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Tag Archives | regulation

Karnataka vs. Cab-Aggregators (Part II)

By Anupam Manur (@anupammanur)

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In order to obtain a licence, cab-aggregators have to replace their present efficient technology with an outdated one. The requirements to obtain the licence are archaic and simply untenable. 

In yet another blow to cab aggregator companies in Karnataka, the State Transport Department issued a statement asking cab aggregator companies which have not obtained the necessary licences to stop operations immediately. “Web-based aggregators had to obtain licences to operate cabs and taxis. But many aggregator companies have not obtained licences, but are operating such cabs. This is a gross violation under sec-93 r/w 193 of the Motor Vehicles Act. Hence, companies which have not obtained licences from the concerned authority should stop operations with immediate effect otherwise strict action will be taken against such operators,” the statement said.

It does feel a bit retrograde to ask companies to stop functioning for not having obtained the appropriate licence. It does remind one of the pre-1991 days. However, the immediate counterbalancing reaction would be to wonder why would the cab companies refuse to obtain a licence. What exactly is preventing them from getting a licence, which can keep them in business in their largest market – Bangalore. So, I wanted to know what does it entail to obtain a licence to continue as a cab aggregator.

This particular section (sec-93 r/w 193) of the Motor Vehicles Act specifies that “No person shall engage himself as an agent or a canvasser, in the sale of tickets for travel by public service vehicles or in otherwise soliciting customers for such vehicles, without a licence from the proper authorities”. This bit seems more relevant for KSRTC ticketing agents and not on-demand cab aggregators operating over a mobile app.

For further clarity, one needs to look at the The Karnataka on-demand Transportation Technology Aggregators Rules, 20 I 6, which was released on 2nd April 2016. It starts off by quoting the original section 93 that a licence is required to operate as a cab aggregator and then goes on to specify the requirements for obtaining the licence.

The requirements are specified for the aggregator company, the driver, and the vehicle. The company has to pay a licensing fee of Rs.50,000; keep a security deposit of Rs.2,50,000; have a minimum of 100 cabs in their fleet, has facilities for monitoring the vehicles via GPS, etc. The driver should have a driver’s licence, minimum driving experience of two years, be a resident of Karnataka for a minimum period of two years and have a working knowledge of Kannada among other things.

All of these requirements seems fairly reasonable and should not act as an impediment for Ola or Uber to obtain a licence. It also seems that the regulators have understood how cab aggregators work, until of course, they get to the specification for the vehicle. When describing the requirements of the vehicles, the Act goes back to the classic 1970s Licensing Raj days. All cabs should be fitted with an yellow coloured display board with words “Taxi” visible both from the front and the rear. The board shall be capable of being illuminated during the night hours. The driver’s licence and photo should be displayed clearly in the vehicle. As of now, the app takes care of that.

The part of the Act that betrays the fact that the regulators temporarily time travelled to the 1970s is the demand for every vehicle to have a meter which displays the fare along with a printer that can provide a printed copy of the final amount to be paid along with the breakdown of the fare. While specifying this, they truly embraced red-tapism, in all its glory, and specified the font size for the bill to be printed in, print width, print speed, resolution, among other things. They have also given extremely detailed specifications of the GPS/GPRS capable vehicle tracking unit (including temperature range and humidity of the device).

Some of the specifications for vehicles operating under cab-aggregators.

Some of the specifications for vehicles operating under cab-aggregators.

Asking an app-based cab aggregator company to install a bill printing device in the car, a large display monitor that shows the route, fare, and other details, to have a taxi sign on top, etc seems to be retrospective in nature, since all of this is done more efficiently by the respective apps. By demanding Uber and Ola to obtain licences by adhering to these specifications is forcing them to replace their more efficient technology with an outdated one.  By doing so, the regulators are only betraying their ignorance of how a cab-aggregator functions. I would strongly urge them to download the Ola app today, take a ride, understand how it works and then come up with regulations that wouldn’t throttle the businesses.

