In a clear cut case of violation of the ‘free market’ and interference by Government machinery in the working of privately incorporated companies, cabs of both Ola and Uber are being seized in Bangalore.
And the worst part is that, police is encouraging users to file complaints against them, as they have assured that strict action would be taken against them.
The cabs are being seized after Karnataka banned surge pricing in their state as they issued a diktat that such taxi apps cannot charge anything beyond the basic fare. It seems that Maharashtra will soon follow Karnataka in banning surge pricing.
Earlier, Ola and Uber bikes were seized in Karnataka, as they broke traffic rules.
The Sting of Surge Pricing in Karnataka
As per available reports, around 30 cabs from Uber and Ola were seized in Bangalore over charges of ‘over pricing’.
Rame Gowda, Bengaluru-based commissioner of transport and road safety said, “Surge pricing is not in the rules. You have to follow the rules of the land, you cannot violate the rules of the land and harass the public.”
Police is actively encouraging users to file police complaints, in case they witness any such surge in pricing. Gowda has promised that strict action would be taken against these cab booking companies, and have said that ‘operations’ against these companies are still on.
Uber Justifies Surge Pricing
Meanwhile, after the ban on surge pricing took over, Uber sent personalized emails to all customers in Karnataka, wherein they justified their move to increase price, as its based on purely demand and supply rule.
In that email, Uber said, “It’s a bit of economics 101: supply and demand adjust in response to price changes”, adding, “higher prices are required in order to get cars on the road and keep them on the road during the busiest times.”
They haven’t yet responded to the news of their cabs getting impounded by Bangalore police.
Govt. Killing Free Market?
As per the fundamentals of ‘free market’, the prices of goods and services delivered are free from any interference by Govt. or any authority; and the sole responsibility lies between the seller and the consumer.
As per Free Market, whenever there is any need, that need would be met without any external influence of the Govt.
By banning surge pricing, Govt. is actually trying to manipulate the business model of privately registered companies, and thus, destroying the fundamentals of free market.
This fluctuation in pricing works for airlines and hotel industry as well, as the demand-supply ratio dictates the current pricing. In case any customer is not willing to accept that, he is free to chose any other vendor.
But how can a Govt. stop this practice, just to benefit local businesses, who are afraid to adapt and use technology?
As an entrepreneur, do you think this ban in surge pricing is good for the startup eco-system? And, as a consumer, do you support the impounding of cabs?
Do share your views by commenting right here!