follows:

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Table I: Prepaid taxi fare at Mumbai international air terminal.

Total fare with 25%late night surcharge(from 12 midnight

to 5 am)Distance

range

Basic fare, chargeable

distance(in kms.)

Incentivepercentage

(%)

Total fare(5 am to 12midnight)

CoolCab (Rs.)

Black andyellow taxi

(Rs.)

CoolCab(Rs.)

Black andyellow taxi

(Rs.)

Upto 7 kms 7 kms 30 135 169 169 211

7.1 to 12 kms 12 kms 30 232 290 290 363

12.1 to 17 kms 17 kms 25 315 394 394 493

17.1 to 22 kms 22 kms 25 408 510 510 638

22.1 to 27 kms 27 kms 23 493 616 616 770

: : : : : : :

: : : : : : :

47.1 to 52 kms 52 kms 20 926 1158 1158 1448

: : : : : : :

: : : : : : :

67.1 to 72 kms 72 kms 20 1282 1603 1603 2004

: : : : : : :

: : : : : : :

97.1 to 102 kms 102 kms 20 1816 2270 2270 2838

Table II: Prepaid taxi fare at Mumbai domestic air terminal and major railway stations.

Total fare with 25%late night surcharge(from 12 midnight

to 5 am)Distance

range

Basic fare, chargeable

distance(in kms.)

Incentivepercentage

(%)

Total fare(5 am to 12midnight)

CoolCab (Rs.)

Black andyellow taxi

(Rs.)

CoolCab(Rs.)

Black andyellow taxi

(Rs.)

Upto 4 kms 4 kms 30 77 96 96 120

4.1 to 8 kms 8 kms 25 148 185 185 232

8.1 to 12 kms 12 kms 25 223 279 279 348

12.1 to 16 kms 16 kms 23 292 365 365 456

16.1 to 20 kms 20 kms 23 365 456 456 570

20.1 to 24 kms 24 kms 20 427 534 534 668

: : : : : : :

: : : : : : :

68.1 to 72 kms 72 kms 20 1282 1603 1603 2004

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81

4.10.3 It is clear from the above 2 tables of the prevalent fare structure that the normal

fare rises in slabs of 5 kms after the first slab of 7 kms for the taxis operating from

international air terminal while that for the domestic air terminal and major

railway terminals rises uniformly in slabs of 4 kms each. The incentive structure

varies from 30% to 20% downward as the distance rises. However, the lower

rates of incentive kick in at different distance slabs.

4.10.4 However, it is with respect to the normal, i.e., basic fare that the R.T.A. -

approved fare structure makes a major deviation from the Hakeem Committee

recommendation. Plain reading of the Hakeem Committee recommendation

suggests that the normal (basic) fare of the actual distance will be topped up by

the surcharge of the respective distance band subject to a liberal, specified

minimum amount of incentive. Effectively, the Hakeem Committee envisaged

the liberally fixed surcharge to be the only incentive. However, the actual fare

structure in force at the international air terminal w.e. from 1st June, 2015 gives

the taxi driver the maximum basic fare of 7 kms for distances from 0.1 km upto 7

kms and then loads it with the surcharge @ percentage rate specified in the

Hakeem Committee recommendation. The fare is thereafter calculated in 5 km

bands with the band's upper end basic fare being the minimum basic fare. In

other words, the fare bands are either 7kms or 5 kms as against just 100 meters

for street hailing. This is a double incentive which was never intended. This is

clear from the rates at which the fare jumps from one band to the next (almost

Rs. 90 - 100). Thus, a passenger travelling to a location marginally beyond a

particular slab ends up paying additional fare and surcharge for about 4 kms.

Besides, since most of the international flights operate late at night, they are also

entitled to 25% additional surcharge which increases each rise in fare even more

to the range of Rs. 110 - 125. Thus, for late night passengers, it is a triple

whammy and for the taxi driver a triple incentive.

4.10.5 It is also revealed that at the international airport, almost 70% of the flights are

during night time & the data obtained of traffic performance at international

and domestic airport at Mumbai shows that, there is over 90% rise in passenger

throughput (from about 17 million passengers in 2007 - 08 to about 33 million in

2016 - 17) at the domestic airport and that at the international airport shows an

increase of 50% (from 8 million passengers in 2007 - 08 to 12.4 millions in 2016 -

17). With such high demand, the waiting period at the airport for the taxi

drivers has come down substantially.

4.10.6 It is understandable that pre-paid fare structure cannot operate on 100-200

meter bands because such micro classification of destinations in advance is too

tedious and difficult to administer if not impossible. Hence, a workable and

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equitable via media needs to be found out which balances the interests of the

commuters with those of the taxi drivers in a feasible manner. Besides, such

workable via media is also an imperative for another practical reason in the

interest of the taxi drivers because without such moderation, they face the real

danger of losing the entire business to App-based black and yellow as well as city

taxis.

4.10.7 It is gathered by the Committee that some drivers take undue advantage of such

high incentives and transfer their serial number in the queue to other drivers for

a price and immediately book themselves in the queue again, often never

actually operating their taxis. With all the facilities, viz., toilets, bathrooms, rest

rooms, restaurants etc. at the airport, it becomes an attractive proposition to be

a rent seeker rather than a practicing taxi driver. Hence, it is necessary to curb

such malpractices as well as high incentives by aligning the incentive structure in

a manner that compensates the international airport drivers adequately but not

unduly.

4.10.8 As regards domestic air terminal and major railway terminals, the basic fare is

calculated in the same manner but the slabs themselves are a uniform 4 kms

each. The incentive slabs are, of course, more moderate. Besides, since almost

all domestic flights end before midnight, the late night surcharge there is not of

regular occurrence except for a few late night flights and occasional delayed

flights. The fare structure at the major railway stations is the same as at the

domestic airport. The basic fare changing every 4 kms as against the mere 100

meters for street hailing taxis is way too high since additional surcharge is

already leviable on such passengers. Hence, the incentive structure at the

domestic airport and at the other places handling long distance passengers also

needs to be appropriately rationalized. With the currently prevalent fare and

incentive structure, the airport and railway terminal taxis face the real danger of

out-pricing themselves out of the business.

4.10.9 Considering the above facts, the Committee recommends the following fare

structure for the international air terminal as well as domestic air terminal and

major railway / bus terminals handling long distance passengers:

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Proposed prepaid fare structure for Mumbai international air terminal (black and yellow taxis)

Distance range Basic fare chargeable Incentive percentage (%)distance

Upto 6 kms 6 kms 25

6.1 to 8 kms 8 kms 25

8.1 to 10 kms 10 kms 25

10.1 to 12 kms 12 kms 25

12.1 to 14 kms 14 kms 20

14.1 to 16 kms 16 kms 20

16.1 to 18 kms 18 kms 20

18.1 to 20 kms 20 kms 20

20.1 to 22 kms 22 kms 20

22.1 to 24 kms 24 kms 20

24.1 to 26 kms 26 kms 15

: : :

: : :

38.1 to 40 kms 40 kms 15

40 kms onwards @ 2 kms slabs 10

Note: 1) AC black and yellow taxi fare will be 10% higher than basic black

and yellow taxi fare.

2) Cool cab fare will be 20% higher than black and yellow taxi basic

fare and the incentive will be charged over that fare.

3) Service charge of Rs. 20/- for prepaid booking service is payable in

addition to the fare payable.

4) Luggage charges are payable @ Rs.6/- per package of size equal to

or greater than (60 x 40) cms other than a brief case, attaché case,

small bag or hand bag.

5) Late night surcharge @25% is payable for booking a taxi between

12 midnight and 5 am over and above the basic fare + incentive

amount.

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Proposed prepaid fare structure for Mumbai domestic air terminal and major railway terminals / bus terminals (black and yellow taxis)

Distance range Basic fare chargeable Incentive percentage (%)distance

Upto 4 kms 4 kms 25

4.01 to 6 kms 6 kms 20

6.01 to 8 kms 8 kms 20

8.01 to 10 kms 10 kms 20

10.1 to 12 kms 12 kms 20

12.1 to 14 kms 14 kms 20

14.1 to 16 kms 16 kms 20

16.1 to 18 kms 18 kms 15

18.1 to 20 kms 20 kms 15

20.1 to 22 kms 22 kms 15

22.1 to 24 kms 24 kms 15

24.1 to 26 kms 26 kms 15

26.1 to 28 kms 28 kms 15

28.1 to 30 kms 30 kms 15

30 kms onwards @ 2 km slabs 10

Note: 1) AC black and yellow taxi fare will be 10% higher than the basic black

and yellow taxi fare.

2) Cool cab fare will be 20% higher than black and yellow taxi basic

fare and the incentive will be charged over that fare.

3) Service charge of Rs. 20/- for prepaid booking service is payable in

addition to the fare payable.

4) Luggage charges are payable @ Rs.6/- per package of size equal to

or greater than (60 x 40) cms other than a brief case, attaché case,

small bag or hand bag.

5) Late night surcharge @25% is payable for booking a taxi between

12 midnight and 5 am over and above the basic fare + incentive

amount.

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4.11 Additional fare for late night journeys.

4.11.1 The additional charges for late night journeys in the MMRTA region and all

Municipal Corporations outside MMRTA region will be leviable @25% of the

basic fare from 12 midnight upto 5 am (See para 3.11.3)

4.11.2 The additional charges for late night journeys in the non-municipal corporation

areas will be leviable @40% of the basic fare from 11 pm upto 5 am. (see para

3.11.3)

4.12 Telescopic fare structure for black and yellow taxi in MMR region.

4.12.1 As explained in detail in para 3.10, the Committee is recommending telescopic

price mechanism with appropriate price discount after specified distances.

Accordingly, it is recommended that for a commute ranging from 8.1 to 12 kms, a

reduction of 15% in the basic fare for the distance beyond 8 kms be given. For a

commute longer than 12 kms, a far discount of 20% will be given for the distance

beyond 12 kms. Thus the fare structure will be as follows :

w1 to 8 kms regular rate.w8.1 to 12 kms 15% discount.w12 kms onwards 20% discount.wExample given below is only upto 20 kms.

Telescopicfare (Rs.)

KmsFare @

Rs. 15.14/km Rs.Discountrate (%)

Discountstage

1 15.14 - - -

2 30.28 - - -

3 45.42 - - -

4 60.56 - - -

5 75.70 - - -

6 90.84 - - -

7 105.98 - - -

8 121.12 - 1 -

9 136.26 15% 2 133.98

10 151.40 15% 3 146.85

11 166.54 15% 4 159.72

12 181.68 15% 5 172.59

13 196.82 20% 6 185.07

14 211.96 20% 7 197.18

15 227.10 20% 8 209.29

16 242.24 20% 1 221.40

17 257.38 20% 2 233.52

18 272.52 20% 3 245.63

19 287.66 20% 4 257.74

20 302.80 20% 5 269.85

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From the table above it is clear that after 20 km run, the taxi driver will lose only

Rs. 33. However, telescopic fare will attract the commuters of longer commute

and will fetch more revenue earning kms. and revenue to the taxi driver.

4.13 Happy hour discount.

4.13.1 As explained in detail in para 3.12, in order to attract more number of

commuters, discounting the fare during the lean period sounds to be a good

idea. Hence, the Committee recommends that during the time period from 12

noon to 4 pm, the taxi and auto rickshaw fare shall be discounted by 15% barring

the 1st stage minimum fare (i.e., fare for the first 1.5 km). This new concept will

turn lean hours to happy hours, especially for housewives and senior citizens

who normally don't have fixed time schedule for their outings. This will fetch

more ridership to the taxi and auto rickshaw drivers during the lean period and

also work out as happy hours for them too. This idea of happy hour discounting

will, hopefully, create a new trend in commuter travel patterns during happy

hours and thereby encourage the IPT sector.

4.14 Additional charges for air conditioning (AC) in black and yellow taxis.

4.14.1 As discussed in para 3.21.2 of the previous chapter, the only additional cost

incurred by a taxi for operating AC is about 25% extra fuel cost. Since we have

worked out the fuel cost per km at Rs. 3.03 for CNG taxis, the additional cost will

be Rs. 0.76 per km which works out to just about 5% of the basic fare per km.

Hence, additional charge at 20% as presently charged is not justifiable and not

fair to the commuter. In fact, it may deter the cost-conscious black and yellow

taxi users who may not even opt for it. Given the additional cost for running the

AC at only 5%, of the basic fare, the Committee recommends that the additional

charge for AC facility in black and yellow taxis may be fixed at 10% of the basic

fare per km.

4.15 Fare structure for cool cabs.

4.15.1 Presently, cool cabs with in-built AC facility are allowed to charge additional fare

of 25% over the basic fare per km. While cool cabs are operated on the fixed fare

system like black and yellow taxis, they are a somewhat superior class of taxis

and were expected to encourage black and yellow taxi owners to upgrade to cool

cabs while considering replacement of their present taxis. They are allowed to

do street hailing as well as operate through phone booking. However, it has not

really caught on and the few available ones operate mostly from airports and

hotels.

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4.15.2 Since AC operational costs are only 5% of the basic fare per km, a premium of

10% over and above the black and yellow taxi AC charges would be fair. Hence,

the Committee recommends to marginally reduce the additional charge for cool

cabs to 20% of the basic fare per km. (See para 3.21.3)

4.16 Additional charges for luggage.

4.16.1 At present, no additional charges are levied on the commuter for a briefcase,

hand bag, attaché case or a bag of less than 60 cms x 40 cms dimensions. Any

piece of luggage large than that is liable to additional charge @ Rs. 6 per piece.

Since the rise in the basic fare is only marginal, any increase in the luggage charge

would be unwarranted. Accordingly, the Committee recommends that the

present luggage charges may continue.

4.17 Additional fare for share-a-taxi.

4.17.1 Presently, additional fare of one-third of the basic fare is payable for a share-a-

taxi over and above the basic fare. This enhanced fare is shared by the 4

passengers sharing the taxi. Thus, each passenger is required to pay only one-

third of the basic fare. The driver is also incentivized due to the extra fare he can

earn legitimately. These services are allowed on designated routes, typically

with high demand pattern. This Committee recommends that the present

additional fare charges for share-a-taxi may continue.

4.17.2 This scheme is very popular and there is a demand from commuters and drivers

to expand the number of designated routes to operate share-a-taxi scheme.

The Committee recommends that wherever the demand for taxis exceeds

supply, such additional routes can be identified by the Motor Vehicles

Department in consultation with the traffic police and notified for such services.

4.18 Compensation for waiting time.

4.18.1 Hakeem Committee recommended the minimum fare for a distance of 1.5 kms

and the fare change for every 100 meters. It has also recommended waiting

charges for waiting at traffic junctions or for moving at a speed less than a km in

10 minutes at the rate of 10% of the basic fare per km for every minute. The

same is presently operational. This Committee recommends the same system

to continue without any change.

4.19 Frequency of fare revision.

4.19.1 The existing fare may be reviewed every year based on the CPI index figures of

31st March by factoring the changes in all the identified elements of cost. If the

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incremental basic fare per km comes to 49 paise or less, no fare revision may be

made but if it is 50 paise or more, the revision may be carried out by the

concerned R.T.A. with effect from 1st of June.

4.19.2 If there is an abnormal price escalation of more than 25% in the fuel cost which

will impact the basic price per km by more than 50 paise,, then the fare revision

may be carried out immediately as provided for in para 3.23.4 of the previous

chapter.

4.20 Roof top light indicator displaying availability position of the taxi.

4.20.1 This concept has been given in detail in para 3.25 of the previous chapter. The

Committee strongly recommends its time-bound implementation within one

year at the most. This facility and its faithful operation in practice will eliminate

almost all consumer complaints of refusal of the taxi driver to ply. Needless to

say, if any driver refuses to ply inspite of displaying “availability” on the roof top

light indicator, it will provide instant and irrefutable proof for punitive action by

the R.T.O. / traffic police officials.

4.21 Refusal of taxi driver to operate by meter or tampering of meter.

4.21.1 Electronic meter is guaranteed by all meter manufacturers to be tamper-proof.

If, however, any such instance is brought to the notice of the R.T.O. officials, they

must take prompt action against the concerned driver and the matter may also

be taken up with the concerned meter manufacturer to investigate the reasons

for and manner of the tampering and necessary corrective action taken in the

manufacturing process.

4.21.2 There were complaints of some drivers refusing to operate by meter, especially

in case of auto rickshaws in the mofussil and small towns. The Committee

strongly recommends that installation of electronic meter must be made

compulsory in actual practice. The R.T.O. officials must carry out a time bound

campaign to ensure within 6 months that all taxis (and auto rickshaws) are fitted

with electronic meter and actually used in practice. (see para 3.28)

4.22 Other important recommendations.

4.22.1 Linkage of permits to Aadhaar card of the taxi owner:

This will help create a unique data base on the taxi permit holder relating to the

taxi permit and the taxi. This will strengthen the database and transport related

research as well help to curb any potential misuse of the permit.

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4.22.2 Display of permit details on the outer side of the taxi.

Along with the taxi registration mark following details

should be displayed on both sides of the taxi:

(i) Name of the permit holder.

(ii) Address of the permit holder.

(iii) Mobile number of the permit holder connected

to Aadhaar.

(iv) Helpline numbers viz., 100, 101 & 108.

The manner in which it is displayed in Uttarakhand is shown here. Especially the

mobile number of the permit holder will help Police and Motor Vehicles

Department officers to trace the driver. Even commuters can find the taxi driver

(in case of emergencies), who has gone somewhere abandoning his taxi on road.