Anupam Manur is a Policy Analyst at the Takshashila Institution.

(Part I was regarding limiting Surge Pricing and my article on that can be found here).

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Unified strategy on cyber security regulation needed – V

 

By Sandesh Anand
There is little doubt that securing our cyberspace is important. Over the last few years, the union government has acknowledged the importance and taken many initiatives to improve the security posture of our cyber infrastructure. However, the lack of a coherent message  from the various agencies working on such an initiative, can lead to cyber-security becoming no more than a heavily regulated compliance burden.

Cyber Security is complex, but the regulators need to keep it simple.

The “National Cyber Security Policy” drafted in 2013 is an important document. While not yet implemented in full, various recommendations made in that documented have been implemented. One of the principal “strategies” of this policy is to create a nodal agency to co-ordinate all matters related to cyber security. The CERT-in was created to fulfill this requirement. In addition, Section 70(A) of the IT Act mandates the creation of another “nodal” agency to protect the nation’s Critical Information Infrastructure. The NCIIPC (National Critical Information Infrastructure Protection Center)f was hence created. Finally, regulators of various sectors (banking, Telecom etc.) have understood the importance of cybersecurity and have come up with their own “CyberSecurity guidelines”.

 

Sense the problem?
Let’s take the example of a bank, which wants to implement a cyber security program. In addition to doing all they can to protect their assets (based on their expertise), they also want to make sure all the regulatory boxes are ticked. Given they come under the definition of “Critical Infrastructure”, they will need to follow the guidelines provided by NCIIPC. In addition, RBI has multiple guidelines on how to implement their Information Security program. CERT-in also provides various guidelines on how to implement specific aspects of the bank’s Information Security program.
The story repeats when a breach occurs. NCIIPC has a 24*7 desk to handle incidents on CII (the bank will need to notify them), at the same time, banks are required to notify RBI and CERT-in when a major breach occurs (defining “major breach” itself can be an interesting exercise. Let’s reserve that for a separate post). So in addition to swiftly dealing with a breach, the bank will have to deal with the red-tape of communicating with three different agencies.
Given the complexity of the subject, it is desirable to have multiple opinions on the best way to implement cyber security. However, it is important for the regulatory framework to speak in one voice. Far too often, security is looked at as a bottleneck or a mere compliance requirement. When this happens, the focus of the industry is less about securing their ecosystem and more about making sure all the boxes are ticked. As we figure our way through the maze of cyber security, it is important for our regulatory system to get its act together. There has been talk about a “National Cyber Security Assurance Framework” being developed. Such a framework should work to unite all the current efforts instead of adding yet another layer of regulation for the industry to follow.

 

Sandesh Anand is a GCPP9 alumni and an Information Security professional. He tweets as @JubbaOnJeans
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Six Things That Trigger Government Action

While enough has already been written about the ban on surge pricing by taxi-aggregators, this policy measure is an interesting case study to analyse what are the factors that led to the Karnataka and Delhi Governments’ decision to spring to action and respond with such a policy measure. The hypothesis of this article is that there are six things that incite governments to ‘do something’ in a situation. Here is a list of the factors, in no particular order. Neither is the presence of all these factors at the same time essential, nor are the factors mutually exclusive.

