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Uber Relents! No Surge Pricing, Fares with Be Capped at Govt Rates in Delhi

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Uber Surge Pricing-001

The stern warning issues by Delhi CM Arvind Kejriwal seems to have worked. Uber has relented. They have agreed to do away with its surge pricing policy in the capital city of New Delhi.

Not only has been the surge price been ended, but Uber, in a letter to Transport minister, has said that per kilometer fare charged by them will not exceed the Government prescribed fare. Gagan Bhatia, company’s General Manager (North-Uber India), said, “With prejudice to all our rights and contentions, we would like to humbly submit that the per kilometre fare charged on the Uber platform within Delhi will not exceed the government prescribed fare applicable in Delhi,”.

The surge pricing drama unfolded late last month, when Arvind Kejriwal warned that if Uber/Ola continued with their surge pricing policy they will be permanently banned in Delhi. The CM compared surge pricing with ‘daylight robbery’, as he tweeted: “Surge pricing is daylight robbery. No responsible govt can allow that. Some taxis saying they will not provide (sic) cab if they are not allowed to loot. This is open blackmailing n govt will not let that happen,”; adding that even after odd-even rule ends, the Govt. won’t allow surge pricing.

Uber suspended Surge pricing in Delhi NCR during the fortnight-long odd-even scheme and Ola too put a halt on it. However, after the odd-even scheme ended, Uber decided to continue with it’s policy. They had to pay the price for this, as Delhi Police some Uber cabs.

Now, with Uber putting a halt on surge pricing – it seems that drama is finally over.

Is Delhi Govt. Discouraging Startups?

Uber, which pioneered the concept on app based taxi hailing platform use surge pricing as part of its primary business model. Similarly, Ola uses the increased price to compensate the discount offers and additional services like WiFi within the cab.

By controlling the pricing model, and forcing these private and successful firms to alter their tariffs, Delhi Govt. is giving wrong signal to the startups who wish to launch innovative, tech based services.

In future, Delhi Govt. can trespass into any business, and twist their arms to control their business model, and enforce their own rules.

As we had shared earlier, the fundamentals of free market doesn’t allow interference of the Govt. in determining the prices. Let the market determine it as per the business demand. If Delhi Govt. wish to launch their own cab service with a pre-determined price band, then no one is stopping them.

And now, Surge pricing being put to halt in capital city – all other cities and states are going to follow suit! This is going really alter the dynamics of how these cabs are priced. I guess the era where we could get price of Rs. 6/- per kilometre may finally be over. Otherwise, there is no way these startups can survive.

What do you think? DO let us know in comments!

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