4.22.3 Data on the second driver operating a taxi:

At present, there is no authentic data even in Mumbai as to exactly what

percentage of taxis are operated in a second shift by another driver. Such data

will help improve the calculation of various cost elements and more accurate

fare fixation in future. In order to build up this data in a systematic manner

within a reasonable time, it is recommended that a simple questionnaire may be

devised by the Transport Commissioner and made compulsory to be filed by the

permit holder while submitting his taxi for annual fitness certification. The

questionnaire should provide for such basic information, viz., (i) the permit

holder's name, address, permit number, PSVA badge number; (ii) taxi make,

model and year of manufacturer; and (iii) whether the taxi is operated by a

second driver, and if yes, then the second driver's name, address and PSVA

badge number (and Aadhaar number, if available)

4.22.4 Permission for advertisement on taxis:

The Committee recommends that permission for advertisements on the taxis

may be given as per rule 134 of the Maharashtra Motor Vehicles Rules, 1989 and

rule 5(11) of the Maharashtra City Taxi Rules, 2017 subject to appropriate

conditions as deemed appropriate and reasonable. Details of the

recommendation are given in para 3.26 of previous chapter.

4.22.5 Provision of adequate taxi stands:

Necessary action may be taken expeditiously as detailed in para 3.27 of the

previous chapter.

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I. Background

5.1 Introduction.

5.1.1 The intermediate public transport (IPT) sector has been a significant contributor

to the mobility of people. While they mostly provide last mile connectivity to

the mass transit system and other public transport systems in metropolitan

cities, they provide almost the entire mobility solution in smaller cities and

mofussil areas due to the absence or inadequacy of the public transport system.

Since it affects the common masses on daily basis, historically there has been a

strong regulatory regime in all states for the IPT sector.

5.1.2 Prior to 2013, the different segments of the IPT sector operated in the same

market harmoniously because of market segmentation achieved through

differential service standards and pricing mechanism. To take the example of

the MMR area, black and yellow taxis are allowed to operate in the entire region

but mostly concentrated in the island city of Mumbai while auto rickshaws are

not allowed to operate in the island city. Besides, because of the pricing factor

and differential riding comfort levels, they had co-existed harmoniously all these

years. Cool cabs with in-built AC facility were introduced to provide better riding

comfort through AC facility and because of the 25% premium on the black and

yellow taxi fare allowed to them, they also effectively operated in an upper

segment of the market. The introduction of fleet taxis brought in a premium taxi

service with bigger cars, better facilities including AC and ease of online or

phone booking. Their fares were expectedly higher than that of cool cabs and

hence, they were not a threat to any of the other segments of the IPT sector. All

of them including their fare structures are regulated by the R.T.A.s.

5.1.3 However, the entry of App-based taxi Aggregators around 2013 – 14

dramatically altered the market dynamics and affected the existing equilibrium.

Operating on a corporate management structure and desire for wider brand

recognition and rapid market share expansion, they started with offering

discounted fares to the customers and performance based monetary incentives

to the drivers. As reported in the press, their expenditure far exceeded their

service related revenues. However, their predatory pricing and incentive

policies were sustained through the funds raised from global venture capitalists.

This has obviously delighted the commuters who find better quality service

DESIGNING A FARE STRUCTURE FOR CITY TAXIS

PART - 1

Approach to designing a fare structure for city taxis.

CHAPTER - 5

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available at affordable prices together with the convenience of online booking,

door step pick up and cashless payment. But it has had significant negative

impact on the existing segments of the IPT sector, especially the radio fleet taxi

operators who have wilted under the unfair competition. Most of the long

distance commuters have migrated to the services provided by the Aggregators,

denting the business and earnings of the other segments of the IPT sector. They

have to now satisfy themselves with the shorter trips. This has created deep

resentment and discontent among the traditional IPT segments.

5.1.4 Typically, these Aggregators aggregate the owner-drivers of the AC cars across

various price segments willing to operate as city taxis and assign them the

customers nearest to their locations based on the price segment preference of

the customer. The customer and the driver are then connected online and the

driver accordingly picks up the commuter to complete the ride. The payments

can be made in cash or through online mechanism. Since the drivers are

assigned customers closest to their location, the idle time and idle run are

minimized, thereby maximizing the driver's commuter throughput and his daily

earnings. The Aggregator takes a percentage of the fare, typically around 20%,

as the service fee. They typically reward the drivers for maximum operations

and often the driver's take home income is more than the gross earnings from

the commuters because of the liberal incentive system. Of late, the incentives

seem to have declined in tandem with the rising popularity of their services and

belt tightening efforts of the Aggregators to improve their finances. These

trends clearly point towards the un-sustainability of outsized incentives

detached from cost considerations.

5.1.5 While customers are generally happy, they tend to resent the surge price

mechanism built into the algorithm of the operating system, especially when the

surge quantum goes up high. Typically surge pricing occurs at particular

locations or particular times. They may occur in particular price segments also.

They happen when demand exceeds supply and tend to moderate or fall to zero

as supply tends towards demand and eventually matches. If demand exceeds in

a particular segment, surge price happens in that segment only. In practice,

however, the surge happens in the lower price segment during peak demand

and also impacts the next price segment.

5.1.6 Data made available by the Aggregators for the last 4 months shows that surge

pricing occurs to the extent of about 12 to 13 % cases. But the Committee has no

means of independently validating this data. The data reveals that the surge

between 1.1 to 2.0 times of the base fare has happened in about 9% rides while

that between 2.0 to 3.0 times of the base price in about 4% rides. Surge above

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3.0 times seems to be negligible which may be because of the consumer

withdrawal or supply surge or a combination of both. Since at present, there is

no cap on the quantum of surge, they sometimes go up 3 to 4 times and in a

critical situation, viz., heavy flooding, can rise even higher. Besides, there are

areas of low supply which tend to be on surge pricing most of the times. The

commuters obviously resent such high surges.

5.1.7 The discounted pricing model of the Aggregators backed by liberal incentives to

the drivers is obviously not sustainable in the long term because no business can

or intends to run perennially on losses. Thus, there is the real danger of long

term price escalation for the commuters from the current discounted price

regime, especially after the legacy segments get sufficiently weakened. Such a

possibility in the vital mobility sector is not a palatable or desirable outcome for

the policy makers.

5.1.8 Besides, they were operating in a regulatory vacuum till now as there were no

fare or operational regulatory control over them. While CNG as a fuel is

compulsory for city operations as a taxi for black and yellow taxis, cool cabs and

radio fleet taxis, most of the taxis operating under the Aggregator model have

diesel vehicles which is anti – environment apart from being illegal. Besides,

even though AITP taxis pay much higher annual taxes at Rs. 2000/- per seat as

compared to Rs. 7150 for the entire life of the taxi by b & y taxis, they are

expected to ply long distances on tourist circuits including intra state tourism.

Hence, their operation as city taxis on a regular basis is not intended even

though they may be contract carriages like the black and yellow taxis and radio

fleet taxis. Hence, the State Government has expectedly come out with a

regulatory framework in March, 2017 by way of the Maharashtra City Taxi Rules,

2017.

5.2 MORTH Committee's Guidelines.

5.2.1 With the rising popularity of the rapidly expanding Aggregators' IPT services,

there was a clamour from the affected stakeholders for a total ban or at least

strict regulation of their services. In this background, the Union Ministry of

Road Transport and Highways (MORTH) had constituted a committee under the

chairmanship of the Union Secretary (Road Transport & Highways) in May, 2016

(hereafter referred to as the MORTH Committee) to study the issues and

challenges involved in the urban passenger transport sector and to recommend

suitable guidelines to create a sustainable urban passenger transport system in

the Indian cities. The MORTH Committee submitted its report in December,

2016. The report has been accepted by the Ministry and has been sent to the

Chief Secretaries of all state Governments for appropriate action.

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5.2.2 This Committee deliberated on the said Report. The major highlights /

guidelines / recommendations of the MORTH Committee are as follows :

(i) Over half of the world's 20 most polluted cities are in India. A major reason

for this has been the uncontrolled growth of private cars.

(ii) Lack of reliable, affordable and convenient alternatives has resulted in

exponential growth in car ownership in the country.

(iii) If we want to have transit oriented cities, we need high quality, door-to-

door service that allows spontaneous travel for commuters.

(iv) Private vehicles are the most underutilized assets that individuals

purchase. Around the world, private cars are not utilized for over 90% of

the time. In addition, average occupancy of a private car is a mere 28%

which means that the vehicle has 4 seating capacity whereas it carries, on

an average, only 1.15 persons. This low utilization – high ownership model

is unsustainable in the long run and requires urgent and strong policy

intervention. Hence the taxi service system needs to be more aligned to

the needs of the citizens to create a sustainable city transport system.

(v) Existing stringent regulations need to be liberalized to promote increasing

use of IPT and to disincentivise private car ownership / usage.

(vi) The taxi permit regime in India is highly onerous and thereby limiting the

growth of the taxi industry. The states should not impose unreasonable

restrictions that will make taxi operation economically unviable.

(vii) Harsh permit conditions are significant entry barriers for service providers

which should be done away with in order to promote a sustainable IPT

sector.

(viii) Many bottlenecks that have prevented the growth of the IPT sector should

be eased out and safe, secured, affordable and accessible taxi service

should be provided to the public.

(ix) Irrational conditions should not be prescribed for Taxi Aggregators.

(x) Dynamic pricing within a specified range to efficiently match supply and

demand during peak hours is to be supported as long as consumers are

appropriately protected.

(xi) Private car owners willing to convert their cars into taxis may be permitted

to apply for such permits if the vehicles comply with the latest emission

norms and are fitted with CNG.

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(xii) There should be no restrictions on the choice of the operator or aggregator

with regard to the composition of the fleet.

(xiii) It is felt that maximum tariff may be permitted up to three times the

minimum tariff. In order to increase the availability of taxis during the night

time, the Committee recommends that maximum tariff may be allowed up

to four times that of minimum tariff from 12 midnight to 5 am in the

morning.

(xiv) Aggregators should take all safety measures including a firewall for the

security of the personal data of the passengers.

(xv) Aggregators should provide a grievance redressal mechanism and should

also have an emergency response centre to handle SOS alerts by

passengers.

(xvi) Sharing of seats should be allowed on Aggregator - based taxis with express

consent of the passengers.

5.2.3 Maharashtra's response to the MORTH Committee Guidelines:

(i) While there is no visible policy or strategy to curb private cars as yet, the

state has been rather pro-active in promoting and accelerating the mass

transit systems in the metropolitan cities like Mumbai, Pune and Nagpur

even before MORTH Committee report.

(ii) The share-a-taxi scheme has already been permitted in Maharashtra before

the MORTH Committee report.

(iii) In the IPT sector, the freeze on the issuance of fresh permits has been

removed in June, 2017.

(iv) A regulatory framework has been created for the Aggregators' taxi services

by way of the Maharashtra City Taxi Rules, 2017.

(v) There are many recommendations promoting the concept of conducive

regulatory framework which have a bearing on the Maharashtra City Taxi

Rules, 2017. This Committee proposes to analyze the said rules and make

appropriate recommendations with regard to the rules which seem

onerous or not in the public interest or have significant financial impact on

the fare structure.

(vi) The Committee will factor in the desirable and proposed changes in the said

rules while framing the fare fixation policy, in order to provide a consumer

friendly and sustainable fare structure.

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(vii) However, the MORTH Committee recommendation for conversion of

private cars does not prima facie seem feasible unless it is permanently

converted to a taxi because a taxi requires a permit, different insurance

policy and the owner should be willing to run it himself. Prima facie, it looks

infeasible.

5.2.4 In the wake of the promulgation of the Maharashtra City Taxi Rules, 2017, this

Committee has been asked to look into the operations and pricing system of the

App-based Aggregators and to recommend the floor and ceiling price, i.e., a

price band within which the Aggregators' fare system should operate. As

discussed in para-3.14 of chapter-3, the radio fleet taxi operators are now

included in the category of Aggregators as their operations are more or less in

the similar operational mode though, however, they were operating till now

under the government - determined fixed pricing system. In the changed

market conditions, they would have the freedom to fix their fares like other

Aggregators within the fare bands that will be now fixed. However, before we go

into the fare fixation exercise, let us examine whether the Maharashtra City Taxi

Rules, 2017 under which the fare system will operate meet the twin objectives of

(i) providing a level playing field to all segments of the IPT sector, and (ii) a fair

and reasonable regulatory framework for the newer market segment which has

obviously found wider acceptance among the commuters, especially in the

context of the MORTH Committee Guidelines of December, 2016.

II. Examination of and suggestions for amendment in the Maharashtra

City Taxi Rules, 2017.

5.3 Need to promote IPT sector.

5.3.1 Today in metropolitan cities like Mumbai, almost 70% of the cars on road are

single occupancy vehicles (SOV). The Committee is of the view that the foremost

objective of a progressive Intermediate Public Transport (IPT) policy should be

that, it must be popular, reliable, economical and must be able to cater to the

needs of all sections of the society as complementary to public transport, so that

instead of using personalized vehicles, people will prefer using IPT which will

result in reducing traffic congestion, improving air quality, saving fossil fuel and

resolving the growing parking problem to some extent. Harmonious co-

existence of different segments of the IPT sector to cater to different strata of

commuters and commuter-friendly provisions ought to be the twin focus of a

progressive IPT policy.

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5.3.2 Need to abolish antithetical and illogical provisions.

The Maharashtra City Taxi Rules, 2017 (hereinafter referred to as “the said

Rules” or as "MCTR, 2017" should ideally aim to achieve these objectives by

providing a conducive policy framework and operating environment. However,

certain provisions of the Rules seem to be antithetical to these objectives and

the MORTH Committee guidelines. Quite a few of them have a financial angle

which will adversely affect the affordability of Aggregators' taxi services from the

consumers' point of view. Thus, they have implications for the fixation of the

minimum and maximum fare for city taxis. The Aggregators have flagged off

some of these issues for resolution. Some of their drivers as well as the

Aggregators have also approached the High Court of Bombay on this count.

5.3.3 Hence, the Committee thoroughly studied the Maharashtra City Taxi Rules, 2017

notified by the State Government vide notification no. MVR-0315/CR. 109/TRA-

2, dated 4th March, 2017. After considering all the objections and suggestions

from all stakeholders and after deliberations with the senior state transport

officials, the Committee recommends the following amendments in the

Maharashtra City Taxi Rules, 2017 in the larger public interest including that of

the commuters.

5.4 Exclusion of black and yellow taxis from the said Rules.

5.4.1 Rule 5 (23) – This sub rule permits a black and yellow taxi to be attached to an

Aggregator and it will accordingly operate under the city taxi rules, thereby

implicitly allowing them to operate under the dynamic pricing model of the

Aggregators. Of course, they are also allowed freely to revert back to street

hailing, fixed price model after a gap of one month.

5.4.2 The Committee would like to point out that the identity and purpose of App-

based city taxis and street hailing black and yellow taxis are altogether different.

The black and yellow taxis are traditional taxis plying on fixed fare (without

surging) and available at each and every corner of the city to the commuters

through street hailing. The passengers who don't have knowledge of mobile

applications or do not possess such mobiles or don't want to use them, can avail

of the black and yellow taxi by way of street hailing. On the other hand, the city

taxis operate on sophisticated technology based App support provided by the

Aggregators and charging dynamic fare pricing but cannot be used for street

hailing.

5.4.3 As per the information received from the operators of Ola Cabs, at present

around 4000 black and yellow taxis are operating on their App, but they are

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allowed to charge the fare fixed by the MMRTA only. It is observed from the data

provided by the Aggregator that these 4000 taxi drivers accept only about 2-3

long distance trips using the App and rest of the business they do through street

hailing, which together fetch them around 25 to 30% more revenue earnings as

compared to those black and yellow taxis who are not attached to the App. In

short, they maximize their asset utilization with the help of the technology

platform of the Aggregator without losing their basic character of street hailing

and fixed pricing.

5.4.4 The Committee also conducted a pilot study on black and yellow taxis on the

Uber's App-based technology platform with dynamic pricing. The incremental

asset utilization and revenue earnings of such drivers was found more or less

comparable to those of the black and yellow taxis operating on fixed price on the

Ola Cabs platform. Hence, it is not essential that black and yellow taxis would

necessarily require to switch over to dynamic pricing in order to maximize their

earnings. Partial support from App to source commuters (typically accepted for

longer commutes) even on fixed price is good enough for black and yellow taxis.

On the other hand, such switch over to 100% dynamic pricing will reduce the

pool of black and yellow taxis available for street hailing which will continue to be

a felt-need for the foreseeable future. Besides, the progressive price discount for

longer commutes which is also being proposed for black and yellow taxis will

make the fares attractive and increase the total kilo meters covered by a taxi in a

shift and the effective total earnings of the drivers. Permission now given to use

the A/C facility on optional basis will also help to attract long distance

commuters. In fact, their availability on fixed metered price during the peak

hours will help moderate surge pricing of Aggregator taxis at a faster pace.

5.4.5 Hence, the Committee is of the view that black and yellow taxis should not be a

part of City Taxi Rules, 2017 as far as dynamic pricing is concerned and their

identity must be kept intact for the sake of adequate availability of taxis for street

hailing which will continue to be a felt-need. Black and yellow taxi operators

may, however, be allowed to join the Aggregators, in order to maximize their

earnings (more ridership) through selective use thereof but should not be

allowed to indulge in dynamic pricing and must operate only on fixed fare as

fixed by the respective R.T.A.s as is presently being done on the OLA cabs

platform.

5.5 Obligation of having 30% fleet of taxis having engine capacity of 1400 cc or

more.

5.5.1 Rule 5(2) - the said sub rule mandates that 30% of the entire fleet of the

Aggregator should have engine capacity of 1400 cc or more.

