On the Road to Nowhere? Delhi’s auto-rickshaws: problems and solutions
Simon Harding
Delhi is a large sprawling city. It expands 20km in every direction from the faded grandeur of Connaught Place, the city’s spherical hub. There are many ways to get around this often bewildering city, devoid of hills and lacking major landmarks: Cycle-rickshaws take passengers around the block, taxis do longer runs in style, whilst increasingly affluent Delhites are buying their own cars, filling the streets with Maruti Suzuki Swifts and Tata Indicas. However, by far the most practical and iconic mode of public transport is the auto-rickshaw: essentially a 200cc three-wheeled scooter with metal chassis, a back seat and a plastic hood. Auto-rickshaws can be flagged down on the street and taken all over town for a fraction of the cost of a taxi. To the foreign visitor, the auto driver, or autowallah, appears to be the perfect entrepreneur. He has the freedom of the streets. He works when he wants and is the master of his own destiny. He can save, buy another auto-rickshaw and expand his business. Social mobility is his, given a bit of hard work and a few tips.
But despite this seemingly happy situation, Delhi’s autowallahs have a terrible reputation for rudeness, greed and aggression. A reputation which, sadly, is often deserved. Hailing an auto usually involves two or three autowallahs driving off at the very mention of your home, office or wherever you want to go. Find one who doesn’t wrinkle his nose and speed off and the haggling starts. He‘ll start by asking for double or triple the meter price. Few auto-rickshaw drivers will willingly run by the meter, despite it being compulsory by law - say “meter chalaoo” too often and he’ll simply drive off like the others. If you’re lucky, he’ll agree to the meter price plus ten or twenty rupees. The haggling leaves you frazzled and irritable. Why the attitude? What’s wrong with the meter? To answer these questions, we need to delve deep into the oily, murky underworld of Delhi’s auto-rickshaw sector.
I came to India in October. Since then I’ve been researching and writing a report about auto-rickshaws in Delhi for an Indian NGO. Through interviews with drivers, union leaders, experts and visits to government departments and auto-markets, a very different picture of the auto sector emerges: a long way from the image of the go-getting developing world entrepreneur sitting proudly in his yellow and green Bajaj RE 4S CNG. This article talks about some of the areas in the report, but remains a snapshot rather than a full picture.
So why do auto-drivers behave in this way? There are around 80,000 auto-drivers in the city. Not all of them are naturally nasty rude people! They are the victims of series of policies and events which squeeze their incomes and stifle their chances of auto ownership and with it social mobility. Here’s how.
Before we cut to the chase, a brief explanation. There are two types of auto drivers in Delhi: renters and owners. Renters rent their machines from contractors (big men who own up to fifty autos) for around Rs.200-250 (GBP3-3.80) for a 10-12 hour shift. They pay for the CNG they use, but not the maintenance costs and they don’t have to worry about the autos permits or paperwork. Currently around 80% of auto-drivers in Delhi are renters. Owners own their autos, although most are paying off loans to financiers from whom they bought the auto and the all-important permit (one vehicle, one permit), without which the auto-rickshaw cannot legally take passengers. Monthly repayments are typically Rs.9-12,000 (GBP138-185). Both groups earn around Rs.500-600 (GBP7.60-9.20) per day gross. Renters pay half their income in rent. Renters, owners, contractors and financiers have always existed in the auto sector. However, from 1997 several policies combined to shift the balance of power dramatically in favour of financiers and contractors.
During the late 90s Delhi started to clean up its air. Air pollution was getting out of control. A public interest lawyer, M. S Mehta, filed multiple writs to the Supreme Court calling for tough new environmental policies. The Court responded by prodding the Delhi Government into action: polluting industry was moved, catalytic converters introduced and vehicle emissions standards raised. Emissions from transport had grown from around 20% of the total emissions in 1971, to around 72% in the late 90s. Auto-rickshaws were partially responsible. Their 2-stroke petrol engines belched out considerable quantities of noxious fumes despite their small size, multiply by 83,000 auto-rickshaws and the result is a lot of smog.
Enough, decided the Supreme Court, issuing a freeze on the issuing of new auto permits in Delhi - and with it no new auto-rickshaws - until some kind of non-polluting auto-rickshaw could be found (be it CNG, electric or clean diesel). With no new permits being issued, the existing stock of permits held by auto financiers became a valuable commodity. Prices rocketed. In the 90s, a driver could get a new auto-rickshaw for approximately Rs.100,000 and a permit for a few thousand rupees extra, all bundled together in a handy package by the financier. By 2010, the cost of a standard Bajaj auto-rickshaw was just Rs.145,000, but the cost of the permit had risen to Rs.300,000! Worse was to follow.