  1. Descriptive or vividness bias: Descriptive bias is one of the cognitive biases in evaluation. According to this bias, information that is vivid, descriptive, and visually stimulating has a greater impact of being registered as valid evidence regardless of how close it is to reality. Thus, campaigns and protests that have vivid imagery circulated through media tend to strike a chord with the masses and the government alike. Thanks to social media, such vivid images go viral very quickly and garner a sense of urgency with which the issue in question must be responded to. For instance, in the case of surge pricing, the pictures showing 2.8X, 3X went viral and caught people’s and Mr Kejriwal’s attention.
  1. Need to respond to interest groups: Governments can be coerced into action deliberately or unconsciously by various interest groups, such as labour unions, auto unions, OBCs, etc. More likely than not, the government looks at these interest groups in terms of gaining an electoral advantage. By terming the surge pricing as “daylight robbery” by cab-aggregators, Mr Kejriwal wants to portray this image of the protector of the interests of middle-class, who are the typical user of taxis, while simultaneously endearing himself to the auto-rickshaw drivers, who are purported to be among his staunchest supporters. Another important group is the government itself, which has vested interests in the success of its policies. The reinstatement of the odd-even policy by the Delhi government, led to a scarcity of commuting options for the public. One can surmise that because the government did not want to withdraw its already rolled-out odd-even policy, it reacted with another policy measure to tackle the scarcity.
  1. Sense of violation of fairness: All governments try to maintain the perception that they want fair and equitable outcomes for their people. As soon as there is a sense that fairness is being compromised in favour of one or the other groups, governments decide on actions that restore a sense of fairness. Again, the middle-class was portrayed as being shortchanged in case of surge pricing.
  1. Judicial activism: As per Indian law, an individual, an institution, or a non-governmental organisation (NGO) may approach the courts of justice to file a Public Interest Litigation (PIL) to raise issues of broad public concern and demand social justice. Typically, the litigants use PILs to focus the attention of people and government toward matters related to larger public interest especially in the areas of human rights, consumer welfare, and environment.
  1. Mistrust towards MNCs/private enterprises: More often than not governments treat private enterprises, especially large multi-national corporations, with suspicion. Any perceptible large-scale action on behalf of these enterprises immediately makes the government vigilant and ready to take action. Further antagonism builds up because of the past reputation of an entity, particularly if there has been bad press. This can lead the government to treat every future action by the said entity with caution and exaggerated measures. With a rape case being filed last year against one of the Uber drivers, the cab-aggregators have since been under the government’s scanner.
  1. Government’s urge to regulate: The government finds it difficult to let go of its urge to be in the driving seat and hence it often responds in order to take control of situations that are otherwise best left to market forces. For instance, technological innovation is omnipresent in today’s world and the government is not always nimble enough to respond to the fast pace of technology. As a result, the government reacts by establishing regulations, especially in the short-term, that help them rein in the pace of technology while the government itself thinks of long-term solutions. The government regulates taxis and auto-rickshaws by issuing limited number of licenses to ply. Drivers’ unions also help maintaining the status quo that governments know how to navigate. Taxi aggregators have broken this system, and Uber was also criticized for operating beyond any such oversight world over.

Nidhi Gupta is a Programme Manager at the Takshashila Institution and tweets at @nidhi1902

 

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Making information handy for the smart citizens

Indian regulation needs to accommodate information aggregators to help create smart citizens. 

Recently cab aggregator ZipGo suspended its operations in Bangalore after facing trouble with the  the Karnataka State Transport Department. One of the major reason for the tension between the start-up and the state is the the Karnataka Motor Vehicle Rules of 1989. As per the Rules, there is no provision for ZipGo to operate services that directly compete with the state-run city bus service under. This is just one of the many examples where the information aggregating services in India have faced trouble while dealing with Indian regulation.

Information aggregators are entities that collect information from a wide range of web sources and other sources, with or without prior arrangements, and add value by providing post-aggregation services. Common example being Uber, a cab aggregation service that helps the demand for cab services meet the supply. By reducing the information symmetry between the customer and cab driver, Uber reduces the search time spent by both the parties. The ease in looking for the customers helps in increasing the number of rides the cab drivers can provide in a day.

Uber is just one of the examples of the varied aggregating services provided across sectors. For instance, Buildkar and Swiggy provide the same service for building construction and food deliveries respectively.  As we look forward to using Information and Communication Technology to make cities smarter, it is vital that enough platforms are provided for the citizens to be able to utilise the resources around them in the best possible form. One of the ways to utilise the resources better can be by reducing the transaction cost faced by the citizens.