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5.5.2 From the data received by the Committee from various stakeholders, it is

observed that the share of ridership of more than 1400 cc engine capacity

vehicles is less than 5%. Secondly, when Aggregators themselves don't own any

vehicle and only aggregate them or own only a few (directly or indirectly through

a subsidiary), they by themselves can't ensure compliance with this stipulation

nor can they compel 30% of their driver partners to buy more than 1400 cc

vehicles when statistics clearly shows that there is no guarantee of assured

business in the absence of adequate public demand for such taxis.

5.5.3 Furthermore, these vehicles (1400 cc and above) are much costlier than popular

low-and medium-priced vehicles commanding a premium fare structure and

their inclusion in the fleet will result in substantially increased over all fares in

the smaller taxi categories due to gross under utilization of these costlier assets.

It will put unnecessary burden on the common commuter's pocket. It will also

restrict the entry of lesser engine capacity vehicles (economical vehicles) in the

Aggregator's fleet and thereby create needless higher surge pricing. In nutshell,

the said condition is impracticable, infeasible, illogical and against the public

interest as well as the owners' interest.

5.5.4 Hence, the Committee is of the considered view that this stipulation should be

deleted. It should be left to the choice of the driver owners to decide which

vehicle they want to buy, which of course will be influenced by the public

demand in the market place. Let the market forces decide the fleet

composition.

5.6 Converting AITP vehicles to city taxis.

5.6.1 Rule 5(6) - This sub rule of the Maharashtra City Taxi Rules, 2017 prescribes that

all All India Tourist Permit Vehicles (AITP) in the present Aggregators' fleets shall

be converted to be driven on clean fuel within a period of one year.

5.6.2 While it is necessary that the AITP taxis which are being used as city taxis must

acquire a permit under section 74 of the Motor Vehicles Act, 1988, presently,

most of the vehicles in the Aggregators' fleet are diesel-run vehicles. At present,

there is no technology available to convert diesel vehicles into CNG vehicles. It

will be impossible for the driver partners of Aggregators to sell their diesel

vehicles under regulatory duress at throw away prices and purchase new CNG

vehicles. Furthermore, since the Aggregators' operations started only about 4

years back, they may not have repaid their bank loans also. In the circumstances,

insistence on the timeframe of one year for such conversion will be onerous and

unfair to these lower middle class micro-entrepreneurs and ruin them

financially.

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5.6.3 In the case of AITP vehicles running as city taxis on the Aggregators' platforms in

the National Capital Region (NCR), the Hon'ble Supreme Court has already

passed a judgment to the effect that they should replace their diesel vehicles

with clean fuel vehicles on expiry of their present permit periods by efflux of time

(i.e. allowed to operate diesel taxis till the validity of their current permits). The

Committee recommends that the same principle may be adopted in the said rule

which sounds logical, reasonable and feasible and backed by the Supreme Court

Judgment.

5.6.4 Ever since the issuance of the draft City Taxi Rules in 2016 asking for objections

and suggestions, the new driver – owners joining such Aggregators' platforms

have reportedly started opting for CNG vehicles due to the fear that it will be

made mandatory. Hence, at the most in the next 4 years or so, the entire city taxi

fleet will be converted to CNG vehicles even if they are allowed to replace the

existing diesel engine vehicles by CNG vehicles on the expiry of the validity of the

existing permits (AITP permits issued under Section 88(9) of the Motor Vehicles

Act, 1988).

5.6.5 Hence, the Committee recommends that the taxi owners affiliated to the

Aggregators may be issued permits as city taxis irrespective of the fuel used by

their vehicles subject to replacing the non-CNG vehicles with CNG vehicles on

the expiry of the validity of the present permit. The Motor Vehicles Department,

however, has to take care while issuing permits to these diesel taxis under the

City Taxi Scheme under section 74 of the Motor Vehicles Act, 1988 that an

endorsement is made therein about the date by which the driver has to switch

over from diesel taxi to CNG taxi and make it mandatory to get such an

endorsement on the permit from the department after purchase of CNG taxi.

However, no diesel taxi purchased after notification of MCTR, 2017 shall be

registered as a city taxi. Such a policy approach will be rational, reasonable and

conducive to public interest.

5.7 Compulsion of specified color scheme on the exterior of the city taxi.

5.7.1 Rule 5(10) - This sub rule of the said rules stipulates that lower side of the vehicle

of all taxis operating under the said scheme shall be painted in Daffodil Yellow

(RAL 1007) colour.

5.7.2 Firstly, “lower side of the vehicle” itself is an ambiguous term. Assuming that the

vehicle top and front as well as rear bumpers are excluded for the purpose of

such a definition of “lower side”, still then it is almost 60% of the exterior area of

the vehicle that would need such repainting. To repaint the same will be costing

about Rs. 50,000/- to 60,000/-, which will again lead to increased capital cost to

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the driver and effective higher fare per kilometer for the commuters. This is not

in commuters' interest.

5.7.3 Secondly, there is no guarantee that the taxis repainted outside the factory will

last as long as those painted by the manufacturer without fading. It may also be

noted that the Rule 5(11) of the said City Taxi Rules allows to carry advertisement

on city taxi vehicles which obviously shall be on all 4 doors. If this happens then

there is no logic for a separate colour scheme because the colour will eventually

be covered by the advertisement.

5.7.4 This is a totally needless stipulation. The city taxis will operate on the App-based

technology platform with full details of the taxi and the driver provided in

advance to the commuter. In any case, the customer is given a code number

without which the driver cannot start the ride. Hence, identification of the taxi

for the commuter is not a problem. Such identification for others not concerned

with the ride is of no consequence. Alternately, the Aggregators and the drivers

could be asked to put stickers of the Aggregator on the side panels and if

considered necessary, even on the front and back of the taxi. Hence, the

Committee is of the considered opinion that this stipulation for painting of lower

side the city taxi with an additional (Daffodil yellow) colour is against consumer

interest apart from being unnecessary.

5.7.5 Hence, after in depth examination of the issue, the Committee recommends

that instead of any particular colour scheme, the driver owners may be

permitted to purchase vehicle of any colour of their choice but it should be made

mandatory for fixing the sticker of the Aggregator's brand name along with its

logo on both sides of the vehicle. Hence, this particular colour stipulation should

be deleted.

5.8 Age limit for city taxis.

5.8.1 Rule 5(14) – This sub rule of Maharashtra City Taxi Rules prescribes the age limit

of the vehicles under the said rules as 20 years. For black and yellow taxis, this

Committee has already recommended that the maximum age limit should be

reduced from 20 years (as per S.T.A.'s current guidelines) to 15 years.

5.8.2 The present App based taxis attached to the Aggregators are covered by All India

Tourist Permits issued under Section 88(9) of The Motor Vehilces Act, 1988. As

per Rule 82 of the Central Motor Vehicles Rules, 1989, the prescribed age limit

for AITP vehicles is only 9 years.

5.8.3 The city taxis are premium taxis as compared to black and yellow taxis and hence

the commuters will naturally expect that these taxis are well maintained and

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provide a comfortable ride. Older taxis running 30-40 thousands kms per year

will tend to rattle and provide bumpy rides. It is not desirable. Hence, the

Committee recommends that the maximum age limit permissible for city taxi

should not be more than 10 years.

5.9 PSVA badge.

5.9.1 Rule 7(1) – This sub rule mandates that the driver of the taxi plying under the City

Taxi Scheme shall have public service vehicle authorization (PSVA) badge.

5.9.2 For obtaining PSVA badge in Maharashtra, it is mandatory to produce S.E.C.

Certificate which certifies that the applicant is residing in the state of

Maharashtra for the last 15 years. The other two requirements for obtaining

PSVA badge are that the applicant should have working knowledge of Marathi

and topographic knowledge of the city. While these latter two conditions are

rational and reasonable, the requirement of 15 years' residence in Maharashtra

does not seem rational and contrary to the present ground realities, especially in

the context of MMRTA region.

5.9.3 As per the information received from the Aggregators, most of the drivers on

their platforms do not meet the said requirement of 15 years' domicile and

hence it compels them to drive the vehicles without holding a PSVA badge.

These drivers are often required to pay the fines for not obtaining the badge.

5.9.4 Many taxi drivers in the Mumbai Metropolitan Region drive taxis without such

badges. The recent liberalization of permit limits (prior to total removal of

restrictions) did not elicit adequate response as enough local candidates

fulfilling 15 years' domicile condition are not available.

5.9.5 As per information received, almost half of the fleet of the fleet taxi companies

remain unutilized for not getting drivers with PSVA badge. From the survey

conducted by a research student of the Tata Institute of Social Sciences, Ms.

Tarana Chauhan,(2016), it is observed that majority of the taxi drivers in Mumbai

are from Uttar Pradesh and Bihar and the rest from Maharashtra and other

states. It is, thus, obvious that sufficient local drivers are not available to take

PSVA badges.

5.9.6 Such impractical restrictions only create an artificial supply side constraint and

promote illegal driving of taxis with the attendant risk of accidents, entry of

criminal elements into taxi trade etc. Ultimately, it affects the commuters

without necessarily promoting employment of local people. Hence, the policy

needs to be practical in the interest of promoting legal taxi trade in the larger

public interest.

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5.9.7 Hence, the Committee recommends that for obtaining permit under the said

scheme, 10 years' stay in Maharashtra should be considered sufficient. This will

ensure that only long term residents of the state own the vehicle. As regards

PSVA badge, drivers who do not own the taxi but run the second shift are also not

eligible for the PSVA badge due to the 15 years' domicile condition. Hence, there

was a suggestion to remove the domicile condition altogether for drivers to

obtain PSVA badge. However, the Committee feels that at least 3 years' stay in

Maharashtra should be made mandatory for obtaining PSVA badge to ensure

adequate working knowledge of Marathi and local topography. Besides, this will

also provide adequate safeguard against entry of drivers without adequate

background check by the Police. Similar changes have been suggested for black

and yellow taxi and auto rickshaw permits and drivers' badges also. The

combination of 10 years' domicile for permits and 3 years' domicile for PSVA

badge will ensure local ownership of taxi and availability of sufficient drivers with

PSVA badge to run those vehicles in the second shift.

5.10 Uniform for the city taxi driver.

5.10.1 Rule 7(3) – This sub rule stipulates the condition that the city taxi driver shall

wear the uniform as per the company's design.

5.10.2 However, since the option of switching the Aggregator is allowed to the driver in

the said rules, there is no point in having uniforms of different colours for

different Aggregators' drivers.

5.10.3 Instead, a common uniform consisting of sky blue shirt with tie and black trouser

and black shoes will be a smart and decent uniform for all city taxi drivers

irrespective of the Aggregator company. Since these are all AC taxis, stipulation

of tie should not be a problem.

5.11 Permit fees.

5.11.1 Rule 9(1) - Rule 9(1) of the said rules prescribes fee for each permit as follows -

Sr.No. Type of Vehicle Permit fees in rupees

1 Motor Cab having engine capacity less than 1400 cc.

2 Motor Cab having engine capacity 2,61,000/-1400cc or more.

25,000/-

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5.11.2 When the number of permits issued to black and yellow taxis were frozen in

1997 and no new additional permits were issued till June, 2017, the permits

were unofficially sold or leased out at an exorbitant premium in the market.

Hence, in this controlled, supply – scarce market, when the Government

auctioned 4000 permits in the year 2010-11 for a premium fleet taxi service

distinct from the black and yellow taxis and cool cabs, it fetched the price of Rs.

2.61 lakh for each permit quoted by the auction winning company. However,

the company which won the auction for those permits failed to acquire the full

quota of 4000 permits and acquired only 2800 permits, because there was no

demand for premium service of that magnitude and the exorbitant premium

made them financially unviable. As of now, the actual fleet of the auction

winner company is a fraction of the original fleet. Obviously, the auction winner

had not done any market analysis which resulted in its failure to absorb the

number and the resultant high fare.

5.11.3 The Government has introduced additional permit fees under the newly

introduced Rule 75A of Maharashtra Motor Vehicles Rules (MMVR), 1989 as

recently as in February 2016, ranging from Rs. 10,000 to Rs. 25,000 for auto

rickshaws and taxis. This fee is in addition to the normal permit fee under rule 75

of the Maharashtra Motor Vehicles Rules, 1989 and seems to be premised on

the informal permit transfer premium being demanded by permit holders from

the transferees. It was a sort of 'pagdi' system similar to that obtaining in the

property tenancy market in Mumbai.

5.11.4 However, after the removal of restrictions on issuance of permits in June 2017,

now the permits are freely available and hence no permit will command any

worthwhile premium in the market, let alone Rs. 2,61,000. Hence, there is no

logic behind such exorbitant permit fees as prescribed in the Maharashtra City

Taxi Rules, 2017. The failure of the auction winning company to acquire the full

quota of 4000 permits is itself testimony to the excessiveness of the fee

prescribed in the Maharashtra City Taxi Rules, 2017.

5.11.5 Such hefty permit fees will lead to immense increase in capital cost and thereby

result in increased fare per kilometer, putting avoidable extra burden on the

commuter's pocket. This is against the motto of promoting use of IPT, in order to

discourage private transport and decongest city roads and parking spaces. It is

also worth nothing that, in no other state in India such huge permit fees are

imposed in addition to the normal permit fee. All taxi and auto rickshaw unions

and Aggregator companies have also vehemently opposed such additional

permit costs as illogical and unfair and have represented for their roll back. It

has also landed in the High Court for adjudication.

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5.11.6 The so-called discovered price of Rs. 2,61,000 obtained in a highly supply-

restricted market cannot be a rational basis for permit fees in a liberal, no-

restriction market. Permit fees are not levied in lieu of any service provided.

Hence, the Committee is of the view that the permit fees should not be reckoned

as a revenue earning source and such huge permit fees cannot be justified in a

free-market regime.

5.11.7 However, the Committee is elsewhere proposing to transfer a part of the

additional permit fee levied under Rule 75A of Maharashtra Motor Vehicles

Rules, 1989 to a Welfare Fund for the taxi and auto rickshaw drivers. Hence, it

does not recommend its complete removal but recommends for substantial

reduction and over all rationalization of the fee structure. Accordingly, the

Committee recommends that the permit fee for the city taxi should be a uniform

Rs. 10,000/- irrespective of the engine capacity. The Committee has already

recommended scrapping of the condition of 30% fleet of engine capacity 1400

cc or more and hence, there is no need to classify Aggregators' taxis on the basis

of engine capacity. The Committee has also recommended in the relevant

chapters that the additional permit fee for black and yellow taxi should be Rs.

5000/- and for auto rickshaw Rs. 3000/-.

5.12 Application form for grant or renewal of license.

5.12.1 Rule 8 (1) stipulates that any firm or company may apply for grant of license

accompanied by processing fee of Rs. 1,00,000/-

5.12.2 While the application form to apply for license is appended to the said rules,

there is no reference to the same in sub rule (1) or anywhere else. Similarly, sub

rule (3) also has no reference to the form of the license appended to the rules.

More importantly, it is necessary to have the details of the Directors/ Partners of

the firms, financial and other performance details of the firm and contact details

of the 'chief compliance officer'. The format of the application may be

accordingly revised suitably.

5.12.3 The Committee also feels there should be some nominal amount of renewal fee

prescribed in sub rule (3).

5.13 Security deposit by an Aggregator.

5.13.1 Rule 10 - This rule mandates the Applicant Aggregator applying for a license to

furnish the security deposit by way of bank guarantee of Rs. 5000/- only.

5.13.2 As per the draft rules published earlier, the licensee was required to furnish bank

guarantee of Rs. 2 crore per 1000 vehicles and security deposit of Rs. 10 crore.

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The Committee fails to understand the reason behind such drastic reduction in

the amount of bank guarantee and security deposit to merely Rs. 5000/- while

notifying the final rules.

5.13.3 If the Government wants genuine and serious players to apply for the license

under the city taxi scheme, the Committee recommends that the security

deposit amount should be at least Rs. 10 lakh to take care of any penalties that

may be levied on the licensee for breach of any rules. The licensee should

recoup the amount forfeited by way of any penalty in order to bring the deposit

back to Rs. 10 lakh within 7 to 10 days as may be prescribed. Care should also be

taken to ensure that the bank guarantee is renewed as and when due.

5.14 Authority to prescribe minimum and maximum fare.

5.14.1 Rule 11 : Fare - This rule authorizes the Licensing Authority to prescribe

minimum and maximum limit of rates of fare.

5.14.2 The Committee is of the opinion that in this rule, it must be mentioned that the

algorithms used for distance and fare calculation etc. should be checked and

validated for accuracy. Quality of this software application should be audited by

Standardization Testing and Quality Certification (STQC) or any other agency

authorized by the Ministry of Electronic and Information Technology (MEIT) on a

one time basis. If, however, there is a change in the algorithm, then the

revalidation and certification would be necessary.

5.14.3 This rule also stipulates that no minimum and maximum limit may be prescribed

for vehicles with engine capacity of 2000 cc or more. The Committee is of the

view that the vehicles having seating capacity 6 + 1, like Toyota Innova, Mahindra

Xylo / Scorpio, Tata Aria / Hexa, etc. are having engine capacity which ranges

from 2179 cc to 2494 cc costing between Rs. 10 to 16 lakh. In fact, these vehicles

are very popular among the upper middle class segment of commuters and

invariably hired when 6 persons are travelling together. They are not luxury cars

but are quite popular among the upper middle class passengers for shared

transport because of their affordability.

5.14.4 Hence, the Committee is of the view that in this rule, the figures and words

“2000 cc or more” should be replaced by the figures and words “2500 cc or more

or costing more than rupees twenty lakh (ex showroom price)”. This will ensure

that luxury cars of lesser than 2500 cc engine capacity but costing more than Rs.

