While enough has already been written about the ban on surge pricing by taxi-aggregators, this policy measure is an interesting case study to analyse what are the factors that led to the Karnataka and Delhi Governments’ decision to spring to action and respond with such a policy measure. The hypothesis of this article is that there are six things that incite governments to ‘do something’ in a situation. Here is a list of the factors, in no particular order. Neither is the presence of all these factors at the same time essential, nor are the factors mutually exclusive.
- Descriptive or vividness bias: Descriptive bias is one of the cognitive biases in evaluation. According to this bias, information that is vivid, descriptive, and visually stimulating has a greater impact of being registered as valid evidence regardless of how close it is to reality. Thus, campaigns and protests that have vivid imagery circulated through media tend to strike a chord with the masses and the government alike. Thanks to social media, such vivid images go viral very quickly and garner a sense of urgency with which the issue in question must be responded to. For instance, in the case of surge pricing, the pictures showing 2.8X, 3X went viral and caught people’s and Mr Kejriwal’s attention.
- Need to respond to interest groups: Governments can be coerced into action deliberately or unconsciously by various interest groups, such as labour unions, auto unions, OBCs, etc. More likely than not, the government looks at these interest groups in terms of gaining an electoral advantage. By terming the surge pricing as “daylight robbery” by cab-aggregators, Mr Kejriwal wants to portray this image of the protector of the interests of middle-class, who are the typical user of taxis, while simultaneously endearing himself to the auto-rickshaw drivers, who are purported to be among his staunchest supporters. Another important group is the government itself, which has vested interests in the success of its policies. The reinstatement of the odd-even policy by the Delhi government, led to a scarcity of commuting options for the public. One can surmise that because the government did not want to withdraw its already rolled-out odd-even policy, it reacted with another policy measure to tackle the scarcity.
- Sense of violation of fairness: All governments try to maintain the perception that they want fair and equitable outcomes for their people. As soon as there is a sense that fairness is being compromised in favour of one or the other groups, governments decide on actions that restore a sense of fairness. Again, the middle-class was portrayed as being shortchanged in case of surge pricing.
- Judicial activism: As per Indian law, an individual, an institution, or a non-governmental organisation (NGO) may approach the courts of justice to file a Public Interest Litigation (PIL) to raise issues of broad public concern and demand social justice. Typically, the litigants use PILs to focus the attention of people and government toward matters related to larger public interest especially in the areas of human rights, consumer welfare, and environment.
- Mistrust towards MNCs/private enterprises: More often than not governments treat private enterprises, especially large multi-national corporations, with suspicion. Any perceptible large-scale action on behalf of these enterprises immediately makes the government vigilant and ready to take action. Further antagonism builds up because of the past reputation of an entity, particularly if there has been bad press. This can lead the government to treat every future action by the said entity with caution and exaggerated measures. With a rape case being filed last year against one of the Uber drivers, the cab-aggregators have since been under the government’s scanner.
- Government’s urge to regulate: The government finds it difficult to let go of its urge to be in the driving seat and hence it often responds in order to take control of situations that are otherwise best left to market forces. For instance, technological innovation is omnipresent in today’s world and the government is not always nimble enough to respond to the fast pace of technology. As a result, the government reacts by establishing regulations, especially in the short-term, that help them rein in the pace of technology while the government itself thinks of long-term solutions. The government regulates taxis and auto-rickshaws by issuing limited number of licenses to ply. Drivers’ unions also help maintaining the status quo that governments know how to navigate. Taxi aggregators have broken this system, and Uber was also criticized for operating beyond any such oversight world over.
Nidhi Gupta is a Programme Manager at the Takshashila Institution and tweets at @nidhi1902