Analysis of costs and benefits of Rules essential before finalisation: Rangasayee Ramakrishna, Former MP

New Delhi, June 28, 2018

“Analysing the impact of rules and regulations in draft stage is essential through a structured stakeholder consultation mechanism”, observed Rangasayee Ramakrishna, Former MP, Rajya Sabha and Member, Standing Committee on Transport, Tourism and Culture.

He was speaking at a conference organised by CUTS International on Facilitating Innovation in Ubran Mobility. A report by CUTS International on Regulatory Impact Assessment of Maharashtra City Taxi Rules, 2017 (Rules) was released in the conference. The report estimated that the per day cost to consumers may increase up to 40% and per day cost to taxi drivers may increase up to 93% if the Rules come into force. The report further provides some recommendations to rationalise the regulatory requirements and recommends that similar rationalisation is necessary for incumbent taxis as well. Suggestions include doing away with requirements related to fleet composition, domicile for public service vehicle badge, and taxi colour standardisation.

Agreeing with the recommendations under the report, Kamal Chandra Nagar, Deputy Secretary, Department of Transport, Madhya Pradesh, highlighted that the light touch approach has been suggested by the MP government for regulating taxis linked with app based aggregators.

While making a presentation on the report, Arpit Tiwari, Assistant Policy Analyst, CUTS International, presented the Regulatory Impact Assessment (RIA) framework utilised to estimate costs and benefits of the Rules. It was estimated that the Rules are likely to have varied impacts on different stakeholders, including consumers, drivers, aggregators, and government. In aggregate, based on cost benefit analysis, the costs imposed by select provisions of the Rules are likely to outweigh their benefits. In addition, it appears that the Rules may distress the dynamics of congestion on the road and environment of the city. Even in some cases wherein regulatory objective are likely to be met, it is estimated to happen at a prohibitively higher cost wherein other economical options might be available.

It was highlighted that several incumbent city taxi providers are already subject to provisions similar to Rules and are incurring significant compliance cost. In fact, one of the rationales for introduction of the Rules was to create level playing field between incumbent city taxi providers and taxis linked with app based service providers. A level playing field may not necessarily be achieved by increasing the costs for new market entrants to match the costs of incumbents but can also be created by reducing the costs of incumbents to match the costs of new entrants.

The RIA framework helps in designing a regulatory framework which has the potential to achieve regulatory objectives at minimum costs to stakeholders, through a detailed analysis of likely costs and benefits of regulatory proposals. In the report, CUTS have identified six specific Rules for the purpose of in-depth cost-benefit analysis. These are: i) minimum engine capacity ii) fleet composition, iii) permit fees; iv) fuel type; v) Public Service Vehicle (PSV) badge; and vi) colour standardisation. The analysis is based on data and information collected from in-depth discussions with 1,000 taxi drivers and 1,000 consumers of taxi services in Mumbai Metropolitan Region and consultations with relevant stakeholders.

The event witnessed participation from industry, academia, media, experts, and all relevant stakeholder groups.

For any details, please contact Arpit Tiwari


or Vijay Singh


from CUTS International.