20 lakhs are not included in the fare regulation regime.

5.15 Authority to suspend or cancel the license of an Aggregator.

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5.15.1 Rule 12 (1)(c) - Clause (c) of sub rule (1) of rule 12 gives open ended power to the

Licensing Authority to suspend or cancel the Aggregator's license on receipt of

any complaint from any passenger.

5.15.2 The Committee is of the opinion that, when thousands of driver owners are

attached to any Aggregator and their bread and butter is linked with the

existence of the Aggregator, the Licensing Authority should not be vested with

the drastic powers of suspension or cancellation of the Aggregator's license on

account of passenger complaints against one or two drivers.

5.15.3 In a large scale operation, some commuter complaints or grievances are bound

to arise. The test of an Aggregator's responsible conduct and accountability

would be whether it has constructively taken prompt corrective / remedial

action or not. Hence, graded penalties on the Aggregators for specified acts of

proven omission or commission of the Aggregator will be more appropriate.

5.15.4 Hence, if the Licensing Authority has reason to believe that some action is

required to be taken against the Aggregator for specified acts of omission or

commission, then it can be compounded and the composition amount may be

forfeited from the security deposit. Needless to say, the deposit has to be

recouped to the prescribed level within a specified time, say 7 or 10 days.

5.15.5 The Licensing Authority is always free to take action against any individual

permit holder under the said scheme for valid reasons by suspending or

cancelling his permit, but should not be vested with the drastic powers of

suspending or cancelling the Aggregator's license for the reasons mentioned

above. If at all any extreme or extraordinary situation warrants any such action,

for reasons to be specified in writing and after giving the Licensee adequate

opportunity of being heard, the state Government may take such action. This

issue needs to be thoroughly and carefully examined in view of its drastic

implications and consequences.

5.16 Recommendation for addition of new provisions to the Maharashtra City Taxi

Rules, 2017.

5.16.1 The Committee recommends, along with the justification, that in the

Maharashtra City Taxi Rules, 2017, the following provisions should be added in

the interest of better regulation of the City Taxi Scheme:

5.16.2 Definition of city taxi in the Rules.

It is seen from the MCTR, 2017 that there is no definition of 'City Taxi' in the said

Rules. The Rules will be applicable in the MMR to begin with but Government

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may extend it to such other areas as the Government may notify from time to

time. However, it is a fact that the Aggregators are already operating in some

other cities and even beyond city boundaries. Hence, a definition of 'city taxi'

and area of its application beyond MMR need to be done. Government may

accordingly do the needful.

5.16.3 Agreement of the driver with the Aggregator before issuance of permit.

Licensing Authority, before issuing permit under the City Taxi Rules, 2017, must

ensure that the driver owner produces a consent letter from the Aggregator

with whom he proposes to get attached so that possibility of such drivers

operating their vehicles under the City Taxi Scheme, 2017 without being

attached to any Aggregator will be eliminated.

5.16.4 Aggregators to submit the list of taxis under their fleet.

The Aggregator shall also provide a soft copy of the list of all the drivers / owners

operating under its license at the end of every month to the concerned Licensing

Authority before the 7th of the succeeding month in the format prescribed by

the Transport Commissioner. This will keep the government data base regularly

updated and to monitor movement of drivers across aggregators or out of the

scheme altogether.

5.16.5 Aggregators' contribution to the Drivers' Welfare Fund.

It is necessary to prescribe that the Aggregators will have to contribute Rs. 1/-

per trip undertaken on their platform, to the Welfare Fund to be setup for the

welfare of the taxi and auto rickshaw drivers. The said amount of Rs. 1- shall not

be recovered from the commuter or driver but paid out of the Aggregator's fee.

The Government may make appropriate changes in the amount of contribution

in future, if required.

5.16.6 Sharing the ride data with the Government.

1. The entry of new mobility services has made patterns in city commute very

dynamic. Service features like the ability to book cabs on demand using a

smartphone application, real time tracking, cashless payments, etc. of

aggregators have been instrumental in changing modal preferences.

Further, aggregators have been criticized for increased congestion and

inadequate background checks of drivers and its implications in safety of

women passengers. Having said that, new mobility services have witnessed

a big uptake among urban commuters. For better urban planning and

infrastructural adjustments for commuter convenience, the committee

recommends that new mobility services share data with the Motor

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Vehicles Department in a format that is mandated by the Transport

Commissioner. Care must be taken to anonymize all commuter related data

points so that personal information and individual usage patterns of

commuters must NOT be revealed. New models collect data that the

Motor Vehicles Department can use to address the following areas:

wUnderstanding commuter movement patterns and requirements

wSafety and security

wEquity of service

2. The Committee recommends that the following data points be shared by

the Aggregator under each category:

a) Commuter patterns (Trip level data):

Companies are required to share trip level data where each trip, identified

by an id will have the following data points associated with it:

wDate of each trip

wGPS coordinates of the origin and destination of each trip (Latitude -

longtitude details). For companies that do not have GPS coordinates, they

should give origin-destination details in the way they collect it

wDistance covered in each trip (in km)

wDuration of each trip (in minutes: seconds)

wStart and end time of each trip

wFactor of surge (if applicable) on each trip (1.1x, 1.2x, 1.5x, etc.)

wAverage speed of the vehicle in each trip (in km/hr)

wIdentifier to indicate if the ride is shared or not.

b) Safety and Security:

Companies are required to share data that will give clarity on commuter

security and road safety. The following data points are to be shared:

wDriver data:

wAverage rating of each driver on the platform

wAverage number of daily working hours of each driver

wDrivers blacklisted by the platform

(These data points can be shared as a part of the driver database referred to

in section 5.16.3)

wIncident data:

wDate and time the panic button on the app or in the vehicle was triggered by

a commuter. For companies that have different ways of addressing

commuter safety are required to share details of the incident where an

alarm raised by the commuter

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wAction taken to address the incident by the company

wNature of incident

wNumber of vehicle accidents/collision reported

wGPS coordinates or locational data of each accident/collision

wSeverity of accident (critical or non-critical)

wFatalities/injuries of each accident

c) Equity of service:

wNumber of rides cancelled per day

wNumber of incomplete rides per day

wAverage time between ride booking and ride commencement per trip (i.e.

waiting time for each trip against each trip identifier)

wNumber and percentage of ride requests that were not serviced per day

3. The data sharing requirements with the transport department is applicable

to all segments of service of aggregators and radio cab operators and can be

extended to other new mobility models as deemed fit by the Motor

Vehicles Department.

4. Companies are required to share the data with the Motor Vehicles

Department on a quarterly basis. This, however, does not apply to the

driver database that is referred to in para 5.16.3. The Transport

Commissioner may prescribe additional data points to be furnished by

companies as deemed necessary by him

5.16.7 Part of the additional permit fee to be deposited into Welfare Corporation Fund.

The Committee also recommends that half of the amount of the Rs. 10,000/-

permit fee received from the city taxis under rule 9 of MCTR and from black and

yellow taxis and auto rickshaws under rule 75 A of MMVR. 1989 should be

deposited into the proposed Welfare Corporation for such drivers. The relevant

rules in the Maharashtra City Taxi Rules, 2017 and Maharashtra Motor Vehicles

Rules, 1989 may accordingly be modified

5.16.8 Provision of fire extinguisher.

The rules should provide that fire extinguisher equipment of ABC type of 1 kg

capacity shall be mandatorily provided in the city taxi.

5.17 In view of the specific recommendations with regard to Maharashtra City Taxi

Rules, 2017 for alterations, deletions and additions, the same may be carried

out as early as possible following due procedure.

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III Approach to designing a fare structure for city taxis.

5.18 Need to promote harmonious growth of different segments of the IPT sector.

5.18.1 The population of private cars and two-wheelers in Mumbai has grown almost 5

times in the last 25 years while the road length has grown barely 5%. The

consequential adverse impact on commuting time, loss of production, damage

of environment, deterioration in quality of life and pressure on parking space

can be imagined. The productivity and financial viability of the BEST

undertaking have drastically fallen. Proliferation of private vehicles is not

unique to Mumbai but visible in PMR, Nashik, Aurangabad, etc. as well. Hence,

there is a need to promote good quality, reliable and affordable IPT sector to

cater to the needs of different income groups.

5.18.2 As discussed in the preceding para 5.1.2, Mumbai has multiple segments in the

IPT sector, namely, the black and yellow taxis, black and yellow auto rickshaws,

cool cabs, radio fleet taxis and now the App-based Aggregator taxis. The impact

of the entry of the Aggregators into the IPT market on the other segments has

been dealt with in paras 5.1.3 to 5.1.8. In the changed circumstances, in the

wake of the notification of Maharashtra City Taxi Rules, 2017, the radio fleet

taxis have been subsumed into its scope as Aggregator taxis. The cool cabs have

not really taken off in a big way and, with a strength of about 2768, have become

a niche segment operating mostly from the airport and star hotels. They do very

limited street hailing business. That leaves the black and yellow taxis and black

and yellow auto rickshaws which cater to the street hailing commuting business.

The quality of their service and their conduct vis-à-vis the commuters, no doubt,

leave a lot to be desired. However, in the wake of the entry of Aggregators, a

positive change in the attitude of black and yellow taxi / auto rickshaw drivers

and unions is visible. It is expected that with the permission now given to use AC

on commuter demand, they are expected to maintain their vehicles better and

work towards consumer satisfaction. Besides, with about 4 lakh of them in the

MMR and another 4 lakh in the rest of the state, they are a vital segment of the

passenger transport business which cannot be wished away or left to fend for

themselves.

5.18.3 In this background, it is necessary to provide a level playing field to all segments

of the IPT sector so that there is healthy competition and sustainable services to

cater to all segments of the society. Hence, prima facie, a fair and reasonable

floor price and ceiling price for the Aggregators seems to be desirable to provide

a level playing field to all segments of the IPT sector and to protect the

commuters from exploitative pricing. The MORTH Committee has also

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recommended a floor and a ceiling price within which the Aggregators can

operate to provide a dynamic and innovative supply-demand driven fare

system. However, the present Aggregators have objected to this mechanism

and have advanced various arguments which are analysed below.

5.19 Philosophy of Dynamic pricing vis-à-vis floor and ceiling prices.

5.19.1 The concept of dynamic pricing is not new and has been in operation in the hotel

and airline industry since long. The pricing adjusts to the dynamics of supply

and demand in a given business. If the demand surges, prices rise and suppliers

rush in to take advantage of higher earnings and when the demand surge abates

through satisfaction or withdrawal of a part of the demand, the prices fall.

When the demand falls, suppliers are willing to accept lesser price or offer

discounts to attract customers. When the demand-supply are at equilibrium,

prices tend to be steady. The App-based taxi Aggregators operate on dynamic

pricing in order to maximize their earnings.

5.19.2 Arguments of the Aggregators against a floor price:

(i) Higher prices for riders - A fixed floor price will prevent innovative lower

fares during lean demand periods and hurt low-income riders.

Committee's View - Low income riders do not necessarily wait for lean

demand hours for a ride. Except for leisure commuters, viz. senior citizens

and housewives, all commuters are purpose and time-line driven and will

mostly travel during normal to peak demand hours. Hence, this argument

is not entirely correct. As regards optimizing a driver's earnings during low

demand periods, the Committee is proposing a “happy hour” discount

between 12 noon to 4 pm which will apply to Aggregators' drivers as well.

(ii) Stifles innovation – It removes an incentive for the operators to find

operating efficiencies and improve asset utilization.

Committee's view - The data given by the Aggregators shows that only

about 13 to 15% of the rides operate on surge prices, and the average price

of all rides at the base segment (comparable to black and yellow taxis

except AC) is Rs. 17 per km. Interestingly, one of the Aggregators had

earlier given data showing only 3% rides on surge prices. Besides, from the

pilot study done on Uber App, percentage of rides on surge prices has been

derived which is about 17% (Uber did not provide the information). As

regards the data provided by the Aggregators, there is unfortunately no

independent means to validate their authenticity. Assuming that 15 to

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20% of the total revenue comes from surge pricing, thus per km base fare

seems to be about Rs. 14 per km. It is not exactly cheap vis-à-vis black and

yellow taxis. If this is the price with all-too-obvious subsidies given by the

Aggregators, this innovative lower price cannot be accepted at face value as

the true demand-supply driven discovered price. Besides, a market and

pricing system distorted by subsidies is neither a perfect market nor a fair

one. 'No floor price' policy would definitely hurt the legacy segments and

in the long term, may even hurt their own driver-partners. Due to falling

earnings of the drivers after reduction in the incentives given by the

Aggregators, they have already resorted to strikes. Such market disruptions

are certainly not desirable. Hence, very low prices which will be effectively

below – cost prices are not sustainable in the long run.

(iii) True floor price can be lower than an artificially mandated floor price in a

situation where multiple commuters have the same destination, viz., share

taxi.

Committee's view - There is nothing new in share-taxi concept. It is already

operational on designated high demand routes for black and yellow taxis

and auto rickshaws. The Aggregators can also operate on such routes on

the share-a-taxi principle as applicable to black and yellow taxis. For

unscheduled routes, they can identify the demand and operate through

their App within the price ceiling. Floor price will not come in its way.

5.19.3 Arguments of Aggregators against a price ceiling.

(i) Reliability - Our goal is to create a system in which a car is always available

when one needs it, thereby creating a reliable alternative to private car

ownership.

Committee's view - Free inter play of supply-demand to discover the

market price is a fine idea theoretically. But when supply is finite, if demand

far exceeds due to unforeseen demands, viz., in a crisis, open ended price

discovery can be highly exploitative because everybody is in urgent need of

transport and even supply of the full contingent cannot match the demand.

Supply rising to meet the demand due to rise in price or less urgent demand

dropping out or finding alternate means are feasible only in normal peak

demands but not in a crisis when price tends to be exploitative due to

failure of market. Besides, in areas with low availability, even normal

demands also meet with surge pricing. This is also in a way a sign of an

imperfect / under - developed market. In such a situation, no ceiling on

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surge pricing will be nothing but anti-consumer and not pro-market. Even

otherwise also, the data given by the Aggregators shows that almost the

entire surge pricing happens within 3 times of the base price with bulk of it

lying within 2 times. Even the MORTH committee has also advocated a price

floor and ceiling for the App-based taxis. Most importantly, too high surge

pricing will remove the incentive for not using private car, thereby negating

the very argument advanced by the Aggregators. Hence, a price ceiling is

desirable and is not necessarily against reliability. Needless to say, the price

ceiling needs to be setup in a manner that provides adequate scope for fee-

play of demand-supply to facilitate demand prioritization without hitting

the consumers hard.

(ii) Compensating drivers who serve high demand - Drivers who serve during

peak demand should be adequately rewarded to ensure efficient supply.

Committee's view - Open ended surge pricing may reward the driver but is

not necessarily in the interest of the commuters or to their liking.

Ultimately, a driver should also work adequate hours to earn a decent

revenue package and not look up to making all his money through surge

pricing. Balancing the interests of the consumers with the incentive for the

drivers and augmenting the supply side is the right and sustainable way to

go. For the purpose of providing a level playing field to the black and yellow

taxi etc., the impact of the telescopic pricing recommended for them will

also be factored in for fixing the floor and ceiling fares for the App-based

taxis.

5.19.4 In view of the above facts and arguments, the Committee has come to the

conclusion that it is in everybody's long term interest to recommend a dynamic

pricing model which fulfills the following 3 objectives.

(i) providing sufficient scope for the philosophy of dynamic pricing to operate

in a manner that facilitates matching of supply with demand by the market

forces;

(ii) protecting the commuters from exploitative pricing; and

(iii) providing a level playing field to the other segments of the IPT sector.

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Part - 2

Fare structure proposed for city taxi.

5.20 Inputs from the stakeholders.

5.20.1 The Committee has had five meetings with the officials of OLA Cab (M/s ANI

Technologies Pvt. Ltd.) and Uber Cab (M/s Uber India Systems Pvt. Ltd.) and

three meetings with MERU Cab and Tab Cab officials. The Committee studied

and discussed the inputs given by them, interalia, on the following points:

i. Their fleet size

ii. Various models of the cars in their fleet

iii. Daily average number of trips they undertake

iv. Average trip length

v. Their administrative costs and overheads.

vi. Their fare structure

vii. The patterns of surge pricing and the need therefor.

viii. The payment/ incentives they give to their driver-partners.

ix. Their service charges.

x. Their views on the scope of or plans for future expansion of the App- based

taxi business in various cities in the state of Maharashtra.

5.20.2 The Committee also studied the report submitted in 2012 by the committee

headed by the then Jt. Transport Commissioner, Maharashtra State, about fleet

taxi fare structure since they are now included in the scope of Maharashtra City

Taxi Rules, 2017. Besides, the Committee also had two meetings with the

chairman and other representatives of Mumbai Grahak Panchayat (MGP),

Mumbai. They have presented their views about the fare structure of b&y taxi/

auto – rickshaw and App – based taxis.

5.21 Composition and categorization of the fleet of App-based taxi Aggregators.

5.21.1 Composition of the fleet.

From the above inputs/ data it is seen that the App – based taxi Aggregators and

fleet/ radio taxi operators have the following models in their fleet categorized

basically into 3 price and fare ranges. Ola Cabs has further carved out a slightly

cheaper segment out of the base segment (Ola Mini) consisting of relatively

older taxis labeled as “Ola Micro”.

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Sr.No.