Transaction cost refers to the cost other than the money price incurred during an economic exchange. For instance, standing in a queue to get movie tickets is a transaction cost. However, this cost is reduced by online ticket bookings. The time saved provides more leisure time for the citizens and helps them in being more productive and efficient.

In his paper, Jiangxia Hu has listed six benefits of an aggregator: increased diversity of information, broader service availability, reduced searching cost, comparison between alternative choices, better customised to user wants and needs, and reduced transaction time. For instance, Uber the cab aggregator app does not only provide the information about availability of the cabs but also about the driver once the cab is booked. It also provides a wide range of option to choose between the type of vehicle the customer wants to choose. These features of a aggregator makes them more efficient and better equipped to serve the citizens in the technology age.

Keeping in mind the benefits and the increasing reliance on the aggregating services, it is important that Indian regulation accommodates these new platforms. Being the regulator, it is imperative that the government looks at the safety and basic quality standards of these aggregating services. That said, keeping regulations to the minimum will help these services to grow organically though network effect. Blocking or constraining the growth of such services will either harm the market or lead to the growth of illegal platforms providing similar services.

Devika Kher is a policy analyst at Takshashila Institution. Her twitter handle is @DevikaKher.

Image source: Sebastiaan ter Burg, Flickr

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What does it mean to be employable?

Why autonomous universities are essential to harness India’s demographic dividend

By Shobitha Cherian

 

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India is currently in an extremely advantageous position, demographically speaking. Half of its burgeoning population of 1.27 billion people is comprised of individuals under the age of 25 and a quarter of the increase in the global working population between 2010 and 2040 is projected to come from the country. This so called ‘demographic dividend’ could be extremely beneficial to the Indian economy. According to the IMF, it could potentially result in an increase in the GDP growth rate by two percentage points each year for the next twenty years. However, in order to harness this demographic, it is necessary that this growing population also be productive and employable.

But what determines the employability of an individual? A lot of employers would say it is the extent to which a worker can utilise his attributes, skills or knowledge in order to contribute productively. So, in addition to a bare modicum of knowledge and skills, it is essential that workers are also capable of actually translating that expertise into productive labour. Unfortunately, such workers are far from being prevalent in India, and a vast amount of work is required before the majority of India’s young workforce becomes employable.

Higher Education in India: Vision 2030, a report produced by Ernst and Young for the Federation of Indian Chambers of Commerce and Industry (FICCI) states that 75 percent of graduates from Indian universities are said to be unemployable in the IT sector. This number decreases to 55 percent in manufacturing and 50 percent in the banking and insurance sectors. While graduates from the country’s top universities are much more capable, they comprise a small proportion of the national average. Overall, there is an apparent disconnect between the skills and knowledge of a majority of the Indian workforce and the needs of their respective industries. This must be rectified as soon as possible, otherwise India’s youth will age past the point of productivity without ever realising their potential.

One major problem with the current education system is that it churns out students that are theoretically proficient in their subjects but lack the ability to adapt and apply this knowledge to perform specific tasks required on the job. Theoretical know-how is relayed in isolation through prescribed text books and written examinations; this is not enough to understand practical or real world applications in their industries. The problem is particularly pronounced with science and engineering graduates; the ability to apply scientific theories to come up with practicable solutions is an absolute necessity in a job environment.

In order to ensure that students possess this ability, it is necessary that they are given expertise in the tools and practices actually used in their respective industries. In the United States, the Secretary’s Commission on Achieving Necessary Skills (SCANS) was appointed in 1990 to determine the skills needed for young people to succeed in the workplace. In its report, which is still widely used as a guideline for educational institutions in the States, it illustrates five competencies that all graduates must possess-

  • Knowledge of how to effectively allocate time, money, materials and human capital.
  • The ability to work on a team, teach, lead, negotiate, serve customers and work with people from diverse backgrounds.
  • Knowledge of how to acquire, evaluate, interpret and communicate data.
  • Knowledge of how to design and improve social, organizational, and technological systems.
  • Having the ability to effectively use technology.

