REPORT OF THE COMMITTEE FOR

DETERMINATION OF THE FARE STRUCTURE

OF TAXIS AND AUTO RICKSHAWS
IN MAHARASHTRA STATE

SEPTEMBER - 2017
 B. C. Khatua
Chairman
Committee for determination of
Fare structure of Taxis and
Auto rickshaws in Maharashtra, Mumbai

Dated 28th September, 2017.

PREFACE
The four-member Committee was constituted in October, 2016 to undertake a
comprehensive review of the existing policy relating to fixation of fare for taxis and auto
rickshaws in Maharashtra after taking into consideration the changed circumstances and
to recommend a revised fare fixation framework.
2. At the outset, the Committee would like to sincerely thank Hon'ble Minister of
Transport, Shri Divakar Raote and the Government of Maharashtra for reposing
their faith in this Committee to carry out the task assigned to it.
3. Till about 4 years back, fixation of taxi and auto rickshaw fare was a relatively
straight forward issue in as much as the various IPT segments, viz., black and
yellow taxis, cool cabs, radio / fleet cabs and auto rickshaws operated in distinct
and more or less, mutually exclusive demand domains. The only contentious
issues could be quantification of various cost elements which go into
quantification of fare and special charges, viz., late night charges or luggage
charges etc.
4. However, the entry of App-based Aggregator taxis into the IPT sector, backed by
latest technology, has completely unsettled the domain distinctions due to their
operation across commuter classes and venture capital-backed subsidized fare
structure. As disrupters of the status quo, they not only demolished the carefully
crafted state policy of providing distinct operational spaces and price frameworks
to different segments of the traditional IPT operators but also started operating in
the penumbra of the legal framework of licensing and permit regimes. It also
demolished long held policy certitudes, viz., freeze on new permits for intra-city
operations. The response of the traditional players in the market was obviously
one of vehement objection and opposition. The commuter response has been a
mixed one, happy for lower fares, better service and comfort but upset over high
surge pricing during peak hours.
5. The regulatory and policy response has been relatively slow but quite focused.
The Government has responded to the market disruption and emerging trends

aia
 through a series of measures, viz., unfreezing the limits on taxi and auto rickshaw
permits, permitting black and yellow taxis to use AC on commuter demand with
20% additional fare, promulgation of the Maharashtra City Taxi Rules, 2017 to
regulate the Aggregators' operations for providing a level playing field to the radio
/ fleet taxi operators and mandating fixation of minimum and maximum fare limits
for aggregator taxis so as to protect the interests of traditional taxis as well as
consumers.
6. The Committee's mandate has consequently been expanded by the Government
to fix the floor and ceiling on the fares that the Aggregator taxis can charge and
also to fix the fare for electrical cars. The entry of new IPT service providers and
new types of vehicles has made the IPT sector more complex and challenging. The
Committee is fully conscious of these complexities and the conflict of interests of
various stakeholders. Hence, it was necessary for the Committee to examine the
related policies and principles that clearly had a bearing on the interests of
commuters and service providers at large and necessary amendments have been
proposed in order to create a robust, competitive and commuter-oriented policy
and fare framework.
7. Accordingly, the Committee interacted with all stakeholders across the state and
across the sectors and repeatedly as the situation warranted. A major handicap
the Committee faced is the incompleteness of the required data sets or anomalies
and gaps therein. Reconciling them to coherent acceptable data sets took quite a
bit of time. Besides, in view of the emerging complexities and competition, it was
necessary to not only interact repeatedly with the various stakeholders but also to
interact with relevant domain experts from outside the interested parties in order
to validate the former's inputs. In this regard, the Committee would like to
acknowledge the valuable inputs and insights of Shri Manoj Saunik, I.A.S.,
Principal Secretary, Department of Home (Transport), Government of
Maharashtra and Dr. Praveen Gedam, Transport Commissioner of Maharashtra,
Shri Vishal Ramprasad and Shri Ojas Shetty from the World Resource Institute
(WRI), India, Shri Ganesh Gaikwad from Artscope Creations, Pune and technical
experts like Shri K. D. Dighe from Pune and Prof. Dr. O. G. Kulkarni from Nashik.
8. The Committee is fully conscious of the confusion and discontent among the
traditional taxi and auto rickshaw drivers in the face of sudden and unequal
competition from the Aggregators. But it is also heartening to note that there is a
growing awareness among them about the need for consumer-orientation, better
upkeep of their vehicles, and playing by the rules. Consequently, the incidence of
fare refusals has reportedly come down. But it is also a fact that they have mostly

ii
 lost the long distance passengers to the Aggregators and have shown a willingness
to offer discounts for long commutes. Regarding fare revision, while most of the
unions have argued in favour of a fare hike, a lot of drivers are apprehensive about
further loss of business if fare is hiked.
9. As regards the Aggregators, their operations are, as of now, mostly on the margins
of the legal framework. Most of their drivers do not have a valid permit under
section 74 of the Motor Vehicles Act, 1988 for city driving and perhaps even PSVA
badge as well. They also mostly operate on diesel fuel with All India Tourist
Permits which are not permitted for intra-city operations. Most importantly, their
fare structure at present is designed with a focus on brand recognition, market
penetration, and development of long term customer and driver loyalty. Hence,
they have been rather liberal with incentives for the drivers to build up a fleet over
and above the fare earnings from out of the venture capital funds received by the
Aggregators. The Maharashtra City Taxi Rules, 2017 will bring them within the
ambit of the legal framework. However, there are issues relating to these rules
with a significant impact on the pricing of their services and efficiency of the
regulatory framework. Hence, the Committee has analysed them and given its
specific recommendations for certain amendments and additions of new rules in
the interest of commuters and better regulatoryl control.
10. As regards fare fixation, the Committee has analysed all the elements of cost that
go into the calculation of fare for black and yellow taxis and auto rickshaws and
based on the feedback received from the stakeholders and related market
research, made appropriate changes therein in keeping with the actual market
costs and accounting principles. Consequently, some cost estimates have gone up
while others have gone down. Some legitimate cost elements, never considered
in the past, have also been factored in. Consequently, the fare revisions are
moderate. But in order to enable the traditional IPT sectors compete in the market
place better, some innovations, viz., telescopic pricing, happy hour discount have
been recommended. It is hoped that now with permission to use AC coupled with
these innovations, the black and yellow taxis will be able to compete with the
Aggregators for long distance commuters.
11. These factors including the basic fare for the black and yellow taxis have been
taken into consideration for fixing the floor and ceiling on the fares that the
Aggregators can charge to the commuters. While the floor price will provide a
level playing field to the black and yellow taxis and auto rickshaws, the ceiling price
will cap the maximum surge price and thereby protect the interests of the
commuters. It is to be noted that the recommended price bands for different

iii
 service categories are well within the limits suggested in the MORTH Committee
Guidelines.
12. As regards fare fixation for electrical taxis, the Committee has interacted with the
manufacturers and outside experts before concluding that at the present high
levels of price and non-existing operational and servicing logistics, it is not feasible
or affordable to have black and yellow taxis in the electrical category due to
technical, financial and operational reasons. The Aggregators can, however, try
them within the fare bands permitted to them. The Committee hopes, with
remediation of the constraints presently surrounding electrical cars, induction of
them into the taxi services in the future will be a boon for a clean environment and
would need to be encouraged.
13. Welfare measures have been a consistent demand of the taxi and auto rickshaw
unions. The Committee has devoted considerable energy and time to frame a
holistic and comprehensive scheme for them. The Committee has noted that
since taxi and auto rickshaw drivers, unlike unorganized manual labourers, are
self-employed and have no direct or indirect employer, the Welfare Board
structure as has been done for Mathadi workers in Maharashtra or unorganized
labour in Tamil Nadu, is not an appropriate and effective solution for them. It is
also not feasible to enhance the living costs to accommodate such welfare
demands without hurting commuter interests. Hence, the Committee has
recommended an elaborate scheme for constituting a “Welfare and Insurance
Corporation” for them with a defined corporate governance structure and defined
sources of funds. The Committee hopes, the Government will be able to act on it
in a time bound manner to fulfill a long standing grievance of the taxi and auto
rickshaw drivers. The Committee has also recommended that this corporation
should be mandated to create or acquire and operate an App-based technology
platform to connect the black and yellow taxi and auto rickshaw drivers with the
prospective commuters in order to maximize the unilisation of their assets and
earnings.
14. The Committee has also underscored the need for liberalising the present
restrictions on taxis of engine capacity below 980 cc because cars with engine
capacity of upto 600 cc are available in the market which are technologically
superior to 3-wheeler auto rickshaws and can provide affordable taxi services
including AC facility with their introduction into the IPT fleet. However, in order
not to destabilize the present set up in the MMR, the Committee has
recommended to permit taxis with engine capacity between 600 to 980 cc in the
million-plus population cities outside of MMR, namely, Pune, Pimpri-chinchwad,

