Auto rickshaw drivers’ demand for fare hikes – Are they justified?

Auto rickshaws are one of the most popular modes of public transport across cities and towns in India. They have been providing last – mile connectivity at an affordable cost to a majority of the Indian population till now. In a densely populated city like Mumbai, auto rickshaws complement the BEST buses, trains and also taxi.

However, the overall auto rickshaw experience has become an ordeal off late as Mumbaikars have had to endure refusals from auto rickshaw drivers to ferry them to their destinations, overcharging is rampant and extremely rude behavior to top it all. Recently, a steep rise in auto fares was affected. But the refusals and rude behavior continues.

Apparently there are around 1, 25,000 auto rickshaws catering to a population of 1.25 Cr in Mumbai. These drivers are represented by unions such as Rickshaw Chalak Malak Sena and the Mumbai Autorickshawmen’s Union. According to these unions, some of the issues faced by Mumbai auto rickshaw drivers are:

a)     Fare hikes are based on the old formula whereby the fares were raised only if the petrol / CNG prices rose by more than 50 paise. As a result, there were no fare hikes from 2004-2010, though the cost of living rose during this period.

b)    Few general and share auto stands results in idle run to look for passengers and parking anywhere requires them to pay illegal parking charges.

As a result they have been demanding among other things an indexation of an auto rickshaw drivers‘income to the increasing costs and say that a lack of this has contributed to the practice of overcharging, the brunt of which is borne by the passengers. In addition, they refer to the basic problems of livelihood of auto rickshaw drivers as also other problems like parking space availability, auto rickshaw stands and CNG stations. 

Prima facie it may sound fair as everyone has the right to earn a fair and a decent /remuneration / income / living as per the services that they provide. But the militant stance adopted by union leaders and the blatant harassment by the auto rickshaw drivers is uncalled for. Let us first have a look at some hard numbers;

Minimum Distance (Kms) 1.5
Minimum Fare (Rs) 15
Per Km fare for minimum distance (Rs) 10
Every Subsequent km (Rs) 10
Avg overall per km fare  (Rs) 10
Waiting charge per minute (Re) 1
Avg. no. of new fares per day 35
Avg distance per new fare per day 3.75
Avg waiting time per new fare per day 3
TARIFF 1312.5
REVENUES per day (Rs) 1417.5
Cost of a new autorickshaw (Loan @ 13%) 160000
EMI per km 1.13
Fuel Cost Per km 1.44
Maintainance & Repairs Per km 0.51
Insurance 0.08
Miscellaneous 0.63
EXPENSES per day (Rs) 481.56
INCOME per day (Rs) 935.94
INCOME per month 28078.1

 Some of the assumptions include; Avg. no. of new fares per day, i.e. no. of times an auto rickshaw driver downs his meter per day is 35. The avg. distance plied per new fare per day 3.75 km. On the cost side, insurance premium is assumed @ Rs 300 p.m. miscellaneous exp. include the penalty paid by auto rickshaw drivers and even the bribes paid as claimed by auto rickshaw union leaders @ 2500 p.m. (phew!). Majority of the autos in Mumbai run on CNG which is supplied to the city by MGL and the retail selling price of CNG is Rs 36 / kg. CNG cost is ~ Rs. 36 per kg. An auto gets a mileage of about 25km per kg. So it costs Rs. 1.5 per km to them.

Adding all possible other costs etc. still the rickshaw wallas make around Rs.28000/- pm. Now, it is safe to assume that this income is tax free. This is assuming that the auto rickshaw driver operates on an ownership model i.e. he owns the auto rickshaw he drives. This is pure business and businesses are driven by margins and returns on investment. By any standards this is a cool sum to make. In light of this, the continued refusals and lack of improvement in service and the strikes that almost hold the city to ransom seems criminal.

According to latest economic survey average salary of Indians is Rs.6300 pm.

I believe there should be de – regulation of permits issued and also the fares. Pvt fleet operators should be allowed too. It is only increasing competition and fear of being driven out of business that would discipline these blokes. Time for brave for brave new decisions!


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