It is vital that Indian universities adopt such guidelines when setting their curricula. In this regard, universities should be granted more autonomy in deciding their curriculums and with other such vital functions. The current framework empowers regulatory authorities to micromanage universities through various laws, rules and guidelines, often to poor results. This level of regulation makes it nigh impossible for progressive minded faculty to adopt more modern and practical curricula. This autonomy could be granted without detrimentally affecting educational standards by defining some basic pre-requisites for each university.

Creating a regulatory structure where universities are empowered to produce graduates that cater to industry requirements is the need of the day. Without it, the potential of the majority of India’s workforce will not be realised into actual contributions to the economy. Currently, the demographic dividend is closer to a non-performing asset about to turn into a liability.

Shobitha Cherian is an intern at the Takshashila Institution.

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Net Neutrality is like Net Neutrality

Internet has been a disruptive(pardon the cliche) force for at least 3 generations now; it has created a knowledge revolution not seen since the invention of the press. India, due to various reasons, entered this disruptive realm a little late but the knowledge revolution has definitely kicked off here.

The recent “zero rating” debate has resulted in outrage-over-load on the internet, with people trying to explain the situation through analogies ranging from airports to public parks to roads to enter-your-pet-peeve-here. The net-neutrality debate has to be viewed, devoid of analogies, from the perspective of the users, telecom operators, content developers, and regulators.

As a user(data user, particularly), it is obvious to gravitate towards the cheapest and the most reliable telecom operator and choose to use data in any way possible. A proportion might opt for zero-rated products purely because it maximise the users’ interest; however, if such products result in disincentivising the users from accessing other content, the users are at a disadvantage. These products can potentially result in quasi-censorship, and in the extreme case can stall the knowledge revolution. Therefore, it is reasonable to expect that every packet of data is treated similarly and not be worried about the revenues or fortunes of the telecom operators.

As a telecom operator, it is natural to device strategies that maximise profits and acquire market share. In the Indian context, since the sector is regulated, such a behaviour(purely rational) has automatically created oligopolies which has in turn resulted in the regulator establishing rules that deny the operators several sources of revenue. In addition, content providers have created innovative products that are directly in competition with the basic services offered by the telcos. In such a muddied scenario, the operators are trying to create pricing strategies that help them benefit from the creativity/innovation of content developers, well within the regulatory framework, at the expense of the neutrality of the internet and in turn the consumer.

As content developers, it is natural to espouse the case for net-neutrality as a neutral internet benefits them. However, once the content developers acquire strategically large user-base, it is no longer in their interest to  vehemently vouch for net-neutrality. A neutral net has the potential to create competitors that can threaten these large players. The behaviour of Indian firms of initially tying up with these zero-rated products indicated the same(after the backlash on twitter and other social media, the firms are now purportedly trying to #savetheinternet).

Lastly, in a sector that is exceedingly important from the point of view of India’s national interest, the regulator plays a crucial role. In an ideal world we don’t need regulation, but in such a world the internet is also neutral. Therefore, the regulator’s two major tasks are to enhance social welfare by protecting the consumer interest and to create an environment that is conducive for business — that will further enhance social welfare. A neutral internet will definitely benefit the consumers’ interest; but since the regulatory framework is not conducive for business, it appears that net-neutrality is in conflict with business interests. The situation can change if the regulatory framework is eased and the markets are opened up. Easing of regulatory hurdles can grant existing operators the freedom to respond to market changes with positive or negative price changes, without impinging on the neutrality of the internet.  Opening up of the markets, can encourage new entrants and allow for mergers & acquisition(currently, both these tasks are nearly impossible) which will create real competition among these firms. This is not an easy problem to solve. The regulator has its work cut out and it will be interesting to see how things unfold.

Varun Ramachandra is a policy analyst at Takshashila Institution and tweets @_quale

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