The cap on auto rickshaws in Delhi is unjustified Premium

Earlier this month, the Supreme Court wasted an opportunity to improve the lives of auto rickshaw commuters by turning down a request to lift the cap of 1,00,000 auto rickshaws in Delhi, imposed in 2011.

Imagine you are on the road, in need of transport. You wave your hand, and two auto rickshaws stop. Your chosen driver asks you where you want to go, accepts the metered fare, and takes you to your destination. Such auto rides are possible, but not always in Delhi. Earlier this month, the Supreme Court wasted an opportunity to improve the lives of auto rickshaw commuters by turning down a request to lift the cap of 1,00,000 auto rickshaws in the capital, imposed in 2011.

The court received this application from Bajaj Autos in 2018. Judges felt that even if lifting the cap was the right decision, they could not be seen doing so at the request of a commercial interest. It would reflect poorly on the Court.

The Court recognised the need to increase the cap on auto rickshaws in Delhi, but also made an impossible ask. The order noted that the cap could be lifted in the interest of the people if the application came from the government or an organisation representing the interests of the common man, and not from a profit-making company. History and economic theory tell us that such a request is unlikely to come from a common man. The government will choose the side of an organisation that exists and is powerful at representing its interests: unions of auto rickshaw drivers.

To form interest groups of a large number of members such as auto rickshaw riders, public transport commuters, pedestrians, or consumers, or taxpayers is impossible. Interest groups work only when the interest is narrow and the benefits go to members who are concentrated, geographically or occupationally. Auto rickshaw drivers are able to form unions because their interests are narrow and specific towards protecting the value of their auto licence issued by the government. Auto licences are estimated to carry a value of ₹4,00,000 in secondary markets, while they were issued for a fee of just ₹1,000. If the cap were removed, the value of their licence would become zero.

On the other hand, if the cap is removed, riders will gain from more choices, competitive fares, and shorter waiting periods. But the interests of riders are scattered among a large number of people who are hard to organise. This is the tragedy and the reason why the Court’s precondition to even consider lifting the cap is impossible to fulfil.

The Delhi government’s view during the application hearing is also worth noting. Government counsel cited development of metro and other public transport as reasons to turn down the request to lift the cap. How this view is in complete contrast to the lived realities of commuters will be obvious to anyone who takes the metro. To take the metro, many must take an auto first. In Delhi, there are not many walkable streets, or safe road crossings. Metro stations, too, are far away from start and end destinations. Auto rickshaws fill this gap, making their services necessary. Just like there is no organisation to represent the interest of an auto rickshaw rider, there is no organisation to represent the interest of a pedestrian.

A Delhi commuter’s life is different from, say, a Singaporean, who has the luxury to take public transport and continue their transit on wide and safe footpaths. Delhi residents bear the added cost of taking auto rickshaws, because the government has failed to provide basic public goods.