The economics of being a cab driver in Bengaluru

LIVELIHOODS IN BENGALURU

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Pic: Deepa Vaishnavi V M

This article is supported by SVP Cities of India Fellowship

“Madam, all I want now is a job that will help me meet my monthly expenses. That is all.” The worry in Sridhar’s voice and the desperation on his face as he says this, cannot be captured in words.

Sridhar’s story is similar to that of many, who in their late teens or early twenties moved to Bengaluru in search of a job, often leaving behind ageing parents and small plots of farmland in their villages.

Every year, thousands migrate to Bengaluru in search of a livelihood, to support themselves and their family back home. With low levels of education and skills, many of them start working in the informal sector.

Informal sector employs the majority in our country, usually without offering any security, substantial wage hike or benefits. Workers’ income remain stagnant, and their health is often compromised.

But the sector continues to grow in India as more people transition from agricultural to non-agricultural jobs. In this series, we look at the stories of those who work largely in the informal sector, why the majority of them can’t become part of the middle class despite working their entire lives, and possible solutions to this problem.

To Bengaluru as a teenager

A native of Valagerepuru village in Kunigal taluk, around 100 kms from Bengaluru, Sridhar is the younger of two brothers in a family of seven. Though he managed to complete 10th standard in a school in the nearby village, he did not attempt 12th standard exams. Instead, he came to Bengaluru in 1994-95, in search of a job.

Though his brother had already moved to Bengaluru, Sridhar did not want to depend on him and hence shared a small room with a friend. With no knowledge of English but determined to make things work, he took up different types of jobs – as a helper in a small manufacturing unit, tailoring, and so on.

After a couple of years, Sridhar got a professional driving licence and became an auto driver. A few months later, he started working as car driver for a family in Bengaluru, and stayed with them for over a decade, till 2011. After his employers passed away, Sridhar started working as an independent on-call taxi driver.

Ola and Uber come into the picture

In 2012, Ola Cabs started operations in Bengaluru. Uber did so a year later, in 2013. Earning Rs 9000 a month as an independent taxi driver, Sridhar saw the possibility of earning five times more, depending on the time he spent on duty with Ola. He had already bought a second-hand car in 2011, with his family’s support including by mortgaging his wife’s jewellery.

The reason was simple – when Ola Cabs entered the market, it promised lucrative daily and weekly incentives to drivers aka partners. Added to this, was the bait that the drivers could be their own boss, and choose the hours they worked. The entire package was tempting enough for many to leave their routine driver jobs, take loans, buy second-hand cars, and drive people around the city nearly every day.

As per the Ola website, nine lakh vehicles and 10 lakh driver-partners are currently registered with them, across 110 cities. The numbers for Uber are not easily available, but a February 2018 article in Quartz India indicated that Uber had only half as many drivers affiliated to them as Ola.

A bachelor when he first came to Bengaluru, Sridhar’s expenses had grown over time as well. His expenses doubled after his marriage in 2007, since he then had to rent a house and provide for his wife. The next leap in expenses came when his first child was born in 2010. It was around this time that Sridhar had to start working as an independent taxi driver. He started taking loans to make ends meet; by 2014, he had loans of nearly Rs 2.5 lakh.

Ola, therefore, came as a godsend. As an early entrant, he was able to cash in on the incentives, and clear some of his loans.

But the long hours of driving on Bengaluru’s fractured roads took a toll on Sridhar’s health, and on his vehicle too. But Sridhar was not aware of it, at least not initially.

Here is a comparison of Sridhar’s earnings as an Ola/Uber driver over the years, and his current job as a driver on contract with a government department:

As an Ola Driver in 2012-16 As an Ola / Uber driver in 2016-18* Driver on contract with govt dept, since June 2018
Working hours 15 – 18 10 – 12 10
Working days Seven days a week; a day off only when too tired, or for personal work Six days a week As per government schedule – five days a week on average
Average kms covered daily 150 – 200 Minimum 100 kms to get Rs 500 per day 60
Rate per km Rs 14/km plus incentives Slabs would change arbitrarily – targets would be very high and difficult to reach almost every day Fixed wages
Average monthly income Rs 60,000, going up to Rs 80,000 occasionally Rs 20,000-25,000

Income from Ola reduced gradually but drastically; all benefit passed on to customer

Rs 30,000 consolidated
Expenses related to his work^
Diesel (litres/day) 15-20 9-10 5-7
Cost of diesel/day Rs 750 ~Rs 700, because of fuel price hike Rs 400
Food/day Rs 200-300 (From hotel, thrice a day) Rs 150-200 Rs 50
Vehicle maintenance/month Rs 5000 Rs 3500 Rs 2500
Monthly work-related expenses Rs 36,500 Rs 28,500 Rs 12,850

* He worked as an Ola Auto driver for a few months in 2017-18 while also driving his cab

^ These do not include his household expenses

Everyday reality – the need for money to meet short-term needs – makes it hard for those like Sridhar to plan for the long term. While he had the mandatory insurance for his car, he had not planned for health insurance for himself or his family. His family grew again with the birth of his second son in early 2018, as did his expenses towards his family and towards maintaining his car.