iv
 Nashik, Nagpur, Aurangabad and Solapur to begin with. Based on the experience
thereof, this policy may be reviewed and revised after a couple of years for
possible expansion to other municipal corporation areas.
15. In the course of working on this assignment, the Committee observed that there is
an acute shortage of manpower in the Motor Vehicles Department, with many
officers working on more than one responsibilities. Consequently, officers who
were assigned to assist the Committee in its work were either changed mid-course
or the Committee had to adjust to their inevitable work exigencies on multiple
assignments. Shortage of officers and large number of vacancies across the
cadres has also adversely affected their regulatory work and timely provisioning of
various services to the public. In every single interactive meeting of the
Committee with the stakeholders, this shortage of officers and consequential
delay in the provisioning of various services was highlighted. Enforcement of the
law, detection of illegal taxis and auto rickshaws and redressal of fare refusal
complaints have also suffered. They have serious and adverse implications for
road safety, earnings of the authorized taxi and auto rickshaw drivers and
government revenue as well. Hence, keeping such a large number of vacancies in
a policing and revenue earning department is neither in public interest nor in
Government's interest Hence, the Committee has recommended to fill up the
vacancies, especially in the cutting edge staff in a time bound manner and also to
provide for additional manpower viz., transport constabulary for enforcement of
the law. The Committee has also recommended for creation of district and taluka
level enforcement committees for monitoring strict implementation and
enforcement of installation of fare meters and charging of fare by the meter only.
16. On-road conduct of the drivers often is as bad as with the customers. Arrogance,
lack of common courtesies, lane cutting, signal jumping, wrong parking are some
of the most glaring ones. Hence, improvement in the drivers' over all conduct,
knowledge of the law, civic sense and knowledge about basic motor mechanics
are a sine qua non of safe roads and safe and pleasant commuter experience.
Mere knowledge of how to hold the steering and operating the break and the
clutch are not enough to qualify them for a driving license or PSVA badge. Hence,
the Committee has made appropriate recommendations in this regard which
need to be urgently acted upon.
17. I have earlier referred to the gaps and inconsistencies in the data sets generated
and maintained by the Motor Vehicles Department. There is also no worthwhile
activity in traffic and transportation related research happening in the
department. There is no dedicated manpower for that purpose either. A strong

v
 data centre and research centre in the Motor Vehicles Department is an absolute
necessity for accurate fare fixation, accident prevention measures, licensing
policy and law enforcement apart from providing policy inputs to the
Government. Accordingly, the Committee has strongly recommended for the
strengthening of the data base and creation of a Data and Research Centre in the
Motor Vehicles Department and manned by related experts in the field. It is
hoped that the Government will act on it expeditiously in the interest of road
safety and law enforcement.
18. I am thankful to my esteemed colleagues on this Committee for their valuable
contributions and insights provided from time to time through the Committee's
deliberations and written inputs. This exhaustive report has been possible due to
the collective efforts of the Committee members and I wish to keep on record my
appreciation and gratitude to them.
19. The Motor Vehicles Department officials have provided necessary support and
logistics to the Committee inspite of heavy demands on their time. I wish to keep
on record my appreciation and thanks to Shri S. B. Sahasrabudhe, Additional
Transport Commissioner and Shri Jitendra Patil, Regional Transport Officer, Thane
for their assistance to the Committee in the discharge of its task.
20. The Committee is also thankful to the R.T.O.s and their officers who made the
arrangements for the interactive meetings of the Committee and ensured the
presence of various stakeholders for fruitful interaction. They also provided
useful inputs to the Committee on their respective jurisdictions. Various
consumer organizations, taxi and auto rickshaw unions, fleet taxi associations, taxi
aggregators, car, auto rickshaw and meter manufacturers provided all the
necessary information on various aspects of the fare fixation issue to the
Committee from time to time without any hesitation.
21. I am most thankful to the Motor Vehicles Department officers and staff assigned
for assisting the Committee whose assistance to me in drafting the report has
been immense. Shri Sanjay Sasane, Dy. Regional Transport Officer, Kalyan, Shri
Yogesh Bag, Asstt. Regional Transport Officer, Satara, Shri Haresh Patil, Head Clerk,
Dy. Regional Transport Office, Borivali and Shri Ganesh Devtale, clerk-cum-typist,
Dy. Regional Transport Office, Vasai, have tirelessly worked day in day out to
provide the last minute inputs, and typing out the report multiple times till it met
the expectations of the Committee. I also wish to thank Shi P. H. Raut, consultant
and Shri Yashom Navalkar, IT Co-ordinator of Mumbai Transformation Support
Unit who have unstintedly assisted the Committee, looking after the
correspondence, drawing up of minutes and logistics for the Committee's smooth

vi
 functioning. I must acknowledge that without their support and assistance, the
Committee would not have been able to complete the assignment.
22. I hope, the Committee has risen to the Government's expectations to provide a
holistic framework for the fare structures for various segments of the IPT sector
and meet the expectations of the commuter community and all other
stakeholders of the IPT sector.

B. C. Khatua

vii
 INDEX
Sr.
Item Description Page No.
No.

1. Preface i-vii
2 Chapter-1 Introduction 1-6
3 Chapter-2 Objections and suggestions of various 7-26
stakeholders
4 Chapter-3 Approach for working out a formula for 27-61
fare structure of black and yellow taxi.
5 Chapter-4 Fare structure proposed for black and 62-89
yellow taxi
6 Chapter-5 Designing a fare structure for city taxi. 90-118
7 Chapter-6 Approach for working out a formula for 119-144
fare structure of auto rickshaw
8 Chapter-7 Fare structure proposed for auto rickshaw 145-166
9 Chapter-8 Welfare and Pension Schemes for taxi and 167-180
auto rickshaw drivers
10 Chapter-9 Miscellaneous 181-194
11 Annexure-1 Comparison of recommendations of this 195-199
Committee with those of Hakeem Committee
12 Annexure-2 Recommendations of the Committee for 200-201
amendments in the Maharashtra
City Taxi Rules, 2017
13 Annexure-3 Abbreviations used in the report 202
14 Annexure-4 List of the taxi and auto rickshaw unions and 203-210
other stakeholders who met the Committee
and submitted their objections and
suggestions
15 Annexure-5 List of meetings held by the Committee 211
16 Annexure-6 Bibliography - List of references 212-213
17 Annexure-7 Government of Maharashtra Resolutions 214-224
regarding constitution of the Committee
and its terms of reference

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 CHAPTER - 1
INTRODUCTION
1.1. Background to the constitution of the present Committee.
1.1.1 The Government of Maharashtra had constituted a one man Committee under
the Chairmanship of Shri P. M. A. Hakeem in 2012 vide the Home Department
Resolution no. MVR-1111/C.R. No. 966/TRA-2, dated 13th April, 2012, to
determine various cost elements for working out a formula for fixation of taxi
and auto rickshaw fares in the State of Maharashtra and to recommend a
formula for future revisions. The details of the terms of reference of the said
committee were as follows:
i. To determine the various cost elements relevant for working out a formula
for the fare structure of taxis plying in the State based on the fuels of petrol /
CNG / LPG and recommend a fair and reasonable fare structure based on
the same.
ii. To determine the various cost elements relevant for working out a formula
for the fare structure of auto rickshaws plying in the State based on the fuels
of petrol / CNG / LPG and recommend a fair and reasonable fare structure
based on the same.
iii. To recommend a formula for revision of the fare structure of taxis and auto
rickshaws in case of increases in the costs of relevant elements in future.
iv. To recommend the minimum fare for one kilometer (metric system) instead
of the existing distance of 1.6 km.
v. To recommend the fare structure for share-a-taxi and share-an-auto
rickshaw.
1.1.2. The Hakeem Committee submitted its report in July, 2012 which was accepted
and adopted by the State Government with minor modifications vide its
Government Resolution no. MVR-0712/ C.R.40(1)/ TRA-2, dated 28th
September, 2012. The fare structure for taxis and auto rickshaws are presently
being determined by the Regional Transport Authorities for their respective
regions based on these recommendations.
1.1.3. However, various stakeholder groups had reservations about the cost
estimation formula and its validity in all circumstances apart from their
objections to certain cost estimates. This issue has also been legally challenged.
Hence, the Government felt the need for a comprehensive review of the
determination of various cost factors, cost estimates and the fare fixation
formula by an expert body. Accordingly, the Government of Maharashtra