Model of Cars

Enginecapacity in

(CC)

Ex-factory price of Vehicle

(in lakhs)

GroupCategory

(Nomenclature usedby the Aggregators)

1 Datson Go + 1198 3.85

2 Wagon R 998 4.15

3 Beat 936 5.24

4 Indica 1405 4.78

5 Hyndai X cent 1200 6.27

6 Etios 1364 6.83

7 Swift Dzire 1248 6.44

8 Indigo CS 1405 5.72

9 Indigo Zest 1248 6.24

10 Verito 1461 7.04

11 Enjoy (6+1) 1248 6.86

12 Ertiga (6+1) 1373 6.18

13 Honda City 1497 10.05

14 Tata Aria 2179 12.05

15 Tata Hexa 2200 11.99

16 Duster 1461 10.20

17 Innova (6+1) 2400 13.49

18 Corolla Altis 1364 16.14

Group-A(Ola mini / micro,

Uber-go)(upto Rs.5.5 lakhs)

Group-B(Ola prime, Uber-x,

Radio/fleet taxi)(Rs.5.5 lakhs to 9

lakhs)

Group-C(Ola SUV, Uber-black)

(Rs. 9 lakhs to 16 lakhs)

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Note - The list is more illustrative than exhaustive as the new driver-partners of

the Aggregators continue to add different models to the fleet.

5.21.2 Categorization of city taxis.

1) From the above table, it is observed that the engine capacity of the cars is

ranging from 980 cc to 2400 cc & the price range is between Rs. 3.50 lakh to 16

lakh. The cars costing more than Rs. 20 lakh or with engine capacity above 2500

cc will normally fall into the luxury category with multiple features and as per the

guidelines of the Committee constituted by MORTH, it would be proper to leave

the fare structure of these luxury taxis (which are not normally used by a

common man) to the Aggregators and market forces to decide.

2) It is seen from the models mentioned in para 5.21.1 that the engine

capacity, type of vehicle (hatchback, sedan , suv, etc.) and car length do not have

linear correlation with the prices of the vehicles. Many other variables, viz., the

features and facilities provided in the car determine the price irrespective of the

engine capacity or vehicle type. However, after going through the inputs

received from the Aggregators and after detailed discussion, the Committee

decided to categorize all these models into the following three categories for the

purposes of deciding the fare structure.

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5.22 Present fare structure of App-based taxis.

5.22.1 The present fare structure of App based taxis is based on 3 parameters, namely, a

fixed base price, a price per kilometer and a time price. Unlike black and yellow

taxis, cool cabs and radio / fleet taxis, the time price is applicable for the entire

duration of the trip and thus increases the total fare during peak time slow

traffic. A comparative table of fares for various taxi services is given in the

following table.

Sr.

No. Category of Service

Fixed Minimum

Fare [Rs.]

Distance (per km)

Charges [Rs.]

Ride time (per min)

Charges [Rs]

Waiting Time (per min)

Charges [Rs.]

Late night surcharge

(12.00 am - 5.00 am)

1. Ola Micro* 55.00 6.00 1.50 NA NA

2. Ola Mini* 70.00 8.00 1.00 NA NA

3. Ola Prime Sedan* 70.00 11.00 1.00 NA NA

4. Ola Prime SUV* 150.00 17.00 2.00 NA NA

5. Uber Go* 50.00 8.00 1.50 NA NA

6. Uber X* 75.00 10.00 1.50 NA NA

7. Uber XL (SUV)* 106.00 14.84 2.12 NA NA

8. Uber Black* 106.00 18.02 2.12 NA NA 9 Radio/Fleet Taxi

(vehicle price up to Rs. 8 Lakh)

27.00 (for 1

first km)

20.00 NA 2.00 25%

10. Radio/Fleet Taxi

(vehicle price over Rs. 8 Lakh)

32.00 (for

first 1 km)

25.00 NA 2.50 25%

11. Black & Yellow Taxi

(Non-AC)

22.00 (for

first 1.5 km)

14.84 NA 1.48 25%

12. Black & Yellow Taxi (with AC)

27.00 (for first 1.5 km)

17.81 NA 1.78 25%

13. Cool Cab 28.00 (for first 1.5 km)

18.55 NA 1.85 25%

* GST charges of 5% are applicable for these services

Sr.

No.

Classification Vehicle models Remarks

1 Base or standard

segment

Datson Go+, Wagon R, Beat,

Ritz, Eeco, Indica, i10 etc.

Group-A of para 5.21.1

2 Midsized segment Hyundai Xcent, Etios, Swift

Dzire, Ertiga, Enjoy, Indigo-

cs, Indigo-zest, Verito etc.

Group-B of para 5.21.1

3 Premium segment Duster, Honda City, Verna,

Tata Aria, Tata Hexa,

Innova, Corolla Altis, etc.

Group-C of para 5.21.1

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5.22.2 Surge pricing - During the peak hours and as per the demand and supply

mismatch of the App-based taxis, the surge price is automatically charged which

normally ranges from 1.1 times to 3.0 times the basic fare. However, as per the

feedback received from the commuters, in the extreme cases surge price has

increased upto 5x also. This surge is operated across all three components of

the price, namely, the minimum fixed price plus the distance price and the time

price. At the peak of demand when supply cannot meet the demand, the

commuters end up paying very high fares. As discussed hereinbefore, the

exorbitant surge can happen due to inadequacies and imperfections in the

market including chronic low supply situations. Surge price is, therefore, not

always a fair response to the market realities and needs to be regulated.

5.23 Providing a level playing field to other IPT segments.

5.23.1 This Committee has recommended two innovative features into the pricing of

black and yellow taxi and cool cab fares, namely, telescopic pricing above a

distance of 8 kilometers and happy hours discount in the lean demand period

between 12 noon and 4 pm. It has also recommended actual cost-based

moderated pricing of AC facility in black and yellow taxis and cool cabs. It is

expected that with moderation in the long distance fares and efforts from the

black and yellow taxi drivers towards better commuter satisfaction, they should

be able to compete in a fair manner.

5.23.2 The App-based taxis hardly operate in the short distance commuter demand

segment. At the present fare structure, the black and yellow taxi fare exceeds

that of the App-based taxi beyond 8 - 9 kilometers and during peak time traffic

beyond 11 - 12 kilometers. The recommended telescopic fare system will

moderate their long distance fare and the effective per km fare for the

commuter will reduce from the recommended Rs. 15.14 per km to about Rs.

14.00 per km. Keeping this point in mind, the Committee proposes to fix the

floor price for the base segment of the App-based Aggregator taxis at Rs. 14.00

per km.

5.23.3 On the other hand, a reasonable ceiling in the fare of the App-based taxis to

protect the commuters from excessive surging is desirable. From the data made

available by the Aggregators, maximum surge pricing occurs within twice the

base price. Besides, most of the surge pricing occurs in the base segment and

the mid-size segment as the demand for the premium segment is limited. The

Committee expects that once the regulatory system settles down, the supply

side will improve and consequently surge prices will moderate even during peak

hours. In any case, too much of surge pricing is not only anti-consumer but can

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be counter-productive due to commuter resistance. Hence a pragmatic and

moderate fare structure is desirable for long term substainability.

5.24 Fare structure for the App-based city taxi.

5.24.1 Keeping the above facts in mind, the Committee recommends the following

floor and ceiling in the fare structure of App-based Aggregator taxis, segment

wise:

Sr. No. City taxi segment Floor fare per km

(Rs.) Ceiling in fare per km (Rs.)

1 Base / standard 14.00 26.00 2 Mid size 16.00 32.00

3 Premium 16.00 38.00

It is clarified that the floor and ceiling will operate as the effective fare limits per

km irrespective of the component wise values thereof.

5.24.2 Happy hour discount - The demand for IPT services during the early afternoon

hours is low. The 'Happy hour' discount has been recommended at 15% of the

basic fare for black and yellow taxis and auto rickshaws. The same level of

discount should also be available on the App-based taxi services between 12

noon and 4 pm. In other words, the App-based taxi fare would fall below the

floor price of Rs. 14 or 16 per km by 15% during 12 noon to 4 pm period.

5.25 Service charges collected by the Aggregators.

5.25.1 The Committee does not wish to get into the domain of commercial

arrangements between the Aggregators and their driver partners. However, we

would like to make an observation that it is desirable that service charges are

kept at moderate levels instead of keeping it high and then giving the drivers

subsidies by other means.

***

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6.1 Determination of cost elements.

6.1.1 Auto rickshaws which are operating in Mumbai (MMRTA) region (excluding

Mumbai island city), Pune and Pimpri-Chinchwad Municipal corporation (PMC

and PCMC) areas are 100% run on CNG. Hence, the fare structure for these

regions is developed on the basis of this single fuel. For auto rickshaws

operating elsewhere in the state which are run on petrol or diesel or LPG, this

fare structure will be appropriately modified by factoring the relevant cost

elements.

6.1.2 For determination of the fare structure, it is necessary to first determine the

various cost elements and their respective shares in running the auto rickshaw

for a productive unit distance, namely, a revenue earning kilometer. The

Hakeem Committee had taken the following cost elements into consideration

for determining the fare structure for auto rickshaws.

(i) Fixed cost represented by interest and depreciation on the capital cost of

acquisition of the auto rickshaw;

(ii) Other fixed costs, viz., taxes, insurance premium for comprehensive

insurance policy and other levies;

(iii) Estimated cost of repair and maintenance of the auto rickshaw;

(iv) Provision for the cost of living of the family of the driver of the auto

rickshaw;

(v) Estimated number of revenue earning kilometers run by an auto rickshaw

during one working shift.

(vi) Average kilometers run on one unit of fuel, viz., one kg of CNG or one litre of

petrol etc;

(vii) Estimated percentage of idle run (in kms) out of the total distance travelled

by the auto rickshaw during one working shift;

(viii) Percentages of vehicles run on double shift by two different drivers.

6.1.3 The Committee has critically examined the identification of various cost

elements as determined by the Hakeem Committee. While the Committee

agrees with the cost elements listed at (ii) to (viii), it begs to differ from that listed

at sr. (i), namely, interest and depreciation. Typically, a bank loan for buying an

APPROACH FOR WORKING OUT A FARE STRUCTURE FOR AUTO RICKSHAW

CHAPTER - 6

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auto rickshaw is repaid in 5 to 7 years after which the investment effectively

becomes own fund of the auto rickshaw owner. The margin money is also his

own investment. Hence, cost of capital, after factoring in the interest on bank

loan, is a more appropriate measure than interest as a cost element. This

concept is further elaborated while discussing the approach to estimation of this

cost element. As regards depreciation, Hakeem Committee, by averaging the

residual depreciation on auto rickshaws of all vintages has under-compensated

the newer models to their disadvantage. Hence, this Committee has corrected

this anomaly for calculation of depreciation on a more rational basis in keeping

with the principles of financial accounting. The approach to various identified

cost elements as modified by this Committee is discussed item wise below.

6.2 Cost of (return on) capital.

6.2.1 Even assuming that all auto rickshaws are purchased partly on borrowed capital,

the loans are generally given for a limited period of 5 to 7 years. The auto

rickshaw owner also has to typically invest the margin money which is about

25%. The Committee has elsewhere recommended that the auto rickshaw

should be permitted to ply only for 15 years and not 16 years as at present. In

other words, the share of capital that is liable to levy of interest in the total useful

life of the auto rickshaw is “X(0.75 x 7/15), i.e., 0.35X where 'X' stands for the cost

of acquisition of the auto rickshaw. The same 75% share of capital cost becomes

the auto rickshaw owner's own funds for the remaining 8 years of its useful life

which comes to a weight of 0.40X in the total capital. Together with the margin

money of 0.25X, this becomes the auto rickshaw owner's own funds. The cost of

capital of the borrower, i.e., the auto rickshaw owner on this 0.65X share is

effectively the opportunity cost of his own funds which can be considered on the

basis of the interest fetched by a one-year fixed deposit in the nationalized bank.

In other words, the real cost of capital for acquisition of the auto rickshaw is =

(0.35X x rate of borrowing) + (0.65X x rate of interest on a one year fixed deposit

in a nationalised bank). This cost of capital would, therefore, be a more

appropriate measure of the return on capital deployed.

6.2.2 Even another factor which militates against the Hakeem Committee approach

on this count is the calculation of purchase price. It has relied on the age wise

classification of the present auto rickshaw fleet and assumed different prices for

auto rickshaws of different vintages and has calculated the weighted average

price of the entire fleet at Rs. 56,580 as against the weighted average price of the

latest inclusions into the fleet at Rs. 1,40,000. Such assumptions will lead to

under-compensation of the latest auto rickshaws, which is not based on sound

financial and accounting principles. This would tantamount to financially

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penalising the new auto rickshaws inspite of providing better riding comfort and

environment. A more appropriate approach is to calculate the weighted

average cost of the entire fleet at the latest prices and give the cost of capital on

the weighted average price as the fair return on investment. Even the inflation

adjusted cost of older auto rickshaws would also be close to this figure and

hence, can be considered as a rational basis for earning a return at today's price.

6.2.3 In 2012, the price of a 2-stroke auto rickshaw was Rs. 1,33,000/- and that of 4-

stroke auto rickshaw was 1,43,000/-. The shares of 2-stroke and 4-stroke auto

rickshaws were in the ratio of 7:3 and hence the weighted average price was Rs.

1,36,000/-. The Hakeem Committee considered it as Rs. 1,40,000/-. This ratio

has undergone a substantial change in the last 5 years. Presently, the fleet share

of 2 stroke and 4 stroke auto rickshaw is about 3:7 due to induction of more 4-

stroke auto rickshaws. Secondly, the share of Bajaj auto rickshaw is more than

90% in the total fleet. The present prices of a 2-stroke Bajaj auto rickshaw and a

4-stroke Bajaj auto rickshaw including electronic fare meter price and

registration charges are Rs. 1,56,000 and Rs. 1,66,000 respectively. Taking the

current composition of the auto rickshaw fleet in MMRTA area at 3:7 ratio, the

weighted average price comes to Rs. 1,63,000.

6.3 Depreciation:

6.3.1 The Hakeem Committee has considered 7 years as the useful life of an auto

rickshaw and has assumed salvage value at 10%. Then it divided rest of the 90%

value by 12 to arrive at the annual depreciation amount by straight line method.

However, thereafter it has calculated the depreciation on older models by

assuming different residual values (other than book residual values) for auto

7%1%

28%

3%

52%

9%

3 years

4 years

5 years

6 years

7 years

Others

Survey result - Auto driver response on Loan Tenure*

The chart reveals that loan tenures are largely between five and seven years.

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rickshaws of different vintages and then taken the weighted average of all such

assumed annual depreciation values to arrive at an annual depreciation value of

Rs. 9,771. As discussed in para 3.3 in chapter-3, it will be more equitable and

financially justifiable to provide depreciation of the full value of the latest

weighted average price of auto rickshaws over the permissible useful life of the

auto rickshaw after deducting a fair salvage value.

6.3.2 This Committee has recommended, in the interest of consumer comfort and

environment protection, to limit the useful life of a black and yellow auto

rickshaw to a maximum of 15 years. Hence, the salvage value at the end of that

period would essentially be the material value of the auto rickshaw which can be

more realistically assumed at 5%. The rest of the latest weighted average price

of an auto rickshaw divided by 15 will give the annual depreciation to be

allowed. As explained in the preceding para on cost of capital, this will not be an

undue over-compensation of the older models when their historical prices are

updated / adjusted for inflation to the current value of the price index.

6.4 Average distance travelled daily, percentage of idle run and fuel consumption

for auto rickshaws.

6.4.1 Percentage of idle run and revenue earning kms per shift.

In order to determine the daily average distance travelled and quantum of idle

run, the Hakeem Committee had carried out test checks through the officials of

the Motor Vehicles Department in May, 2012 by following selected auto

rickshaws for specified periods along with the representatives of consumer

organizations like the Mumbai Grahak Panchayat and of auto rickshaw unions,

to get details such as (i) consumption of fuel, (ii) number of paying trips; (iii) total

distance covered; (iv) idle distance involved; (v) revenue earned; (vi) waiting

time at CNG filling station etc. This information was attested by the operator of

the vehicle, representatives of consumer organizations and auto rickshaw

unions and the officials of the Motor Vehicles Department in respect of 60 auto

rickshaws in Mumbai. A normal shift of auto rickshaws in Mumbai is for 10 to 12

hours, i.e., an average of 11 hours. The information stated above was collected

for shorter periods. After converting the total distance travelled to 10 – 12

hours (average 11 hours), it was found that it varied from 33.3 kms to 128.3 kms

averaging to 86.3 kms. Of these 60 vehicles, 31 vehicles (51.6% of the vehicles)

had the total distance (converted into 10 – 12 hour periods) above 83 kms

(including idle distance) and revenue earning distance above 68 kms (excluding

idle distance). However, to be on the safer side, Hakeem Committee considered

67 kms as the productive run per shift and the idle run at 18%, thereby assuming

the total run at 81 kms.

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Parameters Findings of

EMBARQ survey

Recommendations of

Hakeem Committee

Average hours of operation 10 hours 11 hours

Average daily kilometers

travelled (per shift) 105 kms 81 kms

Percentage of average share

of empty kilometers

travelled

10.2% 18%

Revenue earning kms.

(per shift) 94.8 kms. 67 kms.

6.4.2 EMBARQ India (now known as W.R.I. - World Resource Institute - an

independent world renowned N.G.O.) conducted a survey in July, 2012 on the

“role of auto rickshaws in Mumbai transport system”. The survey included 500

auto rickshaw drivers for 10 days at 11 high demand locations in the Mumbai

suburbs. As compared to the survey of 60 auto rickshaws done by the Motor

Vehicles Department for the Hakeem Committee, the survey done by EMBARQ

consisted of an 8 times larger sample of 500 auto rickshaws. Hence, its results

would have higher statistical validity.

