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Friday, April 22, 2016


Indian consumers have been living with the Surge pricing structure on commodities and services for quite some time and suddenly when the Chief Minister of Delhi Arvind Kejriwal came down hard on cab operators Uber & Ola for their surge pricing the whole nation has woken up from its slumber and debates are raging about this pricing structure. There was no reaction when the Karnataka & Maharashtra governments enforced similar curbs on the cab operators.

 Most of us know that the pricing is based on the supply and demand in the market and for a consumer to get these at the time of demand has to surely pay higher than the next person. This is how the free markets works and I do not think that the government has rights to curb this practice. I am personally happy that there is a curb on surge pricing since it does save me considerable amount of monies but then how does it ensure him of the service or the product at the times of demand. Let me take an example of a cab service at Chennai where I reside on the outskirts… during the morning and evening rush hours you would normally not get an cab as the demand is very high with office going persons and during these times if I am lucky to book a cab using their application then it gives me an option of continuing with the confirmation for extra pricing and this could range from 1.2x to 3x. Now if I feel that this is too much I would have to wait for a long time to get a service at normal fare… choice is entirely mine and not the governments. If at all government uses their muscles to ban this surge pricing then they should also ensure that they have made provisions of good public transport system and infrastructure which is lacking terribly in most metros of India. In Chennai consumers are willing to accept the surge pricing for Ola cabs as the auto rickshaws charge even higher rates which are at times over 3X.

With the ban on surge pricing on the cab operators in three states let us see the state governments of other metros also take similar actions. If the surge pricing ban  is totally enforced for cab services then next step  by the government is to curb similar practices in commodities market, Cinemas ,Airlines, Hotel industry and so forth and let us see if this would work out for there would be a definite outrage from all the traders for sure. Only time would tell if the ban on such practices is a boon or a bane.