01
 constituted, vide Home Department Government Resolution No. MVR-
0515/C.R. 244/TRA-2, dated 10th October, 2016, a four member Committee to
undertake a comprehensive review of the existing policy and after taking into
consideration the changed circumstances, to recommend a revised fare fixation
framework.
1.1.4 After appointment of the Committee, there were major changes in regulatory
provisions related to IPT sector and additions to the terms of reference of the
Committee. Litigations initiated by some stakeholder groups in the Hon'ble
High Court of Bombay have also implications for the Committee's task. The
committee had to take into consideration these developments for inclusion in its
report, thereby contributing to the delay. They are listed below:
1. Receipt of the Report of the Expert Committee appointed by the Union
Ministry of Road Transport and Highways (MORTH) under the
chairmanship of Secretary, MORTH to propose taxi policy guidelines to
promote urban mobility, vide letter dated 15.12.2016.
2. Maharashtra City Taxi Rules, 2017 notified by Government of Maharashtra
vide notification no. MVR-0315/CR-109/TR-2, dated 04.03.2017.
3. Order issued by Government of Maharashtra vide no. MVR-0317/CR-
163/TRA-2, dated 11.4.2017 permitting black and yellow taxis to charge
20% extra over the basic fare if AC is operated on the commuter's explicit
request.
4. The Committee was also asked to work on the fare structure of battery
operated (electrical) vehicles by the State Transport Authority vide letter
No. 7636, dated 16.5.2017.
5. The Committee was asked to recommend minimum and maximum fares for
App-based taxis operated on the platform of Aggregators, by Government
of Maharashtra vide its order no. MVR0515/CR 224/TR-c, dated 3.6.2017.
6. Issuance of Government notification No. MVR-0815/CR-387/TR2, dated
17.06.2017 lifting the ban on taxi and auto rickshaw permits.
7. Back reference of State Transport Authority to the Government about
lifting the ban on taxi / auto rickshaw permits in the area other than the
cities named in Government notification vide letter No. TCO/MS/D-1/CR-
50A(2)/2015/2017/ON 11776, dated 9.8.2017.
8. Writ Petition No. 1730/2016 filed by Radio / Fleet Taxi Operators'
Association and Writ Petition Nos. 1475/2017, 1587/2017 and 1683/2017

02
 filed by some App-based taxi drivers as well as Aggregators before Hon'ble
High Court of Bombay.
1.2 Terms of Reference of the Committee.
1.2.1 Thus, the Terms of Reference of the present four - member Committee can be
summarized as follows:
I. To undertake a comprehensive review of the various cost factors, cost
estimation methods and fare fixation formula recommended by the
Hakeem Committee in 2012 for taxis and auto rickshaws in Maharashtra.
ii. To compare the actual rate of fare revisions done in the last 3 years vis-à-vis
the actual rate of cost escalations to test their reasonableness;
iii. To take into consideration all the changes in the intermediate public
transport sector and passenger transport sector that have taken place or
are taking place having a bearing on the taxi and auto rickshaw trade in the
state.
iv. Based on the analysis of the factors referred to in (i), (ii) and (iii) above, to
recommend an appropriate revised fare structure and fare fixation formula
for taxis and auto rickshaws operating in the state.
v. To recommend appropriate minimum and maximum fares for taxis
operating under the App-based Aggregation model under Rule 11 of the
Maharashtra City Taxi Rules, 2017.
vi. To determine various cost factors and recommend a fare structure and fare
fixation formula for electrical motor vehicles operated as taxis.
1.3. Urban Mobility and role of IPT therein.
In tandem with the rapid growth of the Indian economy, there has been rapid
growth in urbanization across the country. Maharashtra is one of the most
urbanized states with almost 50 percent of its population living in the urban
areas.
1.3.1. Given the wider mandate of the Committee and the emerging trends in the
passenger transport sector in general and the intermediate public transport
(IPT) sector in particular, it is necessary to identify the emerging trends and the
complex interplay among them before venturing into the identification of cost
factors, their impact and weightage in the cost estimations to determine the fare
structure. In big cities, public transport has been the main stay of urban

03
 mobility. The IPT sector plays a significant role in catering to the customized
mobility needs. This is more true of smaller towns and rural areas where public
transport is either totally absent or provides limited services. However, with
growing affluence in the cities and deteriorating public transport, there is a
growing tendency towards acquisition of personal cars and two wheelers. Such
extensive growth of personal cars and two wheelers has resulted in severe
congestion on the roads leading to people spending many more hours for their
commute to and from work place and for other activities. This has had serious
adverse impact on their productivity, quality of life and living environment.
While up-gradation and expansion of public transport is both capital intensive
and time consuming, an adequate and efficient IPT sector can provide some
relief from this situation by providing efficient and good quality mobility,
thereby reducing the need for and dependence on personal transport.
1.3.2 Historically, Governments have regulated the number of taxi and auto rickshaw
permits on the assumption that excess supply of taxis and auto rickshaws would
lead to unhealthy competition and inadequate income for their long term
viability and sustainability. However, it is noted by the Committee that the
number of permits in Maharashtra has been frozen in 1997 with no review or
revision thereafter to account for the substantial growth in the population,
especially in the rapidly growing urban areas. It is also a fact that many of the
permits have become inoperative in various regions thereby reducing the
supply even further. The fact that, the App based Aggregators have been able to
provide business to tens of thousands of additional taxis in the last 3 - 4 years
clearly underscores this squeeze on the supply of adequate IPT in the market.
The emergence and rapid expansion of the App based taxi services in such a
short time also underlines the fact that the provision of good quality and reliable
IPT can reduce the dependence of commuters on personal transport and has the
potential to reduce the congestion on the roads and environmental pollution. It
is heartening to note that the Government has now recognized the futility and
negative impact of such artificial restrictions on market forces and has removed
the restrictions on issuance of fresh permits w.e. from 17th June, 2017. The
market forces of supply demand will now determine the levels of demand for
permits. The Committee is sure that the market forces will dictate and regulate
the demand for additional permits.
1.3.3. The entry of new IPT service providers and new types of vehicles has made the
IPT sector more complex and challenging. The carrying capacity of different
kinds of vehicles, the different types of fuels used and other facilities provided in
them have significant bearing on the income of the service providers. The inter

04
 se competition among various types of service providers has also impacted the
patterns of business and income of the traditional IPT sector. While the
Government would like to encourage use of clean fuel, there are inherent
limitations in the provisioning thereof in all parts of the state. Because of heavy
capital investment in the acquisition of a vehicle, an average driver cannot
change his decision in the short term. A reasonable level of protection to all
types of IPT service providers will provide the necessary comfort to adjust to the
emerging market trends in the short to medium term and provide prompt and
efficient service to the commuters. The Committee is conscious of the fact that
it needs to factor in all these issues and challenges in order to arrive at and
recommend sustainable and rational fare structures for different types of
service providers so as to provide a level playing field to all of them and ensure a
more satisfactory commuter experience.
1.4 Emerging Trends in Public Transport
1.4.1 The IPT sector has been hobbled by inadequate supply and commuter
complaints about fare refusal, over charging, arrogant behavior etc. While the
entry of App-based Aggregators has improved the drivers' conduct and over all
commuter experience, it has a long way to go before they can be the preferred
choice for the commuter over private transport. Urban public transport,
wherever available, has similarly been suffering from poor and inadequate
service. Mumbai suburban railway services and the city bus transport services
in Mumbai, Pune, Thane, Nagpur, etc are prime examples.
1.4.2 However, the emergence of metro rail services in big cities like Mumbai
Metropolitan area, Pune, Nagpur, etc is going to transform urban transport
sector in the next 3 to 5 years in a significant manner. Comfortable air
conditioned commute at reasonable prices, that too without the usual road
congestion woes, will change the way city commuters travel. While it will have
significant downward impact on the need for intra-city travel by private car,
thereby decongesting the city roads, the resultant increase in speed and
efficiency of the IPT sector will be substantially neutralized by the decline in the
commuter demand. The demand patterns for IPT will change from a mix of
short and long commutes to essentially last mile connectivity. The IPT service
providers will be well served to keep these emerging trends in mind to chalk out
their future plans.
1.5 Mandate of the Committee
1.5.1 The Committee has noted that, the scope and mandate of this Committee has
substantially changed from that of the Hakeem Committee because of

05
significant changes that have occurred in the Intermediate Public Transport (IPT)
sector in the last 5 years. As stated earlier, in the last 4 - 5 years new and
organized service providers have emerged in this sector. New types of vehicles,
such as electric cars and e-rickshaws have also started entering the IPT market.
Product differentiation and market segmentation are happening on an ongoing
basis. These new trends and developments have had significant impact on the
existing service providers and their business patterns and incomes. Prior to
2012, there were primarily 2 types of service providers, namely, black and
yellow taxis and auto rickshaws operated by individuals. The tiny cool cab
segment and radio / fleet taxi operators operated in an upper and niche market.
The emergence of ogranised service providers in the form of App-based
Aggregators and new technology vehicles need to be factored in order to
provide a level playing field to all service providers and promote a sustainable
IPT sector. It has also been brought to the notice to the Committee that, the fare
structure decided in 2012 was primarily based on the situation prevailing in the
Mumbai and Pune regions without giving due consideration to the ground
realities and challenges in the smaller towns and other urban / regional areas.
The commuters' representatives have also made useful suggestions, especially
to reduce the conflict points between the service providers and the commuters.
The Committee will keep the grievances of these stakeholders also in mind while
proposing the appropriate fare structures for various categories of service
providers in the IPT sector.