6.4.3 The following table shows comparison of the EMBARQ findings with that of the

recommendations of the Hakeem Committee.

Survey result - Auto driver response on Daily operational hours

31% 38% 45%

68% 52%53%

0.3%

10%

2%

MMR PMR Other Regions

8 hours or less 9 to 12 hours More than 12 hours

The chart reveals that drivers predominantly work for 9 to 12 hours in a day

From the above table, it is clear that the percentage of idle kilometers run

considered by the Hakeem Committee at 18% was far more than the findings of

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the EMBARQ India study at 10.2%. The total revenue earning kms in the

EMBARQ study are also much higher for a somewhat lesser period of 10 hours.

However, some moderation in the EMBARQ findings is called for because of the

fact that the values were obtained from high demand locations which may not

be true of other locations. However, the average daily kilometers travelled per

shift will be definitely higher than that of the Hakeem Committee estimations

and the percentage of idle run will be lower. Considering the fact that now the

ban on issuance of fresh auto rickshaw permits has been lifted, the ridership of

auto rickshaws is likely to be negatively affected to some extent because of the

increased competition, entry of App-based city taxis and expansion of metro

network. Taking these factors into consideration, this Committee recommends

the following values of above mentioned important parameters for MMRTA as

shown in the table below:

6.4.4 Mileage per kg of CNG.

The kilometers achieved per kg of CNG depends on various factors including the

make, model and mechanical condition of the auto rickshaw. The result of the

survey of 60 auto rickshaws conducted by the Hakeem Committee reveals that

the kilometers achieved per kg of CNG varies from 22.4 kms to 38.5 kms. More

than 50% of auto rickshaws recorded above 28.5 kms; hence the Hakeem

Committee considered the kilometers achieved per kg of CNG as 28.5 kms.

6.4.5 The auto rickshaw manufacturers have claimed that kilometers achieved per kg

of CNG for 2-stroke auto rickshaw is 35 kms and that for 4-stroke auto rickshaw is

40 kms. Considering the share of 2-stroke and 4-stroke auto rickshaws in the

current fleet as 3:7, the weighted average kilometers run per kg of CNG comes to

38.5 kms. However, the mileage achieved per kg of CNG for actual travelling may

be somewhat less than that under test conditions. Hence, taking into

consideration the increased share of 4-stroke auto rickshaws in the fleet, the

Committee is of the considered view that 31 kms per kg of CNG can be

considered as realistic mileage. When near 100% of the auto rickshaws in the

Parameters Recommendations of this Committee

Average hours of operation 11 hours

Average daily kilometers travelled 81 kms

% of average share of empty kilometers travelled 15%

Revenue earning kms. 81 kms x 0.85 = 68.85 rounded off to 68 kms 68 kms.

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Mumbai region will be converted into 4-stroke CNG, then the R.T.A.s can

consider it as 33 kms per kg of CNG.

6.5 Insurance, taxes and miscellaneous fixed expenses.

6.5.1 Insurance - The Hakeem Committee considered the annual comprehensive

insurance premium as a recognized item of cost for fixation of auto rickshaw

fare. The consumer organizations have taken objection to this on the ground

that almost no auto rickshaw takes comprehensive insurance policy and all of

them only go for the mandatory third party insurance policy where the premium

is much lower and that such higher cost unnecessarily increases the fare.

However, this objection is not based on sound logic because all auto rickshaws

under hypothecation during the loan period are required to take comprehensive

insurance policy on the insistence of financers, though it may be factually

somewhat correct for the post-loan period. When an auto rickshaw owner does

not take comprehensive insurance policy, he runs the risk of footing the high cost

of repairs when met with accidents. Since it is difficult to estimate the costs

associated with the risk of accidents and consequential repair costs for such a

large number of auto rickshaws, a known and definitive figure such as the

comprehensive insurance cost is a fair reflection of the indeterminate risk of

accident related damages and associated costs. Hence, the higher cost of

insurance over and above the third party component on account of

comprehensive insurance is a fair and reasonable cost which this Committee

also endorses.

6.5.2 Taxes - other than one time tax there are no other taxes on auto rickshaw owners

as a relevant cost for fare fixation unlike taxi owners who are required to pay

professional taxes.

6.5.3 Miscellaneous fixed expenses - Miscellaneous fixed expenses incurred by a auto

rickshaw owner and driver include the costs of permit renewal, driving license

renewal, driver's uniform and shoes. Since these are costs prescribed or levied

and collected by the Government they ought to be considered as legitimate

costs. Hakeem Committee did not consider these costs for the purpose of fare

fixation. However, this Committee considers them as legitimate costs which

ought to be factored into the fare fixation.

6.6 Annual expenditure on repair and maintenance.

6.6.1 The Hakeem Committee did not find it feasible to conduct a survey to estimate

the annual repair and maintenance cost of an auto rickshaw due to practical

reasons as they tend to occur periodically over the entire year, and depending on

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various factors, viz., age of the vehicle, usage and level of upkeep, would vary

from vehicle to vehicle. In 1993, the Patankar Committee which also had

technical members, estimated the yearly repairs and maintenance cost of an

auto rickshaw (then priced at about Rs. 44,000) as Rs. 5,600. According to the

Hakeem Committee, considering 6% annual increase (compounded) in material

cost and 7% increase in the cost of living (75% of repairs and maintenance cost is

assumed to be linked with spares and 25%, is linked with labour), the updated

annual cost of repairs and maintenance came to Rs. 17,880 (in the year 2012).

The manufacturers had estimated the annual repair and maintenance cost of 2-

stroke CNG auto rickshaw at Rs. 18,235/- and that of 4-stroke auto rickshaw at

Rs. 20,900/-. With the auto rickshaw weighted average price of Rs. 1,36,000/- ,

the weighted average cost of repair and maintenance was coming to Rs. 18,990.

Consumer organizations estimated the cost of repairs and maintenance at Rs.

6,000 per annum. However, different auto rickshaw unions estimated them in a

wide range from 12% of capital cost to as high as 38.4% (Rs. 53,720) which seem

to be exaggerated.

6.6.2 Considering the above points, the Hakeem Committee estimated the cost of

repairs and maintenance for auto rickshaws plying in one shift at Rs. 21,000/-

and those plying in 2 shifts at Rs. 25,000/-. However, under consumer protests,

the Government moderated these estimates and approved Rs. 19,000/- for auto

rickshaws plying in single shift and Rs. 21,000/- for those plying in two shifts as

the cost of repairs and maintenance.

6.6.3 It seems from the details in para 6.6.1 that the Hakeem Committee was

somewhat influenced by the high estimates of some of the unions and

accordingly, tried to moderate the widely varying estimates at a level which was

even higher than the estimates given by the manufacturers. Given this

contentious background and wide divergences in the estimates by different

stakeholder groups, this Committee thought it appropriate to identify all items

of repair and maintenance and collect the itemized estimates from auto

rickshaw manufacturers and also the collect the actual cost of various items of

repair and maintenance and overall repair maintenance costs from the market

sources including experienced auto rickshaw drivers. Representatives of some

of the auto rickshaw unions and some experienced drivers told the Committee

that the thumb rule for computation of yearly repairs and maintenance cost of

auto rickshaw plying in one shift can be 10% of the price of the auto rickshaw.

6.6.4 Based on these inputs, the Committee has identified all routine maintenance

items of repair and maintenance including labour and spares on actual basis. All

infrequent but essential repairs, viz., engine over haul, clutch replacement etc.

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are clubbed into a liberal life time total divided by permissible life of 15 years,

separately for auto rickshaws running on single shift and double shift basis.

Accordingly, the Committee has estimated the annual repair and maintenance

costs of a black and yellow auto rickshaw running on a single shift and double

shift separately. Since it is almost universally accepted that most of the auto

rickshaws do not undertake the regular preventive maintenance services nor

replace the tyres and tubes etc as regularly as the Committee has now assumed

on normative basis, the Committee considers the estimates to be fair and

reasonable. Since comprehensive insurance cost would cover major repairs,

which are typically occasioned by accidents, major contingent repairs are not

separately counted.

6.6.5 The Committee found out during its various interactive meetings with

stakeholder groups that in MMRTA, Pune and Pimpri-Chinchwad, almost 70% of

the auto rickshaws are used in two shifts. Major replacement items, viz., tyres,

batteries etc are costed on normative basis separately for single shift auto

rickshaws and double shift auto rickshaws based on the distance travelled. The

weighted average of the two is taken in the annual average cost of repair and

maintenance of auto rickshaws in Mumbai region, Pune and Pimpri-Chinchwad.

6.7 Fare structure ought to consider the real impact of cost of living.

6.7.1 There cannot be any difference of opinion that the cost of living for the taxi

driver and the auto rickshaw driver should be the same. The auto rickshaw

unions have variously demanded a liberal cost of living as a component of the

auto rickshaw fare structure, which ought to consider the costs they incur on the

health, education and other welfare related expenses of their family. They have

also demanded a pension component to be included in the fare structure.

However, it is instructive to remember that the auto rickshaw unions had

demanded before the 1996 Fare Fixation Committee Rs. 4250 as the cost of

living per month including Rs. 3000 towards basic living cost, Rs. 250 for medical

expenses, Rs. 500 for house rent and Rs. 500 for retirement benefits. The

Committee, after considering all aspects, considered Rs. 3750 pm covering the

above mentioned items of cost as adequate, which was about 88% of the

demand. The same assumption was accepted for deciding the fare structure for

auto rickshaws in 2012. The unions and consumer organizations have accepted

the same. However, Hakeem Committee had updated this accepted cost of

living to the then consumer price index figures and arrived at the figure of Rs.

10,880. But it had also added another 10% to this estimate and estimated it at

Rs. 12,000, thereby meeting the unions' demand of 1996 almost in full.

However, consumer organizations took strong objection to this and the

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Government finally accepted the updated figures of 1996 estimates, albeit by

rounding it off to Rs. 11,000 per month.

6.7.2 Given this background, this Committee would like to adopt the formula which

was adopted in 1996 and accepted by both the stakeholder groups and accepted

by the Government in 2012 as well. Accordingly, this Committee has also

adopted the same as the basis for calculation of cost of living and has updated

cost of living as per the current price index figures. It is also pertinent to state

here that the Committee has worked hard on devising an “Taxi and Auto

rickshaw Drivers' Welfare and Insurance Corporation” with identified sources of

revenue and a broad framework of various welfare activities including

education, health and pension. This corporation can be incorporated and

operationalised within about a year without even waiting for the amendment to

the Motor Vehicles Act, 1988 required for mandating it with the business of taxi

and auto rickshaw insurance in Maharashtra. Hence, the Committee considers

the updated cost of living as adequate.

6.7.3 Cost of living applicable to other regions of the state.

It was brought to the attention of the Committee that many R.T.A.s in the

mofussil areas are often not clear as to which price index center to be taken as

reference for their jurisdiction. Besides, they may be facing difficulties while

adjusting for the linking factor. Hence, this Committee has worked out the cost

of living for the five (05) recognized price reference centers in the state for which

the CPI figures are compiled and published every month. The R.T.O.s / Dy.R.T.O.s

jurisdictions are also allocated to the nearest CPI center whose cost of living

values they can adopt. The Committee hopes, this will solve a major factor of

confusion in the fare fixation in the non - Mumbai regions. The Committee is of

the considered view that cost of living for auto rickshaw drivers in metropolitan

areas and those living in comparatively smaller towns / villages cannot be the

same, hence the Committee has moderated the cost of living for the latter.

6.8 Number of working days for consideration of revenues and costs.

6.8.1 The Hakeem Committee considered 300 days as normative number of working

days for the purpose of estimation of costs and revenues for the drivers. Every

driver needs a weekly off day for rest and rejuvenation as well as family time,

thereby leaving 313 days out of 365 days. The driver also needs to be given some

allowance for attending to personal work, health related visits to hospitals and

for vehicle fitness passing. The auto rickshaw may also have occasional on-road

breakdown needing urgent repair and maintenance apart from regular

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preventive maintenance. Hence, 300 days as net effective working days in a year

is a fair and reasonable estimate.

6.8.2 Hence, this Committee agrees with the Hakeem Committee on this count and

accordingly adopts 300 days as the normative number of working days in a year.

Individual variations of a few days more or less cannot be considered for fare

calculation.

6.9 Useful life of an auto rickshaw in MMRTA region.

6.9.1 In a passenger transport vehicle, the passenger's safety and riding comfort is of

paramount importance. The law also provides as much. As per the provisions of

section 74(2)(xi) of the Motor Vehicles Act, 1988, a contract carriage must give

comfortable service to the passengers. In the wake of the Hakeem

Committee report in 2012, the state government decided to limit the age of taxis

and auto rickshaws in the MMRTA region to 20 years and 16 years respectively.

Accordingly, the S.T.A. gave effect to this decision with effect from 01.08.2013.

6.9.2 Considering the points detailed in para 3.9 in chapter-3, this Committee is of the

considered view that in order to safeguard the safety and comfort of the

passengers, the useful life of an auto rickshaw in the Mumbai region should be

restricted to 15 years, the same as for taxis. Accordingly, it is recommended that

auto rickshaws in Mumbai region above 15 years age should be phased out by

01.08.2018.

6.9.3 Useful life of an auto rickshaw in rest of Maharashtra.

Since for the auto rickshaws plying in the rest of the Maharashtra state (other

than Mumbai region), no decision restricting the age limit had ever been taken

by the State Transport Authority, some relaxation in the timeframe for reduction

Four days or less

Five Days

Six Days

Seven Days

Surprisingly in MMR Region almost 94% drivers work for 7 days a week.

0.3% 5% 3%5%

43%

66%

94%

52%

30%

MMR PMR Other Regions

Survey result - Number of operational days in a week - drivers’ response

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in the age limit for those auto rickshaws is called for. Hence, the Committee

suggests that the age limit for auto rickshaws plying in the rest of Maharashtra

should also be fixed at 15 years from the date of initial registration, but older

auto rickshaw should be phased out over a period of 4 years instead of one year

applicable to Mumbai region. The reduction in the age limit in the non-MMRTA

areas can be implemented as follows:

Date of reckoning Revised age limit for auto rickshaws (years)

By 01.08.2018 20

By 01.08.2019 18

By 01.08.2020 16

By 01.08.2021 15

As explained in para no. 3.9.6, the condition of 3 wheeler, 6 seater auto-

rickshaws is also similar to that of jeep type taxis, and hence, the age limit of 15

years will be applicable to these auto rickshaws also.

6.9.4 Given the limitations of stability on varying and not-so-well-maintained city

roads where they ply and the declining passenger comfort with rising age of the

auto rickshaw, it is recommended that the Government / STA should review the

maximum desirable age limit for auto rickshaws in 2020 as to whether it should

be brought down to 12 years in at least the MMRTA, PMC and PCMC areas.

Elsewhere, since the 2-shift usage is relatively limited, especially in non-

municipal corporation areas, the presently proposed age limit of 15 years may

continue for some more time.

6.10 Possibility of introduction of telescopic fare rates.

6.10.1 With the entry of App-based Aggregators, now-a-days commuters prefer street

hailing for shorter distances and Aggregators for longer distances. This behavior

could be attributed to price sensitivity and Aggregators' pricing policies. It is

observed that for long distance commuters, even the App-based taxi fare (which

is air conditioned and more comfortable) is often cheaper than auto rickshaw

(except during surge pricing). Even among street hailing vehicles, auto

rickshaws are less preferred for longer commutes. Hence, there might be merit

in exploring the potential of telescopic pricing for auto rickshaws to encourage

the commuters to summon auto rickshaws for longer distances as well. This

demand has been raised by the consumer forum Mumbai Grahak Panchayat

since as far back as 1996. This Committee is recommending telescopic price

mechanism with appropriate fare discount after a specified distance.

130

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6.11 Additional charges for late night journeys.

6.11.1 The Hakeem Committee has recommended additional charges for late night

journeys between 12.00 midnight to 5.00 am at 30% of the basic fare. However,

the Government revised it downwards and fixed it at 25%. Presently, additional

charges for late night journeys between 12 midnight to 5 am are payable @25%

of the basic fare. There has been a demand from the auto rickshaw unions to

increase the extra charges to 50% and the timing from 11 pm to 6 am, especially

in the rural areas. Some unions from the rural areas and small towns have even

demanded to apply it from 10 pm onwards.

6.11.2 The Committee has gone into this issue carefully. Metropolitan cities like

Mumbai, Pune have now a much livelier night life and commercial activities till

late night. Even other Municipal Corporation areas are much more active farely

late into the night and hence getting passengers is not a big problem nor empty

runs. However, other municipal towns and villages fold up at night much earlier

and getting ridership or return fares are that much more difficult. It is also a fact

that late night charges were 50% of the basic fare in some areas prior to the

Hakeem Committee recommendations. Hence, some concessions in the small

towns and rural areas is warranted. At the same time, it has to be balanced with

the commuter interests.

6.11.3 Accordingly, the Committee recommends to allow additional charges for late

night journeys in all municipal corporation areas in the state from 12 midnight to

5 am and in all other areas from 11 pm to 5 am. The demand for extending it

upto 6 am is rejected because human activities start in all areas by around 5 am.

As regards the rate of late night charges, the same may be continued @25% in all

municipal corporation areas. But since in the non municipal corporation areas,

the chances of ridership or a return fare late at night are relatively even less, to

compensate for the same, it is recommended to allow late night charges in those

areas at 40% of the basic fare. It is hoped, these recommendations will improve

the availability of IPT services in those areas in lean hours at night.

