M. Kondaiah was just a regular guy in Hyderabad, raising his family in a middle-class manner like any other. The 34-year-old drove a taxi for a living and worked towards a great future for his family, especially his two daughters aged 6 and 11. But that dream was terribly crushed, as Kondaiah committed suicide on Feb 12. Under immense stress at not being able to pay the EMI for his brand-new car Indica V-2 for the past few months that he drove for Uber, Kondaiah consumed poison and succumbed in the hospital. Later in the week, apparently two more drivers attempted to commit suicide in front of Ola’s office in Bangalore.
It would be easy to dismiss Kondaiah’s death as just another statistic of suicide in India, a little introspection points towards a totally different malaise. Scratching the surface, one finds that Kondaiah’s death was not caused by poison alone; it was a result of misplaced promises, exaggerated hopes, lure and illusion. The man had been driving cabs for a couple of years, before he was tempted by the idea of a higher living by the new-age cab aggregator. In just the 8 months that he drove his newly bought car for Uber, Kondaiah could barely earn enough to pay for the EMI and the running cost, let alone manage his family or his own expenses. At the end of it all, the exasperated man gave up on life. So who is blame for his death? His own naiveté that believed that he could earn a good living by driving a Uber car or the cab-aggregator companies like Uber or Ola that have been rapidly expanding their footprint across the cities in India by making absurdly impossible promises to the drivers. Is it misinterpretation or fraudulent selling?
A looming crisis?
To get an idea of the problem, all one has to do is scan the newspapers. Across cities of Delhi, Bengaluru, Hyderabad and many more cities, drivers aligned with the cab aggregators like Ola and Uber are agitating against these companies. In fact, in many of the cities, the operations of these companies have been badly disrupted by such agitations. The demands of the agitating drivers were simple: keep the promise of incentives rather than changing it frequently, stop giving financially unviable shared rides, accident insurance and an increase in the minimum charge of Rs 6 per kilometre. In between, they also demanded a capping on the newer additions on the network to ensure that their earning does not dilute further.
While agitations and strike are pretty common in India, and the coverage by media has been at par with all the labour disputes that usually get written about. The contour of the debate has changed much after the death of Kondaiah. People are now asking question as to whether the miss-selling and deliberate misrepresentation of facts by the cab aggregators tantamount to criminality. Was it error on the part of Ola and Uber to paint a ‘too good to be true’ picture or was it a subterfuge that toyed with the lives and livelihoods of hundreds of thousands of drivers across the nation?
For the past few years, as the cab aggregators ramped up the numbers of drivers on their network, they played a dangerous game of deceit. Luring drivers with promises of incredible earnings, as much as 1.5 lakhs per month, these cab companies were able to quickly expand their footprint across the nation. Little wonder then, Ola became a $5 Billion company in a matter of 3 years, and so did Uber. In the early days, the drivers on the network had a field day, with scores of incentives coming their way. In fact, there was even a time, when all you had to do was to mark your ‘attendance’ on the network for a few hours, and money would automatically get deposited in the accounts, even if there was not a single ride through the day. From that peak, where the drivers could easily earn 1 Lakh on a monthly basis, to the current one where they are struggling to eke some 20000-30000 even after driving the cars for some 18 hours on a daily basis. They are working endlessly and yet unable to earn even half of what they were just a year or so back. Imagine, if your income instead of growing crashed by over 50%, it would be disastrous, won’t it be?
Sadly, not many seem to be aware or concerned about this gross miss-selling. Even today, drivers are being promised the moon, just so they sign up on the network. These new recruits in the hopes of a brighter future are buying swanky new hatchbacks and sedans, coming at high EMIs. According to estimates, some 6-8 lakh drivers on the Ola & Uber network and could be exposed to such a risk.
The buck stops where
The biggest problem in all this is about liability. Who’s liable, if the driver earnings crash out and they are unable to even pay their EMIs? What if the whole market collapses tomorrow, who would take a hit?
The beauty of the scenario is that even though Ola & Uber employ so many lakhs of drivers in India on the network, they do so without any culpability or responsibility. With the help of some very efficiently worded contracts, these cab aggregators position themselves as just technology providers and not employers per se. Hence, they unlike employers, they are free from all encumbrances of retirement, PF, gratuity, PLs, etc. Except for a small subset of employees, all the drivers on the network are not accounted as employees at all.
The rather strange part in all this is the manner in which the authorities have largely ignored the issue. While, the drivers have been agitating, not even a single political party has shown whole hearted support to their plight. Which is rather strange, considering the sheer size of the industry and number of livelihoods at stake. Possibly there’s a lesson or two that the Indian authorities can learn from the Federal Trade Commission of US that coerced Uber to cough up $20 million in fine last month for the lies it spread to attract drivers. The allegation was about misleading driver earnings’ claims of hourly or yearly income and exaggerating income figures. The money was supposed to find its way back to drivers who were being misled as per this case. Overstating earnings in advertisements in various media and stretching the median annual income numbers had caught FTC’s flak and it felt that the company should pay for this misleading communication. Uber in this case in the US, silently complied with the judgement. In case, the kind of misselling that is done in India would have been attempted in US or Europe, the cab aggregators would have faced a torrent of cases from the drivers itself.
A big technology-based disruption was portrayed by aggregators and media which dramatically improved efficiencies of cab business and in turn resulted in cab rides available cheaper than auto fares. In reality, such low fares were the result of the subsidies given to drivers to compensate for the unviable fares. The driver network was built on the crutches of incentives. Now these crutches are being taken away without increase in consumer fares, which is drastically reducing the money drivers can take home.
In the end, Kondaiah Kumar’s suicide should be a wakeup call for the industry and the government. There should be an earnest deliberation on the manner in which the taxi industry has expanded in the past few years, where just two of the players dominate the industry and call the shots. There must be a realignment of rules and regulations that stems the practice of miss-selling urgently, brings a realistic alignment of fares, and ensures that all the players in the bargain — from the consumers to the cab-drivers — are treated fairly. The commerce ministry came up with press note 3 last year to prevent ecommerce marketplaces from influencing prices or selling below cost price. Similar intervention on floor pricing by regulators is the need for the hour in cab industry too.
The cost of ignorance can be pretty high on this front. All these drivers have taken loans from banks and NBFCs without any supporting guarantee from the cab-aggregators, in case even a few percentage of the 5 lakh drivers default on the auto-loans and it turns into a NPA, it could trigger an avalanche which would be just like the one that hit the US economy in 2007, and was known as the Sub-Prime Crisis. Thus, ensuring that drivers like Kondaiah are not driven to extreme measures is not only good for the cab aggregators but also to the society at large.
Hopefully, things won’t go that far and Kondaiah would just be an exception and not the norm. Let’s pray for the peace and well-being of his family, and the lakhs of all the drivers that are struggling at the moment to make ends meet.