***

06
 CHAPTER - 2

OBJECTIONS AND SUGGESTIONS OF VARIOUS STAKEHOLDERS

2.1. Interactive meetings with various stake holders.
2.1.1 The Committee has noted the background of its constitution. Taking into
consideration the past dynamics of fare fixation and emerging competitive
environment and complexities in the IPT sector, the Committee decided to
undertake extensive interactive meetings with various stakeholder groups
across the state. Accordingly, interactive meetings were held with the taxi and
auto rickshaw unions and other representatives along with consumer
organization representatives across the state in Mumbai, Pune, Nashik,
Aurangabad, Nagpur and Ratnagiri. Separate interactive meetings were also
held in Mumbai with the radio taxi operators, App-based taxi Aggregators, car
and auto rickshaw manufacturers and electronic meter manufacturers and
technical experts. A number of additional meetings were held with taxi and
auto rickshaw unions and Aggregators on specific issues.
2.1.2 The different stakeholders presented their objections and suggestions on the
Hakeem Committee recommendations including cost factors, cost estimations
and revision formulae. They also provided their views and suggestions on those
aspects for fare fixation in the future and for providing a level playing field to the
competing segments of the IPT sector. What the Committee found interesting
was the objectivity and fair mindedness shown by some of the consumer
organizations on taking on board some of the concerns of the service providers
and offering constructive suggestions for conflict resolution between service
providers and commuters. Another interesting feature was the growing
awareness among the service providers about the need for moderate pricing
and improved services in the interest of sustainable business for themselves.
Perhaps the emerging competitive environment has induced such introspection
which is a welcome sign. This was evident from the fact that some taxi and auto
drivers argued for not raising the fares and for providing them technology
support for better connectivity with commuters and improving their earnings
through more rides. The suggestions, objections and demands of various stake
holders are detailed below.
2.2 Suggestions and demands of taxi unions.
2.2.1 Hakeem Committee formula for fare fixation -
i. Parameters considered by the Hakeem Committee for fare fixation are
adequate and the same should be accepted and adopted by the
Committee.

07
 ii. Hakeem Committee had very well studied the various aspects of operations
of taxis: therefore, there is no need to change its recommendations.
iii. The Taxi Unions should be consulted prior to making any changes in the
recommendations of the Hakeem Committee.
iv. Night surcharge for Pune region should be restored to 50%.
2.2.2 Other price related points.
i. Revision of fares is overdue as per the formula recommended by the
Hakeem Committee. Cost of living is rising and, therefore, fare revision as
recommended by the Hakeem Committee should be granted without any
delay and should be granted without waiting for the report of this
Committee.
ii. Taxi fares in Mumbai are lower than the fares in the metropolitan cities of
Delhi, Chennai and Bangalore. Therefore, taxi fares need to be revised
upwards.
iii. While fixing fares and tariffs, the Committee should consider the traffic
congestion in Mumbai which creates operational problems for taxis and
total lesser mileage they cover now as compared to 5-10 years back.
iv. CNG is not available in rural and semi urban areas. Therefore, for such
areas, petrol and diesel based fares and tariffs should be fixed for taxis.
v. Taxis should be exempted from payment of professional tax as in the case of
auto rickshaws.
vi. Luggage charges for taxis need to be adequately increased.
vii. Minimum wages of the drivers should be linked to the lowest salary of the
employees in the public sector.
viii. Government should give subsidy on fuel for taxis.
ix. Taxis should be either exempted from payment of environment tax or it
should be substantially reduced.
x. While fixing the fare structure of taxis, the cost of living @ Rs. 20,000/- per
month should be taken into consideration by the Committee.
2.2.3 Operational issues-
i. New permits are not issued by the Government even though there is a
shortage of taxis. This should be reviewed.

08
ii. Permit quota for taxis should be decided in consultation with service
providers and their unions / associations.
iii. Taxi Aggregators should be brought under the purview of the same law and
fare structure applicable to the taxis.
iv. Taxis should be exempted from payment of taxes for installation of Cashless
Payments App.
v. Proper and adequate taxi stands should be provided at major passenger
loading points.
vi. Unauthorized auto rickshaws and unregulated aggregators should be
controlled as they create adverse effect on the business of authorized taxis
and auto rickshaws.
vii. Share Taxi Zones should be set up for taxis on as many designated routes as
feasible. Metered taxis should not be allowed to operate in those zones.
viii. Proper parking facilities should be provided for the taxis. In this regard,
survey report on parking facilities prepared by Bombay Taxi Association
should be considered by the Committee.
ix. Taxis should be exempted from payment of toll tax for their empty return
trip.
x. Very high insurance premium is charged by the Insurance Companies on the
basis of all India accident risk factor whereas city taxis operate within cities
and towns at slow speed due to heavy traffic and traffic control measures
and hence carry very low risks of accidents and fatalities. Hence, the Third
Party Insurance premium should be reduced substantially for city taxis.
xi. Third party insurance premium should not be uniform for all states as their
operational conditions and accident rates vary significantly. Since
Maharashtra has much lower rate of accidents, the third party insurance
premium in Maharashtra should be lower.
xii. City public transport is subsidized. However, taxis which provide similar
service, do not get any subsidy, recognition and support from the
Government. Such subsidy needs to be given to them also.
xiii. All IndiaTourist Permit holders are operating in Mahabaleshwar and
Panchgani region without valid permits. Action should be taken against
them,

09
xiv. No action is taken by R.T.O. against unauthorized taxi operators and bogus
permit holders in Mahabaleshwar and Panchgani region.
xv. A special color be designated to the authorized taxis operating in
Mahabaleshwar and Panchani region to curb the unauthorized operations.
xvi. Mobile app support should be provided by the Government at a subsidized
rate to the taxi drivers with the help of unions in order to improve their trips
and earnings and help them face the competition from other types of
service providers.
xvii. Kolhapur - Pune taxi services should be started.
xviii.The first stage of fare structure should be at 1.00 km instead of 1.5 km and
subsequently it should be increased for every 100 meters in Pune and
Kolhapur.
xix. Mahindra jeeps and taxis should be allowed to operate with 9 + 1 passenger
capacity as demanded by unions in Nashik and Dule region.
xx. Share taxis should be allowed to operate only on designated routes.
xxi. New cars with less than 1300 cc should also be granted permits to operate
as point - to - point taxis / fleet taxis in the small towns. Moreover, permits
should be granted to AC cars with 1100 cc engine and non AC Maruti cars
with 800 cc engine to operate as point – to - point taxis / fleet taxis in small
towns.
xxii. After separation of Dhule region from the Nashik region, operation of taxis
from Nashik to Dhule, Nandurbar and Jalgaon is not permitted. Such area
restriction is affecting the business of taxis. Therefore, operation of taxis
from Nashik to Dhule / Nandurbar / Jagaon should be permitted as it was in
the past before division of Nashik Region.
xxiii. Due to geographical constraints, such as hilly terrain, bad road, long
distances of journey etc., the operation and maintenance costs of taxis are
high in the Konkan region.
xxiv. Taxis operating outside the city limits in Konkan region should be permitted
to charge 50% extra fare due to empty return trip.
xxv. In Konkan region, towns and village close down by 8.00 pm. Hence, taxis
should be permitted to charge 50% extra fare as the night charge between
8.00 pm to 7.00 am or at least between 10.00 pm to 6.00 pm.

10
2.2.4 Welfare Issues-
i. The welfare facilities for the drivers and their family members which were
considered by the Hakeem Committee should be recommended by this
Committee also and Government should implement them expeditiously.
ii. Medical facilities should be provided to the drivers and their family
members through the ESI scheme.
iii. Pension facility should be provided to the drivers having valid driving
license under the National Pension Scheme. RTO can collect 50 % of the
premium with the license fee and the balance should be paid by the
Government.
iv. Educational loan should be provided at a concessional rate to the
dependants of the drivers.
v. Taxi drivers should get reservation in allotment of houses under the public
housing scheme.
vi. Taxi drivers should get home loans from the Banks at concessional rates.
vii. Welfare Board should be set up for the taxi and auto rickshaw drivers as per
the recommendations of the Hakeem committee.
viii. Services of taxi drivers should be considered as semi government services
and various facilities should accordingly be extended to them.
ix. Provident Fund scheme should be introduced for taxi drivers.
x. 50% of the premium amount of third party insurance should be given into
the Welfare Board Corpus for the benefit of taxi drivers.
xi. Prepaid taxi scheme at the Railway Stations in Nagpur is not viable because
R.T.O. has prescribed tough conditions such as a deposit of Rs. 50,000/-.
The Committee should recommend waiver of such tough conditions as it is
a public service.
2.2.5 Miscellaneous-
i. Better facilities should be provided to the drivers at the Airport.
ii. Cashless App system should be introduced in all RTO offices in the interest
of greater transparency and higher efficiency.
iii. Condition of prescribed qualification should be dropped for granting
permits for taxis.