The following year the Supreme Court found its solution to vehicular emissions: it ordered that all public transport vehicles, including auto-rickshaws, must convert to run on CNG by 2001. Suddenly, owner-drivers had to find Rs.25-30,000 to pay for conversion kits, in addition to the hefty monthly instalments owed to the financier. These drivers had no chance of getting a loan from a commercial banks: they were bad credit risks and most of them didn’t have the right papers to even make an application. A government credit scheme was meant to bridge this gap by lending drivers money to convert their auto-rickshaws at ’soft interest rates’. But virtually none of the government money ever found its way to the drivers. Multiple sources indicate that a financier cartel paid government officials to withhold financial help from drivers. With no source of credit and a conversion kit to pay for, owner-drivers would have no choice but to sell their vehicles and the valuable permit back to the financiers at a knock-down rate. And that they did. The financiers then simply hoarded the permits, restricting supply further, sending the permit price spiralling. 83,000 auto rickshaws were on the streets prior to the CNG conversion. Just 55,000 survived the switch. Most who didn’t were owner drivers. Financiers tightened their grip on the sector.
The CNG conversion was presented as a boon for auto-drivers: cheaper fuel would raise their incomes, so went the tagline. But, although CNG is roughly half the cost of petrol, a CNG engine is up to ten times more expensive to maintain. The increased maintenance costs cancelled out any benefits to owner-drivers, whilst contractors simply increased the rent on their autos to insulate themselves from the higher garage fees. Typically, the rent for a shift rose from considerably less than Rs.100 in 1997 to around Rs.200-250 post-conversion.
These policies and some large bribes combined to increase the cost of an auto-rickshaw permit and send thousands of permits straight into the hands of Delhi’s 400 or so financiers. So far, this might look like a few well meaning policies, unintended consequences and a few high level bungs unrelated to the lives of the average auto-wallah. The financiers may appear as the fortuitous beneficiaries of a good turn of luck. Talk to owner-drivers and their dealings with financiers and the often smart legitimate image of the suited businessman in an air-conditioned office falls apart. Capturing the auto sector also involves some considerable foul play.
No budding owner-driver can pay Rs.400,000 up front and buy a new auto-rickshaw and a permit from the financier outright (the financier transfers the permit from the previous owner’s name into the name of the new driver). Even if he opts for a second hand model, then the cost can still be as high as Rs.350,000 (as the permit alone can cost Rs.300,000). The new owner-driver has to buy the auto from the financier by making an upfront payment of whatever he can afford and then take out a loan with the financier for the remaining amount at 16-18% interest to be repaid over up to three years. This all sounds rather standard and familiar. But many auto-drivers have barely five year of schooling. Some are illiterate. Many are migrants from small rural towns in distant states. They simply cannot understand the lengthy, legalistic and deliberately difficult contracts drafted by the street savvy and well-educated financiers. Most just sign without reading. Many financiers ask drivers to sign two additional blank contracts, which, having little clue about business procedures and eager to start driving and earning, they do.
The consequences are grave. Many drivers fall victim to unforeseen “late payment penalties” if they are late with a monthly instalment. These penalties often double the monthly re-payment. Having no knowledge of the contracts they signed, these penalties come as a shock. One driver, bought his auto in 2003 taking a modest loan, but due to a succession of late repayment penalties, he was still paying off the loan when we interviewed him last month - 7 years later. Others repay the full loan only to find that they have been given false permits or are simply presented with contracts - the blank contacts pre-signed by the driver - stating that the driver is not the owner of the auto, despite having paid off the full loan. The contracts are designed to maximise the possibility of the financier repossessing the auto in order to sell it on to the next customer.
Given the rising rents and ever increasing cost of owning an auto-rickshaw, an upward trend spurred by the cap on the number of permits, little wonder that Delhi’s autowallahs are abrupt and grumpy. And it’s no surprise that they won’t switch on the meter: Rs.4 per kilometre would not earn them enough to pay the auto rent or loan repayments and CNG and still have enough to meet their daily expenses and send money home to rural Bihar or Uttar Pradesh.