Survey result - Commuter responses

41%

22%

43%

16%

13%

11%

20%

19%

16%

17%

20%

8%

6%

26% 21%

MMR PMR Other regions

10 percent 15 percent 20 percent 25 percent 50 percent

5% 8%3% 13%8%2%

11% 4%

77%64% 72%

12% 13% 8%

MMR PMR Other regions

Did not answer 11 pm to 5 am 11 pm to 6 am 12 am to 5 am 12 am to 6 am

% of additional night charges Timing for additional night charges

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% of additional night charges Timing for additional night charges

22% 21%11%

0.3% 4%

2%10%

2% 22%

78% 74%56%

MMR PMR Other regions

10 percent 15 percent 20 percent 25 percent 50 percent

8%

51%

1%

40%

38%

99%20%

9%31%

2%

MMR PMR Other regions

11 PM to 5 AM 11 PM to 6 AM 12 AM to 5 AM 12 AM to 6 AM

B&Y Taxi / Auto Rikshaw driver responses - Survey result

16%

5%

11%

63%

5%

10 percent

20 percent

25 percent

50 percent

Did not answer

47%

21%

16%

11%

5%

12 am to 5 am

11 pm to 5 am

11 pm to 6 am

12 am to 6 am

Did not answer

Survey result - Union responses

% of additional night charges Timing for additional night charges

6.12 Happy hour discount.

6.12.1 As explained in detail in para 3.12 in order to attract more number of

commuters, discounting the fare during the lean period sounds to be a good

idea. Hence, the Committee recommends that during the time period from 12

noon to 4 pm, the auto rickshaw fare shall be discounted by 15% barring the 1st

stage minimum fare (i.e. fare for the first 1.5 km). This new concept will turn lean

hours to happy hours especially for housewives and senior citizens who normally

don't have fixed time schedule for their outings. This will fetch more ridership to

the auto rickshaw drivers during the lean period and also work out as happy

hours for them too. This idea of happy hour discounting will, hopefully, create a

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new trend in commuter travel patterns during happy hours and thereby

encourage the IPT sector.

6.13 Fare fixation for prepaid auto rickshaws operating from Airports and Railway

stations.

6.13.1 At present, the prepaid auto rickshaw service is not available from the airport as

well as railway stations in the Mumbai region. Since passengers at airport and

railway stations usually have bigger and more luggage, the auto rickshaw is not a

suitable vehicle; hence it is unlikely that like black and yellow taxis the prepaid

auto rickshaws will be made available in the near future. However, prepaid auto

rickshaw service is available in some metropolitan cities like Pune.

6.13.2 In prepaid service, the incentive is given to compensate the long waiting period.

However, since, long distance travel fare of App-based taxis (which are more

comfortable, air conditioned and have large boot space to carry luggage) is

almost equal to or marginally more than prepaid auto rickshaw fare, passengers

always prefer these App-based taxis. Hence, in order to popularize the prepaid

auto rickshaw service, the amount of incentive should be moderate.

Accordingly the Committee has proposed appropriate revised incentive

structure.

6.14 Fare fixation for auto rickshaws operating in the state outside MMRTA region.

6.14.1 The fare structure applicable to the rest of the state should be generally based

on the principles adopted for working out the fare structure for Mumbai.

6.14.2 The fixed cost factors like cost of living, costs towards cost of capital,

depreciation, repairs and maintenance, insurance, taxes and other fixed costs

remain almost the same for Mumbai as well as the rest of Maharashtra barring

slight changes due to marginal differences in the average revenue earning kms

per shift and the percentage of idle run. However, depending on the type of fuel

used in the auto rickshaws outside Mumbai, the average kms per unit of fuel will

be different from that of Mumbai.

6.14.3 The auto rickshaw operation in the rest of Maharashtra is very complex. Almost

80% of the auto rickshaws in the rest of Maharashtra are plying in city / urban

areas whereas only 20% are plying in the rural areas. The area of operation of

auto rickshaws varies from city to city as per the size of the city in area. Ridership

often depends upon the population, level of industrialization, tourist /

educational / pilgrimage importance of the city, percentage of personalized

vehicles in that city and availability of other public transport services etc.

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AreaAverage revenue

earning kms per shiftPercentage of

idle run

Municipal Corporation areas 64 - 69 19% to 22%

Other than Municipal 62 - 67 21% to 24%Corporation areas

6.14.4 There is also varied pattern of permit holders. Some permit holders in rural

areas are small or marginal farmers, some have other part time businesses,

some carry school children and in the rest of the time do street hailing, some

permit holders work only for 3 to 4 hours a day whereas some work even for 12

to 13 hours. Their expectancy of cost of living is also far less as compared to the

auto drivers from big cities.

6.14.5 Due to the above factors, there could be local variations in respect of average

distance travelled per day, percentage of idle run, revenue earning kilometers

and mileage per liter of fuel. These factors can even be different within the same

R.T.A.'s jurisdiction, viz., cities and rural areas. However, the R.T.A.s cannot fix

two different fares (One for city limits and another for rural areas), because the

permit is for the entire jurisdiction or district.

6.14.6 The Hakeem Committee considered that 70% of the auto rickshaws in Mumbai

region are plying in two shifts. This may hold equally good for those plying in

Pune city and Pimpri-Chinchwad city (may not hold good for the entire Pune

region). But, as gathered from the Motor Vehicles Department, in other

municipal corporation cities, percentage of auto rickshaws working in two shifts

could be around 40% only and in other small towns, the percentage could be as

low as 20%. In the rural areas it could be almost 5% because there is hardly any

business or no business at night.

6.14.7 The Committee has not come across any study or survey report or research

paper about the operation of auto rickshaws in the rest of Maharashtra. Hence,

there is no authentic data available about average daily running, percentage of

idle run, revenue earning kilometers per shift, mileage per liter of fuel or number

of auto rickshaws running in two shifts.

6.14.8 The Hakeem Committee, while assuming the average revenue earning

kilometers per shift for Mumbai as 67 kilometers and percentage of idle run as

18%, had recommended the following bandwidth (range) for R.T.A.s in the rest of

Maharashtra.

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6.14.9 It may be noted that in the Hakeem Committee recommendations, at the upper

end of the band, the average number of revenue earning kms in municipal

corporation areas is higher than that of Mumbai and equal in other areas.

Together with a slightly higher idle run, the total gross kms per shift in those

areas will be higher than that of Mumbai. It does not seem to be a rational

assumption and therefore, would need appropriate rationalization.

6.14.10 The Hakeem Committee has discussed, in some detail, the inter-play of the fuel

economy (kms per kg or liter of fuel), idle run and revenue earning kms and

based on its analysis, has provided the range of revenue earning kms and

percentage of idle run from which the respective R.T.A.s are expected to pick up

definitive figures as per local conditions. However, in reality, since the

midpoints of these ranges almost coincide with the Mumbai values for

Municipal Corporation areas and are marginally different for the other areas,

they lend themselves to the R.T.A.s to accept almost the same figures as that of

Mumbai region. Secondly, giving such a range adds complications and creates

confusion among R.T.A.s in calculating basic fare at the time of every fare

revision, especially since they do not have the wherewithals to quantify the

result of the inter-play of various factors. Thirdly, choosing any value within this

bandwidth does not substantially affect the basic fare per km. On the flip side,

the scope of choice within such bandwidths also creates scope for disputes

between consumer forums and the auto rickshaw unions, especially if the upper

end of the band is chosen.

6.14.11 Hence, this Committee has no option but to make rational and logical

assumptions. Unfortunately, the only reliable and authentic data available is for

Mumbai only and limited to the Hakeem Committee's survey and EMBARQ

India's survey. Some inputs could be gathered from the field staff of the Motor

Vehicles Department. Needless to say, we have no choice but to fix these

parameters for areas other than MMRTA, PMC and PCMC areas with marginal

downward moderation with respect to the Mumbai figures. The Committee

recommends the following assumptions for R.T.A.s other than MMRTA, PMC

and PCMC areas.

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Parameter

Municipal corporation areas (except MMRTA, PMC &

PCMC areas)

Other than Municipal

Corporation areas

Percentage of auto rickshawsplying in 2 shifts 40% 20%

Average revenue earning kilometers per shift 66 kms 64 kms

Percentage of idle run 15% 15%

Total distance run in one shift 78 kms 76 kms

It may be noted that while deciding the fares, the concerned R.T.A. should take

these figures into consideration.

6.14.12 The other noticeable factor impacting on the basic fare per km will be due to the

change in the running (fuel) cost per km since auto rickshaws in the rest of

Maharashtra are run either on petrol or LPG or diesel fuel instead of CNG. The

Committee accepts the values of average run of kilometers per liter of petrol and

LPG recommended by the Hakeem Committee as derived from a survey

conducted by the Motor Vehicles Department, namely, 24 kms and 22.5 kms per

liter of petrol and kg of LPG respectively. The Hakeem Committee mentioned in

its report that the average run of kilometers per liter of diesel may be

ascertained by the officers of the Motor Vehicles Department. However, from

the inputs received from the manufacturers, experienced drivers and from the

data available on Google (http://www.vicky.in/trucks/piaggio-auto-rickshaw-

ape-xtra-mileage/) relating to 21 diesel auto rickshaws driven by different

drivers in different conditions, the mileage per liter of diesel comes to 23.43

kmpl in city conditions and 25.43 kmpl for highways. Hence, the Committee

recommends that the appropriate value of the average kilometers run per liter

of diesel can be considered as 23 kms.

6.15 Fare fixation for Share-a-auto rickshaw system.

6.15.1 Almost all stakeholders have championed the cause of share-a-auto rickshaw

scheme. In fact, there was a demand to identify and increase the number of

routes dedicated to this scheme. The evidence of its popularity can be seen

especially in the commercial hubs connecting to the suburban railway stations.

The reasons are not difficult to fathom. This is a win-win arrangement for the

driver as well as the passengers as the driver earns more because of the

permission to charge one-third more on the metered fare while 3 passengers

share the total fare, thereby effectively paying only about 45% of the single fare.

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6.15.2 The Hakeem Committee did not change the then prevalent amount of incentive

given to the drivers by way of one-third extra fare over the permissible fare as it

had found universal acceptance among the auto rickshaw drivers as well as

commuters. This Committee also does not find any reason to disturb this system

and therefore, endorses the same.

6.15.3 Given its popularity and financial benefits both for the driver as well as the

commuters, the demand for more routes is natural. The Motor Vehicles

Department, in consultation with the traffic police authorities and local self

government authorities, should pro-actively identify such routes where the

present demand for auto rickshaws far exceeds the supply. It is also expected

that in next few years on completion and operationalisation of more metro

railway lines in Mumbai Region, the auto rickshaw demand patterns are bound

to undergo change and the auto rickshaws will have to realign at many locations

to the role of feeder services to provide the last-mile connectivity as they do now

at the suburban railway stations. At that time, the share-a-auto rickshaw

scheme will need to be further expanded.

6.16 Distance for which minimum fare is chargeable.

6.16.1 The Hakeem Committee had reduced the distance for which minimum fare is

chargeable from 1.6 kms (essentially conversion of 1 mile to the metric system)

to 1.5 kms. This Committee, through its stakeholder survey through structured

questionnaires had asked this question through multiple options. The opinions

varied. But most of the replies favoured 1.5 kms, i.e., maintenance of status quo

while some of them favoured 1 kms or 2 kms.

6.16.2 The Committee considers 1 km as too small to incentivize the drivers and has the

potential to increase the incidence of fare refusals. Besides, for 1 km distance,

people will tend to prefer walking and may not opt for the IPT mode of transport.

On the other hand, 2 kms will increase the minimum fare by 33.33% and will

certainly create strong resentment among commuters. Since 1.5 kms as the

basis for minimum charge has been by and large accepted by all groups of

stakeholders without any strong reservations, the Committee would

recommend its continuance. There is not much of ground for considering

different distances for different regions, urban or rural. Hence, this norm may

be applied throughout the state.

6.17 Compensation for waiting period.

6.17.1 As per the pre-Hakeem Committee system, when auto rickshaws had to wait,

viz., at traffic junctions or move extremely slowly (lower than a km in ten

minutes), a fall of 200 meters in the fare meter would occur for a cumulative

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time of two minutes. Thus, for every minute of waiting, the driver would get

compensated to the extent of the fare for 100 meters, i.e., 10% of the basic fare

per km.

6.17.2 Hakeem Committee rationalized the meter operation system for both taxis and

auto rickshaws to the fare changing every 100 meters with the minimum fare

fixed for 1.5 kms. Accordingly, at present the waiting charges get calculated for

every minute (instead of 2 minutes) at the rate of 10% of the basic fare per km.

This Committee also endorses the same system without any change.

6.18 Luggage charges.

6.18.1 Presently luggage charges for auto rickshaw are payable @ Rs. 3 per piece of

luggage of size equal to or greater than (60 x 40) cms dimension while a brief

case, handbag, attaché case or bag of lesser dimension is not chargeable.

6.18.2 We have accepted luggage charge for the same size bag (60 x 40 cms) at Rs.6.00

for taxis. While the capacity of an auto rickshaw to carry big bags along with 3

passengers is limited, if it carries such a bag, there is no logic as to why the

luggage charges should be any different or less for the auto rickshaw than for the

taxi. Hence, the Committee recommends luggage charges for a bag of size equal

to or greater than 60 x 40 cms size to be Rs. 6.00 for auto rickshaw as well.

6.19 Rounding off of the fare.

6.19.1 For the sake of the convenience of both the driver and the commuter, it is

necessary to round off the fare payable to the nearest rupee. However, the

rounding off has to be done only once to avoid possible loss to either the

commuter or the driver due to double rounding off. In this regard, the Hakeem

Committee has explained the methodology as follows:

“The minimum fare will be indicated after rounding off; however, the base fare

for a km will be indicated as worked out by applying the formula without

rounding off. The fare payable by a passenger is calculated by multiplying the

distance travelled in kms with the basic fare km. the amount so arrived at is

rounded off to the nearest rupee; if this amount is less than or equal to the

minimum fare, the electronic meter will display the minimum fare which the

passenger will have to pay; if it is more than the minimum fare, then the meter

will display the higher amount, which should be paid by the passenger. (In

respect of mechanical meters, tariff cards to be used till switch over to the

electronic meter takes place will be prepared on this basis). While rounding off,

1 to 49 paise are to be ignored and 50 to 99 paise are to be rounded off to the

next higher rupee.”

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6.19.2 This Committee endorses the same. However, since mechanical meters are no

more in vogue, that part of the methodology recommended by the Hakeem

Committee becomes redundant.

6.20 Frequency of Fare revision.

6.20.1 The Hakeem Committee has recommended an annual review of the fare based

on the changes in the relevant cost factors and give effect to the revision with

effect from 1st of May. However, the government put the caveat that if the cost

escalation per km is less than 50 paise then such fare revision shall not be carried

out that year. However, in extraordinary situation if the cost escalation is more

than 20%, then the fare revision can be done expeditiously without waiting for

the next 1st May. The next fare review and revision (if necessary) can be done on

the next normal due date, i.e., 1st of May provided the time gap between the 2

revisions is at least 2 months or more.

6.20.2 Interestingly, inspite of such an elaborate mechanism provided for the

frequency of fare revision, widely divergent views were presented to this

Committee from commuter as well as driver groups. The suggestions ranged

from as low as one month to 2 years.

6.20.3 The pitfalls of too frequent or too infrequent revision of fares is too obvious.

While frequent revision is cumbersome, impractical and mostly not worthwhile,

too infrequent revisions can be detrimental to protecting the real earnings of

the driver. Hence, a periodicity of yearly review and revision is both reasonable

and fair, especially since in a low-inflation scenario, the revision will not happen

even after the review if the cost escalation translates to less than 50 paise per

km. Besides, the provision for extraordinary situations also provides for quick

relief to the driver.

6.20.4 All in all, the recommendations of the Hakeem Committee as amended by the

Government in this regard were both pragmatic and rational. However, since

the consumer price index data for the preceding 31st March may not be

available before the end of April, no time is effectively available to the R.T.A.s to

effect the change in fare w.e. from 1st of May. Hence, this Committee

recommends the fare revision, if warranted, may be made with effect from the

1st of June every year in lieu of 1st of May. As regards mid-year fare revision due

to rapid rise in costs, it is most likely to happen only in case of fuel cost escalation.

Hence, for ease of action, it is recommended that the cost escalation in fuel price

by more than 25% should trigger the mid-term fare review and not 20% of all

costs.

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6.21 Commuter complaints for Refusal of auto rickshaw drivers to ply.

6.21.1 Allegations of refusal by auto rickshaws to ply has been a sore point with the

commuters. While the auto rickshaw driver may sometimes have genuine

grounds to refuse, viz., lunch break, rest, returning home, but they do

sometimes refuse passengers of short distances, which leads to disputes and

complaints. It is equally irritating for a commuter to waive his hand to stop every

auto rickshaw approaching towards him only to find it occupied.

6.21.2 In order to avoid such disputes and confusion, there is a need to provide

appropriate indicator about the auto rickshaw's occupancy status. An

illuminated LED indicator on top of the auto rickshaw can be provided to clearly

indicate from a long distance as to whether the auto rickshaw is hired or empty

(available for hire) or off duty.

6.21.3 As per the information gathered from the Transport Commissioner's Office, an

initiative was taken in 2014 to implement roof top light indicator system on auto

rickshaws to enable the passenger to understand its occupancy status. In fact,

draft notification was also issued but the scheme could not be implemented for

lack of follow up action in issuing the final notification. The Committee feels, it is

high time to revive the proposal and implement it.