11
 iv. No exparte action should be taken on consumer complaints in fare refusal
cases without verifying the facts as most often the driver has genuine
reasons for refusal.
v. The Committee should strongly recommend to the Government for filling
up all vacant posts in R.T.O., offices in a time – bound manner and further
strengthening of R.T.O. establishment wherever necessary for effective
implementation of the provisions of the Motor Vehicles Act and timely
servicing of taxi and auto drivers' needs.
2.3 Suggestions and demands of auto rickshaw unions.
2.3.1 Hakeem Committee formula for fare fixation -
i. Parameters considered by the Hakeem Committee for fare fixation are
adequate and the same should be considered and adopted. Night
surcharge should be restored to 50% in Pune and Kolhapur regions.
ii. Hakeem Committee had very well studied the various aspects of operations
of auto rickshaws and, therefore, there is no need to change its
recommendations.
iii. Unions should be consulted prior to making any changes in the
recommendations of the Hakeem Committee.
2.3.2 Other price related points-
i. Revision of fares is overdue as per the formula recommended by the
Hakeem Committee. Cost of living is rising and, therefore, fare revision as
recommended by the Hakeem Committee should be granted without any
delay and should be granted without waiting for the report of this
Committee.
ii. Auto rickshaw fares in Mumbai are lower than the fares in the metropolitan
cities of Delhi, Chennai and Bangalore. Therefore, auto rickshaw fares need
to be revised upwards.
iii. While fixing fares and tariffs, the Committee should consider the traffic
congestion in Mumbai which creates operational problems for auto
rickshaws and total lesser mileage they cover now as compared to 5-10
years back.
iv. CNG is not available in rural and semi urban areas. Therefore, for such
areas, petrol and diesel based fares and tariffs should be fixed for auto
rickshaws.

12
 v. Minimum wages of drivers of auto rickshaws should be linked to the lowest
salary of the employees in the public sector.
vi. Government should give subsidy on fuels for auto rickshaws.
2.3.3 Operational issues-
i. New permits are not issued by the Government even though there is a
shortage of auto rickshaws. This should be reviewed.
ii. Permit quota for auto rickshaws should be decided in consultation with
service providers and their unions / associations.
iii. Passing of auto rickshaws should be done simultaneously with the fare
revision.
iv. Auto rickshaws should be exempted from payment of taxes for installation
of Cashless Payments App.
v. Proper and adequate auto rickshaw stands should be provided at major
passenger loading points.
vi. In rural areas, auto rickshaws should be allowed to carry 4 passengers
instead of 3 due to shortage of autos as compared to the demand.
vii. Share Auto Zones should be set up for auto rickshaws on more designated
routes. Metered auto rickshaws should not be allowed to operate in those
zones.
viii. Auto rickshaw driver should be considered as a worker and his income level
on 8 hour work basis should accordingly be determined. His future security
on retirement is also to be considered.
ix. Auto rickshaw driver should be considered as a public servant.
x. Unauthorized auto rickshaws and unregulated aggregators should be
controlled as they create adverse effect on the business of authorized auto
rickshaws.
xi. Very high insurance premium is charged by the Insurance companies for
auto rickshaws on the basis of all India risk perception. It should be
reduced based on low accident rate of our State.
xii. Third - party insurance premium should not be uniform for all States as their
operational conditions and accident rates vary significantly. Since
Maharashtra has much lower rate of accidents, the third party insurance
premium in Maharashtra should be lower.

13
xiii. Percentage of unauthorized non-permit auto rickshaw operation is high. Old
auto rickshaws to be scrapped after 25 years are still in operation as they are not
made unusable while scrapping them. Further, 6 seater diesel auto rickshaws are
not permitted to operate after 20 years but some of them are still in operation.
Non - taxi Omni cars and jeeps operate without proper permits. Unions have
given specific information of such operations to the concerned R.T.O.'s but either
no action is taken by them or follow - up is not always adequate. Shortage of
manpower in R.T.O. offices cannot be an excuse for not controlling such blatantly
illegal operations.
xiv. City public transport is subsidized. However, auto rickshaws, which provide
similar services, do not get any subsidy, recognition and support from the
Government. Subsidies on the same lines should be given to them also.
xv. Auto rickshaw services should be strengthened under the Smart City Project.
xvi. Either stop unfair competition by aggregators or give subsidy to auto rickshaw
drivers in order to provide level playing field.
xvii. C.N.G. centers should be provided in small cities and town also.
xviii. Do not increase present auto rickshaw fares in Pune city as it will affect their
business adversely.
xix. The first stage of fare structure should be at 1.00 km instead of 1.5 kms and
subsequently it should be increased for every 100 meters in Pune and Kolhapur
region.
xx. While fixing the fare structure of auto rickshaws, the cost of living @ Rs. 20,000/-
per month should be taken into consideration by the committee.
xxi. At least 5 additional C.N.G. / L.P.G. stations should be commissioned by the
Government in each of the Aurangabad, Latur and Nanded regions.
xxii. At present, the average gross earning of the auto rickshaw driver outside
Mumbai-Pune region is Rs. 400/- to Rs. 500/- per day which is grossly inadequate.
Therefore, the first stage of fare structure of auto rickshaw should be Rs. 20/- for
1.00 km and subsequently it should be increased by Rs. 16/- per kilometer.
xxiii. For auto rickshaws, the fare should be fixed @ Rs. 20/- per kilometer in Nagpur
and Amravati regions.
xxiv. Operation of auto rickshaws having permits for the rural areas should be banned
in Nagpur and Amravati regions.

14
xxv. Higher fares should be granted for the Vidarbha region as there are no C.N.G.
stations in these areas.
xxvi. The first stage of fare structure should be at 2.00 kms in the city and 3.00 kms in
the rural areas in Nagpur and Amravati regions.
xxvii. For the auto rickshaws operating in rural areas and Vidarbha region, charging
fare by meter is not feasible. Do not make it mandatory.
xxviii. Prepaid auto rickshaw scheme at the Railway Stations is not viable because
R.T.O. has prescribed tough conditions such as a deposit of Rs. 50,000/-. The
Committee should recommend waiver of such tough conditions as it is a public
service.
xxix. Auto rickshaw from rural areas should be exempted from the payment of taxes,
fees and insurance premium.
xxx. In rural areas, six seater auto rickshaws should be allowed.
xxxi. Due to geographical constraints, such as hilly terrain, bad road, long distances of
journey, etc. the operation and maintenance costs of auto rickshaws are high in
the Konkan region.
xxxii. In Konkan region, the quantum of empty runs and dead kilometers in respect of
auto rickshaw is quite significant. In a sample survey conducted, an auto
rickshaw in one shift had 40 kms of productive run and 10 – 12 kms of empty run
which is over 20%. This survey was jointly done with the Grahak Panchayat and
the R.T.O. representatives. This needs to be taken into consideration at the time
of revision of fares.
xxxiii. Auto rickshaws operating outside the city limits should be permitted to charge
50% extra fare due to empty return trip in Konkan region.
xxxiv. In Konkan region, towns and villages close down by 8.00 pm. Hence, auto
rickshaws should be permitted to charge 50% extra fare as the night charge
between 8.00 pm to 7.00 am or at least between 10.00 pm to 6.00 am.
xxxv. Auto rickshaw need not be scrapped after 16 years as per the Government
norms. Instead, they can be scrapped or allowed to operate upto 20 – 25 years
based on the fitness tests conducted from time to time.
2.3.4 Welfare Issues-
i. The welfare facilities for the drivers and their family members which were
considered by the Hakeem Committee, should be recommended by this
Committee also and implemented by the Government expeditiously.

15
 ii. Medical facilities should be provided to the drivers and their family
members through the ESI scheme.
iii. Pension facility should be provided to the drivers having valid driving
license under the National Pension Scheme. RTO can collect 50 % of the
premium with the license fee and the balance should be paid by the
Government.
iv. Educational loan should be provided at a concessional rate to the
dependants of the auto rickshaw drivers.
v. Auto rickshaw drivers should get reservation in allotment of houses under
the public housing scheme.
vi. Auto rickshaw drivers should get home loans from the Banks at
concessional rates.
vii. Welfare Board should be set up for the Auto rickshaws drivers as per the
recommendations of the Hakeem committee.
viii. Services of Auto rickshaw drivers should be considered as semi government
services and various facilities should accordingly be extended to them.
ix. Provident Fund scheme should be introduced for auto rickshaw drivers.
x. No exparte action on consumer complaints in fare refusal cases should be
taken without verification of facts as most often the driver has genuine
reasons for refusal.
xi. The Committee should strongly recommend for expeditiously filling up all
vacant posts in the R.T.O. offices in a time - bound manner and further
strengthening of R.T.O. establishment wherever necessary for proper
implementation of the Act and services.
xii. 50% of the premium amount of third party insurance should be given to the
Welfare Board corpus for the benefit of auto rickshaw drivers.
2.3.5 Miscellaneous-
i. Cashless payments App system should be introduced in all RTO offices in
the interest of greater transparency and higher efficiency.
ii. The condition of prescribed qualification should be dropped for granting
permits for auto rickshaws.