For those who joined Ola and Uber, especially in the initial stages of their operations, the honeymoon period lasted only a couple of years. Once the economics of demand vs supply came into play, as also the aggregators’ desire to show less losses if not marginal profits, things became difficult for most drivers.

Sridhar’s case was no different. Though he made good money in his initial days with Ola, things started getting difficult as the company became stringent in its review of drivers’ performance. A single apparent infringement could bring down the driver’s star rating, which would disqualify him from the incentive scheme of the day/week. This leads to lower income, often due to no fault of the driver.

Disenchantment ensues

Even when Sridhar was earning around Rs 60,000 per month as an Ola driver initially, his work-related expenses came to over Rs 30,000. That is, he was taking home only less than Rs 30,000 per month.

Gradually, as Ola changed its incentive structure, Sridhar’s earnings went down to around Rs 25,000 per month. However, his work-related expenses were higher, at around Rs 28,000. His expenses back home were increasing too, for purposes like his first child’s schooling. Continuing as an Ola/Uber driver was becoming unviable for Sridhar.

Health issues like diabetes, leg and back problems added to his woes. By then, he had to borrow money just to make ends meet. He finally took the decision to exit both Ola and Uber, and resumed work as a taxi driver. His debt runs to a few lakhs now.

According to a Times of India report last July, “the growth rate of taxis hit a four-year low in 2017-18”. The number of new registrations had dropped to 12 percent that year, from 30 percent the previous year. The article added, “Experts say dip in the growth rate is mainly due to reluctance of new drivers to join app-based cab aggregators like Ola and Uber due to reduced earnings and overwork.”

State of the Online Cabs Market’, a 2017 report by the consulting firm RedSeer, also observed a “sharp drop in driver income” due to the reduction in incentives and in the number of rides per day.

Sridhar currently has a contract with a state government department to provide chauffeur service. He drives his own car to ferry the assigned official. He is paid Rs 30,000 per month, which is almost the same has his monthly expenses. Vehicle expenses including diesel and maintenance are borne by Sridhar himself.

Sridhar currently has a contract with a government department. Pic: Deepa Vaishnavi V M

This could well be the story of many – middle-aged drivers and family men who were happy when cab aggregators launched in Bengaluru, but are today stuck in a spiral of debt and financial commitments.

The drivers’ dissatisfaction is evident by their protests against the aggregators. Early 2017 saw large-scale protests in Delhi and Bengaluru – drivers went off duty for over 10 days, and protested on the streets against the aggregators’ incentive system which they felt was ‘erratic’ and impacted their monthly earnings.

Though the strikes were called off, most demands of the drivers were not met. Strikes have continued in different parts of the country since then, such as the one in Mumbai last October-November.

Conversely, there are drivers who have chosen never to tie up with cab aggregators. A middle-aged driver in the city says, “I do not want that stress. I am happy earning what I can being an independent driver.”

Yet, cab and auto drivers who have already entered into agreements with aggregators, have no choice but to continue working, through strikes and through service bans by the government.

This March, after the Karnataka government issued a 6-month licence suspension to Ola, an Ola Auto driver, said, “What can we do? We have our personal commitments; we have to earn everyday. We have to serve customers, and pay bribes if caught…”

In the meantime, Sridhar is considering selling his car to clear some of his debts. If he does, he will have to start working for a taxi owner or a family that owns cars, as he once did, long back.

[Corrigendum: Errors in the table, under the section ‘Expenses related to his work’, have been corrected. Data on ‘Monthly work-related expenses’ under this section has been corrected, and that on ‘Vehicle maintenance/month’ added.]

This article is supported by SVP Cities of India Fellowship. This is the first part of a  series on livelihoods in Bengaluru

 


Deepa Vaishnavi V M
About Deepa Vaishnavi V M 30 Articles
Deepa Vaishnavi is the Communications Manager at Oorvani Foundation. A member of Co Media Lab, she is also a soft-skill trainer and a citizen journalist.

11 Comments

  1. I
    Considering the plight of Ola/über drivers(1000s of über/Ola taxis can be seen in many parking lots hired by financiers to house vehicles seized due to loan default) it is worthwhile somebody help float a employee(meaning drivers) owned company where the stakeholders get a share of profit. Many are working successfully in USA west, notable example being RECOLOGY the waste collection, transport and orderly disposal.the employee strength runs to thousands.