6.21.4 The technical details of the Roof top light fitment for auto rickshaws can be as

follows:

1 Operating Voltage : 12 V + 3V DC Battery Voltage

2 Multi colour LED : 1000 HrsMTBF

3 Height of letters : 50 mm

4 Thickness of letters : 5 mm

5 Power Dissipation : Max 500 W per legend

6 Dimensions of the Box : 300 (L) x 70 (W) x 140 (H) mm

Since auto rickshaws are having rexin hood, the LED fitment cannot be fitted on

roof top as it will puncture the hood. Hence, occupancy status indicator in an

auto rickshaw can be mounted in the top portion of the wind shield glass from

inside. The size of the fitment can be 500 (L) x 10 (W) x 50 (H) in mm. This Roof

Top fitment will indicate 3 positions of occupancy status, viz,

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1. - also indicated by the sign ( ) sign in green Colour.

2. - also indicated by ( ) sign in red Colour.

3. OFF DUTY - (may be break down or driver resting) also indicate by ( ) sign in

white Colour.

6.21.5 The LED indicator can be bl-lingual, i.e., Marathi on one side and English on the

other. Such bi-lingual Signage will be user - friendly to both tourists as well as

locals. An LED indicator provides sharp and clear indication from at least 100

meter distance. Hence, the Committee strongly recommends that this system

must be implemented in a time bound manner. The Inspecting Authorities shall

ensure that the said fitment is fitted in each and every auto rickshaw at the time

of renewal of permit and fitness certificate so that all auto rickshaws in the state

will be covered within about a year. This will drastically reduce disputes about

refusal to ply.

6.21.6 The officials of Motor Vehicles Department also must take stern action against

the drivers and permit holders who refuse to ply or behave arrogantly with the

commuters.

6.22 Permission for advertisement on auto rickshaws.

6.22.1 This demand was made by the auto rickshaw unions before the Hakeem

Committee which had recommended to the Government for permitting it.

However, it seems that no action has yet been taken. Auto rickshaw unions have

again raised the same demand before this Committee.

6.22.2 As per Rule 134 of The Maharashtra Motor Vehicle Rules, 1989 Regional

Transport Authorities are empowered to grant the permission for display of

advertisement on any transport vehicles and as per rule 134(a), the fees for the

advertisement are also prescribed. It may also be noted that Rule 5(11) of the

Maharashtra City Taxi Rules, 2017, allows to carry advertisement on city taxi

vehicles. Hence, the Committee doesn't understand as to why such legitimate

demand of the auto rickshaw union, which is legally permissible, has not yet

been considered favourably. Permission for advertisement will fetch income to

the auto rickshaw permit holder and the Government will also get the revenue

by permitting such advertisement.

6.22.3 Advertisement may be permitted on side and rear panel and back of the front

seat on auto rickshaws excluding the space for mandatory display of information

pertaining to the registration mark and permit number etc. This will provide

extra source of income to the permit holders.

FOR HIRE

HIRED / ENGAGED X

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6.22.4 Advertisements on auto rickshaws will not have the same visibility levels due to

the constraints of size and often auto rickshaw being on the move. The

advertisement, if any, on the back of the front seat will have even less visibility,

essentially confined to the passengers using it. Hence, it should be taken up

with local government authorities to levy concessional license fees for such

advertisements as the revenue earnings of the auto rickshaw owners would not

be substantial.

6.23 Demand for Auto rickshaw stands.

6.23.1 Inadequacy of auto rickshaw stands has been a perennial grouse of the auto

rickshaw drivers. It increases their empty runs and thereby adversely impacts

their net revenue earning kilometers and earnings apart from increasing

punitive action by the traffic police for wrong parking. It also greatly

inconveniences the passengers. Often the auto rickshaws occupy the bus bays

creating conflict with public transport officials and their passengers. The

present metro work going on in Mumbai has further reduced, albeit temporarily,

the availability of auto rickshaw stands.

6.23.2 The grievances of the auto rickshaw drivers on this count, especially in Mumbai

and Pune, are genuine and need to be expeditiously and sympathetically

addressed. Accordingly, the Committee recommends that the Motor Vehicles

Department, in urgent and close coordination with the Traffic Police and local

government authorities, identify additional potential auto rickshaw stands and

the local government should develop them in a time bound manner within, say,

the next one to two years.

6.23.3 After completion of metro railway lines in Mumbai, the patterns of demand for

IPT (and of course, buses) will undergo dramatic changes. There will be need for

providing adequate bus, taxi and auto rickshaw stands at the metro stations for

ease of quick traffic dispersal and providing the last mile connectivity. MMRDA

is already planning for adequate infrastructure at the metro stations for this

purpose. The Motor Vehicles Department should keep close liaison with the

MMRDA and metro implementation authorities to take care of the needs of the

taxi and auto rickshaw drivers.

6.24 Meter recalibration, testing and Complaints of meter tampering.

6.24.1 There were far less complaints of meter tampering since they have been

converted to electronic meters. The meter manufacturers also vouched for the

tamper-proof nature of the electronic meters. However, if and when any such

complaint is received, the Motor Vehicles Department would need to take it up

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with the concerned meter manufactuer(s) and take necessary remedial

measures.

6.24.2 However, there were a number of complaints from the consumer organizations

about operation of auto rickshaws without using the meter and even non-

fixation of meters, especially in semi urban and rural areas. It was also reported

that some commuters also insist on non-use of meter and bargain on the fare,

primarily because of their distrust of the accuracy of the meter. The Committee

recommends that the Motor Vehicles Department must enforce the electronic

meter system in all areas and also take the initiative, with the help of the

consumer organizations and the auto rickshaw unions to educate and sensitize

the drivers and commuters in this regard.

6.25 Reduction of one time additional permit fee.

6.25.1 When the number of permits issued to black and yellow taxis were frozen in

1997 and no new permits were issued till lifting of the freeze in June, 2017, the

permits were unofficially sold or leased out at an exorbitant premium in the

market. This informal permit transfer fee being demanded by permit holders

from the transferees was a sort of 'pagdi' system similar to that obtaining in the

property tenancy market in Mumbai. Hence in this controlled, supply – scarce

market, when the Government auctioned 4000 taxi permits in the year 2010-

2011 for a premium taxi service distinct from the black and yellow taxis, it

fetched the price of Rs. 2.61 lakh for each permit quoted by the auction winning

company. However, the company which took those permits failed to acquire the

full quota of 4000 permits and acquired only 2800 permits because there was no

demand for premium service of that magnitude and more importantly, the

exorbitant permit premium made them financially unviable.

6.25.2 Prima facie, in order to tap a part of the unofficial premium prevailing in the grey

market of unofficial transfer of taxi and auto rickshaw permits, the Government

had introduced additional permit fees under the newly introduced Rule 75A of

the Maharashtra Motor Vehicles Rules, 1989 as recently as in February 2016,

ranging from Rs. 10,000 to Rs. 25,000 in addition to the normal permit fees

under rule 75.

6.25.3 However, after the removal of restrictions on the issuance of permits in June

2017, now the permits are freely available and hence no permit will command

any worthwhile premium in the market, let alone Rs. 2,61,000. Hence, there is

no logic behind such exorbitant additional permit fees as prescribed in rule 75A

of the Maharashtra Motor Vehicles Rules, 1989. This additional fee will lead to

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substantial increase in the capital cost of black and yellow taxis and auto

rickshaws and thereby result in increased fare per kilometer, putting avoidable

extra burden on the commuter's pocket. This is against the motto of promoting

use of IPT in complementarity to public transport, in order to discourage use of

private transport and to facilitate decongestion of city roads and parking spaces.

It is also worth noting that, in no other state in India such huge additional permit

fees are imposed. All taxi and auto rickshaw unions and Aggregator companies

have vehemently opposed such additional permit costs as illogical and unfair.

6.25.4 In the Committee's considered opinion, the so-called discovered price of Rs.

2,61,000 obtained in a highly supply-restricted taxi market or unofficial high

premium commanded by black and yellow taxi / auto rickshaw permits earlier

cannot be a rational basis for charging additional permit fees in a liberal, no-

restriction market to which the state has now moved. Permit fees are not levied

in lieu of any service provided. Hence, the Committee is of the view that the

permit fees should not be reckoned as a revenue earning source and such huge

permit fees cannot be justified in a free-market regime. However, the

Committee is elsewhere proposing to transfer a part of the additional permit fee

levied under Rule 75A of Maharashtra Motor Vehicles Rules, 1989 to a Welfare

Fund for the taxi and auto rickshaw drivers. Hence, it does not recommend its

complete removal but recommends for substantial reduction and overall

rationalization.

6.25.5 Accordingly, the Committee recommends that the additional permit fee under

rule 75A of the Maharashtra Motor Vehicles Rules, 1989 for black and yellow

auto rickshaw should be reduced to Rs. 3000/-. The Committee has also

recommended similar rationalization of the additional permit fee for the black

and yellow taxis and the App-based Aggregators' taxis in the relevant chapters.

The Committee also recommends that half of the amount of this additional

permit fee received from the city taxis, black and yellow taxis and auto rickshaws

should be deposited into the proposed state-controlled Welfare Corporation for

such drivers.

***

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7.1 Determination of Fare structure for auto rickshaws in Mumbai.

7.1.1 Around 1,39,000 auto rickshaws operate in Mumbai city and another 1,94,000 in

the rest of MMRTA, totaling upto 3,33,000. All auto rickshaws in Mumbai

(MMRTA) use CNG as fuel. Hence, we will develop a fare structure for these auto

rickshaws first. This structure will be suitably modified for application to auto

rickshaws elsewhere, whether based on petrol or LPG or diesel.

7.2 Cost elements.

7.2.1 We have already identified the cost elements that go into consideration for

determination of the fare structure. We will determine the actual cost of

operating an auto rickshaws for a unit distance (namely, a kilometer) based on

these cost elements which are as follows:

i. Fixed costs represented by cost of capital and depreciation on the capital

cost of acquiring the auto rickshaw;

ii. Other fixed costs such as taxes, insurance premium for comprehensive

policy and other levies and expenses;

iii. Estimated cost of repair and maintenance of the auto rickshaw;

iv. Provision for the cost of living of the family of the driver of the auto

rickshaw;

v. Estimated number of revenue earning kilometers run by an auto rickshaw

during one working shift.

vi. Average number of kms run on unit quantity of fuel, i.e. in the case of

Mumbai, kms per kg of CNG;

vii. Estimated percentage and actual kilometers of idle run out of the total

distance run by an auto rickshaw;

viii. Percentage of auto rickshaws which are run on a second shift by a driver

different from the one operating the first shift.

The contribution of each of the above elements to the cost of operating the auto

rickshaw are worked out in the following paragraphs.

7.3 Cost of (return on) capital.

7.3.1 In 2012, the price of a 2-stroke auto rickshaw was Rs. 1,33,000/- and that of 4-

stroke auto rickshaw was 1,43,000/-. The respective shares of 2-stroke and 4-

stroke auto rickshaws were in the ratio of 7:3; hence the weighted average price

FARE STRUCTURE PROPOSED FOR AUTO RICKSHAW

CHAPTER - 7

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was Rs. 1,36,000/-. The Hakeem Committee considered Rs. 1,40,000/- as the

weighted average price for fare calculation purposes. This ratio has undergone

a substantial change in the last 5 years. Presently, the fleet share of 2-stroke and

4-stroke auto rickshaw is about 3:7. Secondly, the share of Bajaj auto rickshaw is

over 90% in the total fleet. Hence, for computation of cost of capital and

depreciation, this Committee has considered the present weighted average

price of 2-stroke and 4-stroke CNG Bajaj auto rickshaw model, which are Rs.

1,56,000 and Rs. 1,66,000 respectively which are inclusive of the CNG fitment

price, electronic fare meter price and registration charges but do not include

insurance and motor vehicle tax which are accounted for separately.

7.3.2 Since the composition of the fleet of 2-stroke and 4-stroke auto rickshaws is in

the ratio of 3:7, the weighted average price of an auto rickshaw in the MMRTA

region is Rs. 1,63,000. While making fare revision in future, the R.T.A.s must take

into consideration the weighted average price of the models present in the fleet

at that point of time.

7.3.3 As discussed in para - 6.2, considering that loans for auto rickshaws are typically

given for 5 to 7 years, we have assumed the higher tenure of 7 years for the sake

of benefit of such borrowers. Normally the auto rickshaw owner as the

borrower has to provide for the margin money requirement which is typically

about 25%. Assuming maximum life of 15 years for the auto rickshaw, 0.35X is

the share of cost of the auto rickshaw that bears the burden of interest and

0.65X is the share of the cost that becomes the investment of the auto rickshaw

owner where 'X' is the price of the auto rickshaw. The details of how these

shares are arrived at are given in para 6.2.1 of chapter-6. Presently, the median

rate of interest charged on auto loans by the nationalized banks is 9.00 to 9.50%.

We have adopted 9.5% for our calculation of cost of capital. For the auto

rickshaw owner's own funds, the rate of interest paid by nationalized banks on a

one-year fixed deposit is, on an average, 6% which can be considered as the

opportunity cost of his own funds. Accordingly, the weighted average cost of

capital will be =(0.35x9.50%) + (0.65x6%) = 7.225% which can be rounded off to

7.25%. Accordingly, on the weighted average auto rickshaw price of Rs.

1,63,000, the cost of capital @7.25% per annum will be Rs. 11,817.

7.4 Depreciation.

7.4.1 Depreciation is usually calculated over the useful life of a vehicle. The Hakeem

Committee had assumed it to be roughly 7 years with a salvage value of 10% at

the end of this period. Then it divided the balance amount by 7 to arrive at the

annual depreciation amount. However, thereafter, it went on assuming

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different salvage values for auto rickshaws of different vintages beyond 7 years

and calculated the annual depreciation on them and then accumulated the

weighted averages thereof as the depreciation value to be allowed as a cost. As

discussed in earlier chapters, this is not an appropriate method of calculation of

depreciation.

7.4.2 Hence, the Committee has adopted the more rational and fair method of

allowing depreciation on the basis of the weighted average price of latest

models of 4-stroke and 2-stroke CNG Bajaj auto rickshaws and allowing

depreciation on that average price net of salvage value over the permissible

useful life of the auto rickshaw. Since the latest weighted average price of 4-

stroke and 2-stroke CNG Bajaj auto rickshaws is 1,63,000 and we have

considered 15 years as the useful life of the auto rickshaw, the depreciation is

calculated on these parameters after deducting the salvage value. After 15

years of intensive usage as an auto rickshaw, the vehicle will be left with

essentially its scrap value which can be assumed at 5%. Thus, the annual

depreciation to be allowed will be (Rs. 1,63,000 x 0.95) divided by 15, i.e., Rs.

10,323.

7.5 Insurance, taxes and miscellaneous fixed expenses.

7.5.1 For the reasons as explained in para 6.5.1, this Committee endorses the Hakeem

Committee's decision of accepting comprehensive insurance premium as a

recognized item of cost. Hence, the latest weighted average cost of the

comprehensive insurance premium of CNG Bajaj auto rickshaw, which is Rs.

9,100 is taken as the cost of insurance.

7.5.2 Currently, the one-time motor vehicle tax is Rs. 3,750 which on prorata basis

comes to Rs. 250 (Rs. 3750 / 15 years) = Rs. 250 per annum. There is no

professional tax for auto rickshaw permit holders.

7.5.3 As regards miscellaneous expenses, they are as given in the following table

considering that 70% auto rickshaws are run on double shift.

Item Amount (in Rs) Per year cost (in Rs)

Driver's uniform (two pairs per year) 1800 1800 x 1.7 = 3060

Shoes ( one pair) 800 800 x 1.7 = 1360

Driving license renewal fees every three years, 500 500 x 1.7 = 850/3 = 283

Permit renewal fees every five years, 500 500/5 = 100

Total annual miscellaneous charges 4803

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7.5.4 Accordingly, taking into account the above mentioned cost elements of

insurance, taxes and miscellaneous fixed expenses together the total will come

to Rs. (9100+250+4803), i.e., a total of Rs.14,153.

7.6 Annual expenditure on repair and maintenance.

7.6.1 As explained in para 6.6 of the last chapter, since the estimation of the cost of

repair and maintenance done by the Hakeem Committee was highly contested

by the consumer organizations, this Committee decided to identify various

elements of costs of repair and maintenance of an auto rickshaw on actual basis

separately for auto rickshaws running on single shift and double shift basis.

Such separate estimations are considered necessary as costly consumables viz.,

tyres, tubes, batteries and frequency of servicing would vary substantially for

both types of auto rickshaws due to differential intensity of usage. Most other

expenses will remain the same for both.

7.6.2 We have estimated in para 6.4.3 the average daily kilometers traveled per shift

at 81 kilo meters. Hence, in a year (300 days), an auto rickshaw will travel 24,300

kms in a single shift and 48,600 kms in a double shift. Accordingly, the details of

the costs estimated on account of repair and maintenance for an auto rickshaw

are given below:

Double shift48,600

kms(Rs.)

Sr.No.

DescriptionSingle shift

24,300*kms(Rs.)

a) Regular servicing including labor and spares.

One servicing every 4,000 kms costing (6 services) (12 services)

Rs. 500/- per service. (Number of services

rounded off to the nearest integer)

b) Tyre cost Rs.1,000/- per tyre x 4 = Rs. 4,000/- 4000 8000

for 25,000 kms of tyre life.

c) Battery cost Rs. 2,500/-. Life 2 years. 1250 1250

Hence per year cost

d) CNG / LPG Hydro-test cost Rs. 2100/- for 3 700 700

years. Hence per year cost

e) Annual Fitness Renewal charges including 1000 1000

fixing radium and painting number plate etc.

f) Meter calibration charges and meter testing 600 600

and sealing

g) Hood replacement every 3 years cost Rs.3000/- 1000 1000

3000 6000