16
 iii. Auto rickshaw permits should be linked to the permit holders' Aadhaar
Cards and photo of the permit holder on the permit should be made
compulsory in order to stop misuse or illegal transfer of permits.
2.4 Objections and Suggestions of App-based Taxi Aggregators.
i. No restriction for engine capacity: The condition in the City Taxi Rules that
30% of the fleet shall have 1400 cc engine capacity is unreasonable, anti
consumer and anti opportunity. Most importantly, since Aggregators do
not own the fleet, they cannot pick and choose which driver owners will
buy such high end taxis nor can they force them to do so. Besides, it will
force 79% increase in blended fare and will put unnecessary burden on the
common commuter's pocket apart from making the whole App-based taxi
service unviable.
ii. Permit fee to be reduced: The condition prescribing permit fees for vehicles
under 1400 cc at Rs. 25,000/- and that for vehicles above 1400 cc at Rs.
2,61,000/- is illogical, arbitrary and exorbitant. There is no rational basis for
it. It will lead to 219% increase in the breakeven point of the taxi owners
and add to the higher fare burden on commuters.
iii. Conversion to CNG: currently majority of the All India Tourist permit
vehicles, under the fleet of Aggregators are diesel vehicles. There exists no
technology to enable conversion of diesel cars into CNG cars. To sell such
vehicle at throw away price and to purchase a new CNG vehicle is
impossible task for the driver. The Supreme Court has also allowed diesel
vehicles plying with an All India Tourist Permit to travel within NCT, until the
permit expires by efflux of time. The same condition may be enacted in the
Maharashtra City Taxi Rules, 2017.
iv. PSVA badge - 15 years' stay in Maharashtra: There are 3 preconditions for
the issuance of PSVA badge, namely, the person must have 15 years'
domicile in Maharashtra, working knowledge of Marathi and topographic
knowledge of the city. While the other 2 conditions are rational and
reasonable, the requirement of 15 years' residence in Maharashtra is
clearly arbitrary and violates the provisions of the Constitution. At least
70,000 drivers on the platform of the Aggregators do not meet the said
prerequisite.
v. Police verification: The burden of verifying the antecedents and criminal
record of the driver partners should not be on the Aggregator. Police
verification should be done by the driver partner at the time of induction

17
 and at the time of renewal of driving license. In fact, once the list is
submitted by the Aggregator, the onus of carrying out the police
verification ought to be on the law enforcement authorities. A time bound
police verification should be carried out by the local law enforcement
authority.
vi. Colour Scheme: The requirement of having separate color scheme is
unnecessary and will add to the cost of the vehicle and fare to be charged to
the commuters.
vii. Joining multiple Aggregators: The driver partners may be allowed to
operate on more than one Aggregator's platforms at any given time,
instead of restricting them to the minimum of one month attachment to
one Aggregator only. This will give maximum ridership to the driver and
boost his earnings.
viii. Working hours of drivers: This clause should be deleted. The driver –
partners choose flexible working hours to suit their need for rest, leisure
etc.
ix. Driver's uniform: Drivers operate with multiple service providers. In this
background, there may be different uniforms for different Aggregators,
which will compel and restrict the driver to work with a single company.
x. Control on fare structure: There should not be any control by the State
Government on the fare structure of App-based taxi drivers.
xi. Restriction on the number of vehicles: There should not be any restriction
on the number of vehicles attached to a Licensee Aggregator. Apartment
from being an unreasonable restriction on carrying out business, it will
restrict supply of service providers and may create supply demand
mismatch. Such artificial restrictions will be anti-competition and anti-
growth.
2.5 Objections and suggestions of the Association of Radio Taxi Operators.
i. Restriction on low fare: The minimum fare for Aggregation based service
providers should not be less than that of black and yellow taxi.
ii. Stop incentives to drivers: No company should provide any implicit or
explicit incentive or subsidy to the driver with the intention of cornering
vehicles and killing competition.
iii. Clean fuel: use of clean fuel is a must. Transition period for conversion of
diesel vehicle into CNG should not be more than 3 months.

18
 iv. PSVA - Badge: The 15 years' domicile condition for issuance of PSVA Badge
should be removed.
v. Colour scheme: Separate colour scheme for each Aggregator is not
necessary.
vi. Working hours: The rule of working hours of drivers should not be
prescribed. They should have the flexibility to choose their working hours
as per their convenience.
vii. Choice of multiple Aggregators: Cab owner should have the flexibility to
join more than one Aggregator at a given time.
viii. Restriction on maximum number of permits: Maximum 4000 permits per
applicant Aggregator should be allowed.
2.6 Suggestions of Consumer Forums.
2.6.1 M.M.R.T.A. Region –
i. Efficient services of taxis and auto rickshaws are not available at present in
spite of several service providers.
ii. Supply – demand gap in public buses as well as taxis and auto rickshaws
results in serious inconvenience for the public. Therefore, the supply side
needs to be augmented.
iii. Competitive fares from taxis and auto rickshaws are desirable in the
interest of consumers as well as their own sustainability.
iv. Share taxi and auto rickshaw operators are picking up passengers in
between en- route. But there are no guidelines on how much such
passangers should pay.
v. Sometimes and at some places, share auto rickshaws carry more
passengers than the approved carrying capacity and, as a result, ladies/ sick
passengers are often made to occupy front seats at a lot of personal
inconvenience. This practice must be stopped.
vi. In order to avoid misunderstanding about refusals, proper indicator should
be displayed on the top of the taxi and auto rickshaw so that consumers can
know whether the taxi/ auto rickshaw is hired or available or not available.
vii. Fare structure should be decided taking into consideration the fare charged
by aggregators as they provide better service at competitive rates.

19
 viii. Some of the recommendations of the Hakeem Committee, viz., welfare
measures which are already accepted by the Government, are not being
implemented. They should be implemented.
ix. Social issues of drivers have to be taken into consideration, particularly
after the augmentation of public transport through introduction of metro
and mono rail services in Mumbai, Nagpur etc.
x. Repair and maintenance for Auto Rickshaw should be Rs. 12,000/- instead
of Rs. 23,800/- and that of Taxi should be Rs. 48,000/- instead of Rs.
92,000/- as suggested by Hakeem Committee.
xi. Hakeem Committee considered 17% interest on borrowed capital which is
excessive considering the present low interest regime. Hence, interest and
depreciation cost suggested by Hakeem Committee for auto Rickshaw and
taxi are Rs. 17,692/- and Rs. 41,467/- respectively, which should be only Rs.
8,000 and Rs. 21,066/- respectively.
xii. Hakeem Committee has considered the cost of Comprehensive Insurance
whereas majority of taxis and auto rickshaws opt for Third Party Insurance
only. Hence, the insurance and tax for auto rickshaw and taxi should be Rs.
2,950/- and Rs. 4,695/- respectively instead of Rs. 4,546/- and Rs. 19,128/-
as recommended by Hakeem Committee.
xiii. Average run of auto- rickshaw per shift according to the survey figure is 86.3
kms whereas Hakeem Committee took the figure of 83 kms and
erroneously arrived at revenue earning distance of 67 kms which actually
should have been taken as 70.76 kms.
2.6.2 Pune & Kolhapur Region –
i. Fixation of proper electronic meter should be made compulsory before
deciding on any upward revision of fare.
ii. Petrol price in the year 2017 should be considered for fare revision.
iii. Different rates should be fixed for taxis and auto rickshaws operating on
different fuels like petrol, diesel and CNG.
iv. Consumers in small towns and rural areas are suspicious of meter
tampering and, therefore, don't want to pay as per meter. Hence, electronic
meters should be made compulsory and consumer awareness should be
organized.

20
 v. During non- peak hours, taxis and auto rickshaws should be allowed to
charge fare at a rate lower than the fare fixed by the Government.
vi. In order to avoid misunderstanding about refusals, proper indicator should
be displayed on the top of the taxi and auto rickshaw so that consumers can
know whether the taxi/ auto rickshaw is hired or available or not available.
Once a taxi or auto indicates availability, he cannot refuse to suit his own
convenience.
vii. A separate insurance policy should be introduced for the auto rickshaws.
2.6.3 Aurangabad, Latur and Nanded region –
i. Electronic meters should be made compulsory for taxis and auto rickshaws
to avoid disputes with the commuters.
ii. RTO should strictly enforce compliance with the installation and usage of
electronic meter.
iii. Till electronic meters are enforced, the auto rickshaws should use only
authorized tariff cards. Strict action should be taken against drivers using
multiple and bogus tariff cards.
iv. Revised fare structure should be made applicable only for the auto
rickshaws having electronic meters. Auto rickshaws without electronic
meters should not be given the benefit of rise in fares.
v. Adequate numbers of auto rickshaw stands should be created. Moreover, it
should be ensured that auto rickshaws pick up passengers from the
designated stands only.
vi. RTO stickers/ logo should be fixed on all the 4 outer sides as well as on the
inner side of the authorized rickshaws. This will expose illegal auto
rickshaws and immediate action should be taken against them.
vii. The present fares of taxis and auto rickshaws are on the higher side even
after all cost factors are considered. Therefore, the cost factors and their
rates should be thoroughly reviewed by the Committee. The Committee
should also consider the paying capacity of the commuters.
viii. At the current costs, the auto rickshaw fare @ Rs. 15/- per km is adequate.
ix. Consumer Protection Forum, Nanded has prepared a formula for fare
fixation which is much lower than the present fare structure. It will be
shared with the Committee.