But the pressure on the auto men does not end there. The state, far from regulating the sector for the benefit of those employed within it, actually contributes to the problems. To legally drive an auto-rickshaw in Delhi means obtaining a huge list of official documents which the driver has to carry with him at all times. He has to have a driving licence, a commercial badge, a fitness certificate for his auto, monthly pollution control certificates for the past year, tax, insurance, permit, registration….all in all around sixteen documents. Amassing this vast tome of certificates and permits is a Herculean task, made all the more difficult by the number of documents requires to even apply for just one of the sixteen! A 50-year old ex-farmer from Bihar might be asked to provide his school certificates as part of an application for a commercial badge or an obviously new migrant asked to provide a Delhi ration card - virtually impossible for the migrant to get. The thought of this leaden bureaucracy may make you want to tear your hair out in frustration, but has its purpose. Fully aware that no-one has a chance of supplying all the necessary ration cards and forty year old school certificates, the officials in the Transport Department can name their price to overlook gaps in applications.
The Road Transport office in North Delhi is a testament to this. A soul-less concrete hulk squatting in a walled off compound, its windows barred and its doors locked with shop-front style shutters. The yard is full of auto-drivers either sitting in the shade of the few trees in the compound or patiently queuing at the dozen or so ticket windows, wondering how long and how big a bribe it will take to get the documents they need to drive legally. The place is tense and angry. Auto-unions leaders and drivers berated the office and the government to anyone who will listen. Touts promise speedy applications done by their ‘friends‘ inside the barricaded office, all for a commission. They slip in through quickly opened side doors . One man told us that he was told that renewing his licence would cost Rs.1500, despite the fact that the official fee is only a couple of hundred. He didn’t know how he could pay this on his Rs.250 a day income.
The corruption and obstructionist tactics of the Transport Department provide fodder for another arm of the state: the police. Given the fact that the huge list of compulsory documents is so hard (and expensive) to obtain, the traffic police can simply pull over an auto-driver at random and find an excuse to issue an official challan (fine) retrospectively, safe in the knowledge that the driver is most likely to be lacking several compulsory documents. If they keep asking, the traffic police are bound to find something the driver does not have. Often, instead of issuing an official challan and receipt, the officers are happy to knock a few hundred rupees off the challan and pocket the money as a bribe. This makes auto drivers easy prey for policemen looking to supplement their meagre incomes.
After several months of research, the auto driver no longer appears as a budding entrepreneur. He is victim of poor policies, exploitation by financiers and contractors and corruption in the parts of the state meant to help and protect transport workers. Due to this consistent percolation of cash from 80,000 or so drivers up to several hundred financiers, contractors and officials, the autowallahs have little opportunity for entrepreneurship, investment and social mobility. This has to change for two reasons: firstly, Delhi relies on auto-rickshaws as an integral part of its urban transport system, the much vaunted Metro has a limited reach and the roads are being clogged with larger, thirstier private cars, causing ever more jams; and, secondly, because auto-rickshaws provide employment for 80,000 people and thus for as many as half a million dependents. But what should be done?
My report lists several measures which would go some way to cleaning up Delhi’s auto-rickshaw mess. But the most important measure (and the only one discussed here) is to lift the cap on permits. Issuing news permits would allow the supply of auto-rickshaws to rise to meet the burgeoning demand. Thanks to 4-stroke CNG engines, there is no longer an environmental rationale for the cap, especially when the hard won gains in air quality resulting from the CNG conversion are being swallowed up by a dramatic increase in private cars (near 1000 a day are being registered in the city). The rise in supply would deflate the price of a permit (ideally to the fee of a few thousand rupees charged ten years ago) making auto-rickshaw ownership a reality for thousands of drivers and weakening the power of the finance mafia, which has controlled the sector for the past decade. Declining power means declining ability to influence Transport Department officials. Freed from massive loan repayments and high rental fees (more autos means more to rent too) drivers could relax, smile and switch on the meter.
Lifting the cap is by no means a silver bullet for the sector - the mind-numbing bureaucracy at the Transport Department needs reform, the Bajaj manufacturer monopoly needs ending, better communication of rules and regulations is vital and alternative forms of credit are desperately needs. But as a first step and rallying cry, “Lift the cap!” Is a good start.
For more information visit www.nyayabhoomi.org - an NGO and social enterprise working with auto-rickshaws in Delhi.