  2. Yes.. That’s the fact of all the drivers who are linked with ola and Uber. They have become a bait to the big players. Initially they have been given good incentives. Now the situation is quite adverse for the driver’s. They are having tough times to clear their car emi as well. I spoke to many cab drivers who all are on the same page.

    • Not sure
      How an income of 80,000 could be justified and asked to be continued ??
      Engineers and Graduates get a salary of 50,000 after few years of experience – people who have put the hard work I getting their degrees

      • I have spoken to drivers who said the same in the good old days. A few of them even bought 3-4 cars. I think they knew. Some of them tried to tell me and my friend that they were told its a salary but when we asked for a copy of the papers that uber gave them, they never gave. we even told them its like when pepsi or some other big co starts a new product, but just longer promotion, the good days will end, dont change kids school, put money in small fixed depsoits of 5-15k twice a month so can break a few when needed and still have some money saved…most did not take seriously. a few did.

        i use uber or ola daily as sold my car in 2012. cant take the Blr traffic after being born here.

        was super to meet one driver who remembered me and thanked me for the advice on fixed deposits. he did open a couple and continues too. though a few were broken before time, a few lasted the 1 and 2 year fixed time.

        he has not put in a 5 year one too. as long we have peace and less population growth, i think there is hope for many.

        – Tushar Kapila traffic safety – be careful , drive defensively https://en.wikipedia.org/wiki/Defensive_driving and http://lp5.in/

      • @Kris, the 80,000 was occasional. He has said the average was more like 60K. Now subtract 36500 for running expenses (fuel, maintenance) – so take home is closer to 24,500.
        This is hard work too. Not everybody gets a chance to go to college.

  3. Lets be realistic and not carried away by reaction from the drivers. The taxi aggregators are doing a great job and it was not obligatory for them to give jobs to the drivers. They have opened up a job opportunity for the drivers and helping both the drivers and the users. They have poured billions of dollars to start this venture and are not making money as yet. The concept was new and initially they offered incentives for the drivers to join them and they were not charging the users to pay these incentives. They were absorbing this as an expense. Now that there are many who want to enrol themselves with these aggregators, there is no need to offer any incentives any more. There is a need for a balance between what the users are able to pay without a grudge and what the drivers need to remain in the job. It is not an easy job for the cab aggregators. HD Kumaraswamy made tall promises to the cab drivers that he would start a venture and give them all kinds of incentives and high incomes. What happened to that ?? If it has not seen the light of the day, it means that it is not an easy venture. End of day we need to keep the interests of both the drivers and the users.

    • This comment is so apt, well described lets not our emotions, every profession has its pro and cons.. lets not weigh only on cons..

    • Exactly. Imagine, if ola and uber were to shut shop . Income of these cab drivers would further decrease with increased supply in the market.

      People fail to see the business side of this venture. Ola and Uber is no NGO or Charity Organisation its purely Business. U can’t force them to pay exorbitant amt of money for a basic services.
      Ola and Uber may further take a hit in Blore once metro comes into play. People must be prepared for this just like in any other service industry.

    • I completely agree with Prakash’s comment, there is always a normalization process. India’s city needs decent cab and auto operators, and OLA and Uber are doing a fantastic job. if these drive opt to follow the politician who lure them with falls promises, they will get nothing and they will be kept below poverty line for vote bank. I take Ola or Uber every day and I speak to drives every day, the average feeling is they are happy with what they are earning. what they are not happy is with the road tax, fuel tax, bad road and horrible traffic management. An article should be written on this. i’m surprise there is no mention of on time payment form Ola and Uber to drives, there is no mention of how the Auto drives torture customers because of this they are loosing their business. Drives are proud that they are running their own business, and not begging for subsidiary, freebies, loan waiver. People in India should realize there is no quick way to earn money, we need to work hard, and sacrifices. please do not demotivate hard working Indians and make them lazy or to beg government for their livelihood. Also please write on how to encourage drives to follow rules, how to take care of health, how to keep customers happy, how to be efficient and how to think smart and be calm, how have work life balance.

    • most drivers knew this. but it was a bit like a chit fund too. on paper it was all clear but what the marketing people of uber spoke is something different. i knw this first hand as i too applied, thinking i will sign up. changed my mind later.

      But fact is that their earnings has gone down. ALso congestion on roads means they wait around in car more. pick up time goes up and travel time goes up. when on a ride they earn rs2 per minute but its not as lurative as moving at 20km per hour.

      also many changed life style and then earnings dropped. its like an employee or business man suddenly earning 50% with no hopes of earning more unless they work 24 hours…so it does hurt. fair or not not an easy thing to come to terms with. many have. but hope the govt gives impetus to buses and mini vans too else congestion will become worse and affect everyone’s health, travel time and their earnings

  4. This country is being milked out by naughty politicians,they work for their interest primerly and duty comes then. We find no way to bring this country in direction of development.

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