21
2.6.4 Nagpur & Amravati Region –
i. For the revision of taxi and auto rickshaw fares, the prices of petrol / diesel
should primarily be considered.
ii. Taxi Aggregators with all India tourist permits are running city services
illegally. Their operations should be regulated if they want to operate as city
taxis.
iii. Shared auto rickshaws are charging full fare to each commuter which is
patently unfair. Therefore, fares for the shared auto rickshaws should be
fixed separately. Specific high demand routes may be earmarked for Share -
Auto Scheme..
iv. Many times on their return trips during the night, taxis and auto rickshaws
do not get passengers. This should be taken into consideration while
revising the taxi and auto rickshaw fares.
v. In small towns/ rural areas, empty runs / dead kilometers of auto rickshaws
are significant, especially at night. Therefore, a separate formula should be
developed for fare fixation in such areas, e.g., first stage at Rs. 20/- for 1.00
km and subsequent increase of Rs. 15/- per kilometer.
vi. Use of electronic meters should be made compulsory for taxis and auto
rickshaws to avoid disputes with the commuters. Also, legitimate issues of
taxi and auto rickshaws should be solved to minimize conflicts with
commuters.
vii. Taxi and auto rickshaw fares should be reviewed every two years and not
annually.
viii. As regards periodicity of fare revision, another view was that RTA should
revise the fares every 2 months as the prices of petrol and diesel are revised
every month.
ix. There was another view that there is no need to increase the taxi and auto
rickshaw fares.
x. Auto rickshaws should learn to face the competition and adapt to changing
market dynamics through efficiency and customer – friendly attitude.
xi. Overloading of commuters in taxis and auto rickshaws should be banned
and strict action should be taken against those who overload passengers.
xii. Prepaid taxi and auto rickshaw scheme should be activated and

22
 strengthened at the important places such as Hospitals and Railway
Stations.
xiii. Cycle rickshaw is a reality in the Vidarbha region. They should be surveyed,
solutions to their grievances should be found and they should be properly
rehabilitated.
xiv. Adequate No. of taxi and auto rickshaw stands should be provided for
customer convenience and to avoid haphazard parking on the roads.
2.6.5 Ratnagiri, Sindhudurg and Raigad Region –
i. Various factors / items considered by the Hakeem Committee for the
costing exercise are adequate and they should be adhered to by this
Committee with appropriate updation of the cost indices.
ii. However, the quantum of cost considered by the Hakeem Committee were
on the higher side e.g. interest rate, cost of living, etc. Moreover, the basis
for arriving at the costs by the Hakeem Committee is not clear. The basis
should be simple, logical and easily understandable. Grahak Panchayat of
Ratnagiri is in agreement with the objections raised by the Mumbai Grahak
Panchayat in respect of the Hakeem Committee report.
iii. Geographical aspects viz., hilly terrain, spread of the cities and villages etc.
which affect the actual cost of operation, empty run etc. need to be
considered.
iv. The first stage of fare structure should be at 1.00 km and subsequently it
should be increased for every 100 meters.
v. Fixation of electronic meter should be made compulsory for all auto
rickshaws and taxis.
vi. A representative of the Consumer Forum should be taken on the RTA.
vii. Proper cleanliness of the vehicle should be ensured by the taxi and auto
rickshaw drivers. Moreover, the uniform of the taxi and auto rickshaw
drivers should be neat and clean. Colour of the uniform may be prescribed.
2.7 Views and suggestions of Car, Autorickshaw and Meter Manufacturers.
2.7.1 Views of the Representatives of Car Manufacturers
i. 4 models of Tata Motors, namely, Indica, Indigo, Zest and Bolt are at present
sold and used as taxis. In the BLACK AND YELLOW segment, Indica is the
most preferred model. Indigo is used mostly in the cool cab segment. Most

23
 models are in diesel. Only Indica Ev2 GLS and Indigo Ev2 GLS are petrol
models. CNG kit is fitted in Mumbai after sells.
ii. Tata Motor taxi models are all below 4 mtrs in length. Tata Nano is
permitted as Taxi in Karnataka, Andhra Pradesh and Tamil Nadu but not in
Maharashtra, it costs between Rs. 2.00 to 2.60 lakh and differentiated taxi
fare in black and yellow segment with introduction of such smaller vehicles
as taxis like the Aggregators do will reduce the fare and increase
commuter's choice.
iii. Maruti Suzuki is the only manufacturer which supplies CNG Taxis. Totota
supplies diesel and petrol versions with appropriate pollution control
norms. EON 980 cc of Hyundai is used as black and yellow taxi but most
drivers prefer Santro model whose production is now discontinued. Instead
, EON 1100cc is now made available
iv. As far as Aggregators are concerned, about 7 to 10 % consumers use cars
with more than 1400cc engine capacity.
v. Toyota representative suggested more safety factors to be added.
vi. Representative of General Motors said that there is no difference between
an AC and Non-AC car and it can be converted from non. AC to AC by the
switch of a button and vice versa. Since, AC car consumes about 25% more
fuel, an appropriate surcharge to compensate for this additional cost
element can be permitted. All taxis should have this facility to offer a choice
to the commuter. It will improve the business potential of the black and
yellow taxis.
vii. Tata Motors representative offered to send a detailed note on all the points
raised in the meeting in about a week's time.
2.7.2 Views of the Auto rickshaw Manufacturers
i. Representatives of Bajaj Auto (Sales and services) explained that they have
the largest share of the auto Rickshaw market, about 97%, in Maharashtra.
Piaggio and TVS are the other two manufacturers who supply the rest.
Piaggio has a factory in Baramati.
ii. Meters are fitted at the dealer level while delivering the vehicle to the auto
rickshaw buyers. The price ranges from Rs. 147000 to Rs. 153500
depending upon the model, exclusive of octroi / LBT. Average annual sells of
Bajaj Auto in Maharashtra are about 30000 autos.

24
 iii. Since diesel autos are banned in Maharashtra, CNG auto rickshaw
(compulsory in Mumbai) and petrol autos are only sold. 95% of CNG auto
sales are in MMR and 90% sales of petrol autos are in the rest of
Maharashtra.
iv. Bajaj manufactures 4 stroke and BS-3 model autos in all three permitted
fuel variants (CNG, LPG & Petrol) and has also started producing BS-4
models equivalent to Euro IV emission standards in CNG and LPG. No BS-2
autos are manufactured now. The CNG/LPG kits are fitted at the factory of
the manufacturer.
v. Meter calibration varies from city to city based on the fare structure. Hence
the manufacturers do not fit or calibrate the meters, which their dealers are
required to do. There is no inconvenience to the buyers.
vi. Bajaj Auto Ltd. manufacturers autos with 2- stroke engines in CNG and LPG
variants and 4 stroke engines in CNG or petrol/diesel variants. While 4-
stroke engine is more fuel efficient and environment friendly, buyers prefer
2 –stroke engine autos as driving and maintenance are easy.
vii. 4-stroke CNG autos give 45 kms/kg mileage while 2 -stroke autos give 35
km/ kg. Fuel economy for petrol autos is 25 kms/ litre.
viii. Suggestions:
a. Looking to the cases of refusals and consumers complaints, the demand is
much more than the permits issued and the still lesser actual live permits.
Hence, permit limit should be removed. Let the market decide about the
level of supply it can take. Gujarat, Andhra Pradesh and many other states
do not have any such permit restrictions.
b. Bajaj representatives also pleaded to permit 4 wheeler steel top autos
called Quadri-cycle with engine capacity of 200 cc , sub -500 kg weight and
35 kms fuel economy. They presently export such Autos to Turkey and it is
quite popular there. They are stable and less prone to accidents. The
Committee requested them to provide full information on the said model.
2.7.3 Views of taxi and auto rickshaw Fare Meter Manufacturers
i. There are a number of electronic meter manufacturers producing standard
tamper- proof meters. For example, Sansui and Super brands are used as
standard meters since 1970s.
ii. Meters are not calibrated by manufacturers for a particular location as
there are differing fare structures at different places.

25
 iii. Post- sales services are not provided by the dealers for auto operators in all
rural areas. They are available only at Taluka places
iv. Nikko meters are available with printers and used for taxis. They come along
with displays and maintenance.
v. Cost of meters ranges from Rs 2400 to a maximum of Rs. 6000 in
Maharashtra. It is Rs. 12500 with printer at the higher end. Recalibration is
required only when there is increase in fares. Otherwise there is no need for
recalibration.
vi. Price of Sansui meters is Rs. 5500 for taxi and Rs. 5300 for auto rickshaw
including printer. There is only one model, manufactured in Himachal
Pradesh. They also manufacture weighing machines. Other manufacturers
viz, Puna Manufacturing, Voltek and Neko meters cost about Rs. 2300 –
2500 for auto rickshaw meters and Rs. 2500 – 3000 for taxi meters. Printer
costs another 2500- 3000. Neko also produces Thermal Printers
vii. GPS Meters provide tracking facility which has many advantages, viz., Panic
button, easy to track with smart phone facility. This can be achieved by any
authority .In Delhi, meters with GPS can give a lot of data and about
movement patterns which can be analyzed for transport planning needs
from time to time. Hence, meters with GPS facility should be encouraged in
Maharashtra also as it will help to get sufficient ready data for future
transport planning.
2.8 Committee's Approach to the suggestions and inputs.
The Committee has noted that while there are welcome convergences in some
of the views and suggestions of the stakeholder groups, especially the
commuters and the traditional IPT sectors, it is the differences that need to be
taken on board for resolution and finding appropriate feasible solutions. The
Committee has carefully analysed the suggestions and objections of various
stakeholder groups and desirability and feasibility of accepting and / or adopting
them. They have been duly incorporated into this report.

***

26
 CHAPTER - 3

APPROACH FOR WORKING OUT A FARE STRUCTURE

FOR BLACK AND YELLOW TAXI
3.1. Determination of cost elements.
3.1.1 Most of the black and yellow taxis are operating in Mumbai city. They are 100%
run on CNG. Hence, the Committee took these two factors into account to
develop the fare structure for the Mumbai (MMRTA) region based on the
identified cost elements. For taxis operating elsewhere in the state and / or on
any other fuel, this fare structure will be appropriately modified by factoring the
relevant cost elements.
3.1.2 For determination of the fare structure, it is necessary to first determine the
various cost elements and their respective shares in running the taxi for a
productive unit distance, namely, a revenue earning kilometer. The Hakeem
Committee had taken the following cost elements into consideration for
determining the fare structure for black and yellow taxis.
(i) Fixed costs represented by interest and depreciation on the capital cost of
acquisition of the taxi;
(ii) Other fixed costs, viz., taxes, insurance premium for comprehensive
insurance policy and other levies;
(iii) Estimated cost of repair and maintenance of the taxi;
(iv) Provision for the cost of living of the family of the driver of the taxi;
(v) Estimated number of revenue earning kilometers run by a taxi during one
working shift.
(vi) Average kilometers run on one unit of fuel, viz., one kg of CNG or one litre
of petrol etc;
(vii) Estimated percentage of idle run (in kms) out of the total distance
travelled by the taxi during one working shift;
(viii) Percentage of vehicles run on double shift by two different drivers.
3.1.3 The Committee has critically examined the identification of various cost
elements as determined by the Hakeem Committee. While the Committee
agrees with the cost elements listed at (ii) to (viii) of the preceding para, it begs to
differ from that listed at sr. (i), namely, interest and depreciation, more
specifically the former. Typically, a car loan for buying a taxi is repaid in 5 to 7

27
 years after which the investment effectively becomes own fund of the taxi
owner. The margin money is also his own investment. Hence, cost of capital,
after factoring in the interest on car loan, is a more appropriate measure of the
return on capital than interest as a cost element. This concept is further
elaborated while discussing approach to estimation of this cost element.
Besides, Hakeem Committee also calculated the weighted average cost of taxis
by calculating residual nominal values of old cars alongwith new cars, thereby
under-valuing the newer models. In case of depreciation also, Hakeem
Committee, by averaging the residual depreciation on taxis of all vintages has
under-compensated the newer models to their disadvantage. Hence, this
Committee has corrected this anomaly for calculation of weighted average cost
of taxis and depreciation on a more rational basis in keeping with the principles
of financial accounting. The approach to various identified cost elements and
estimation thereof as modified by this Committee are discussed item wise
below.
3.2 cost of (return on) capital.
3.2.1 Even assuming that all taxis are purchased partly on borrowed capital, the car
loans are generally given for a limited period of 5 to 7 years. The taxi owner also
has to typically invest the margin money which is about 25%. The Committee
has elsewhere recommended that the taxi should be permitted to ply only for 15
years and not 20 years as at present. In other words, the share of capital that is
liable to incidence of interest in the total useful life of the taxi is “X(0.75 x 7/15),
i.e., 0.35X where 'X' stands for the cost of acquisition of the taxi. The same 75%
share of capital cost becomes the taxi owner's own funds for the remaining 8
years of its useful life which comes to a weight of 0.40X in the total capital.
Together with the margin money of 0.25X, this becomes the taxi owner's own
funds. The cost of capital of the borrower, i.e., the taxi owner on this 0.65X share
is effectively the opportunity cost of his own funds which can be considered on
the basis of the interest fetched by a one-year fixed deposit in the nationalized
bank. In other words, the real cost of capital for acquisition of the taxi is (0.35X x
rate of borrowing) + (0.65X x rate of interest on a one year fixed deposit in a
nationalised bank). This will be his return on capital.
3.2.2 In view of these facts, it is not appropriate to consider interest on car loan as the
appropriate measure of the return on investment which is the total car price for
the total useful life. Cost of capital would, therefore, be a more appropriate
measure of the return on capital deployed. As explained earlier, this can be
calculated on the basis of the weighted average of the interest paid on the
borrowings for the loan period and the interest payable on a one-year fixed

28
 deposit of a nationalized bank for the rest of the car price and for the rest of the
period.
3.2.3 Even another factor which militates against the Hakeem Committee approach
on this count is the calculation of purchase price. It has relied on the age wise
classification of the present taxi fleet and assumed different prices for taxis of
different vintages and has calculated the weighted average price of the entire
fleet at Rs. 1,83,180 as against the weighted average price of the latest inclusions
into the fleet at Rs. 3,40,320 . Such assumptions will lead to under-
compensation of the latest taxis, which is not based on sound financial and
accounting principles. This tantamounts to penalising the new taxis inspite of
providing better riding comfort and environment to the commuter. A more
appropriate approach is to calculate the weighted average cost of this entire
fleet at the latest prices and give the cost of capital on the weighted average
price as the fair return on investment. Models with negligible share in the total
fleet could be ignored for calculating the weighted average price. This will
provide fair return to the latest models. Even the inflation-adjusted cost of
other models would also be close to this figure and hence, can be considered as
a rational basis for earning a return on such older cars at today's price. As the
fleet composition changes from time to time, the weighted average cost / price
of the taxis will change in future years.
3.3 Depreciation:
3.3.1 The Hakeem Committee has considered 12 years or 4,50,000 kms as the useful
life of a taxi and has assumed salvage value at 10%. Then it divided rest of the
90% value by 12 to arrive at the annual depreciation amount by straight line
method. However, while applying this principle to the actual calculation of
depreciation, it has calculated the depreciation on older models by assuming
different residual values (other than book residual values) for taxis of different
vintages and then taken the weighted average of all such assumed annual
depreciation values to arrive at an annual depreciation value of Rs. 15,821.
There is no rational basis to these assumptions. As stated in the preceding para
3.2 on cost of capital, for the latest models of taxis costing on an average Rs.
3,40,320 in 2012, the depreciation calculated by the Hakeem Committee
formula comes to Rs. (3,40,320 – 10%) / 12, i.e., Rs.25,524. Thus, their
depreciation is under-estimated and under-provided by Rs. (25.524-15,821),
i.e., Rs. 9,703. This formula, therefore, under-compensates the latest models.
For the same reasons as explained in the preceding para 3.2 on interest Vs. cost
of capital, such unwitting penalization of the latest models is neither fair nor
does it fit in with the principles of financial accounting. Hence, it will be more

29
 equitable and financially justifiable to provide depreciation of the full value of
the latest weighted average price over the useful life of the taxi after deducting a
fair salvage value.
3.3.2 This Committee has recommended, in the interest of consumer comfort and
environment protection, to limit the useful life of a black and yellow taxi to a
maximum of 15 years. The salvage value at the end of that period would
essentially be the material value of the taxi which can be assumed at 5%. The
rest of the latest weighted average price of taxis divided by 15 will give the
annual depreciation to be allowed. As explained in the preceding para 3.2 on
cost of capital, this will not be an undue over-compensation of the older models
when their historical prices are updated / adjusted for inflation to the current
value of the price index.
3.4 Average distance travelled daily, percentage of idle run and fuel consumption
for taxis.
3.4.1 In order to determine the daily average distance travelled and quantum of idle
run, the Hakeem Committee had carried out test checks through the officials of
the Motor Vehicles Department in May and June, 2012 by following selected
taxis for specified periods along with the representatives of consumer
organizations like the Mumbai Grahak Panchayat and of taxi unions, to get
details such as (i) consumption of fuel, (ii) number of paying trips; (iii) total
distance covered; (iv) idle distance involved; (v) revenue earned; (vi) waiting
time at CNG filling station etc. This information was attested by the operator of
the vehicle, representatives of consumer organizations and taxi unions and the
officials of the Motor Vehicles Department in respect of 48 taxis in Mumbai. A
normal shift of taxis in Mumbai is for 10 to 12 hours, i.e., an average of 11 hours.
The information stated above was collected for shorter periods. After
converting the total distance travelled to 10 - 12 hours (average 11 hours), it was
found that it varied from 52.3 kms to 160.8 kms. Of these 48 vehicles, 26
vehicles (54% of the vehicles) had the total distance (converted into 10 – 12 hour
periods) above 94 kms (including idle distance) and revenue earning distance
above 78 kms (excluding idle distance). However, to be on the safer side,
Hakeem Committee considered 75 kms as the productive run per shift and the
idle run at 20%, thereby assuming the total run at 94 kms. However, based on
the actual study results, the idle distance travelled works out to 16 kms, i.e.,
about 17%. The Hakeem Committee seems to have played cautious and fixed
the revenue earning distance at a more conservative 75 kms, thereby
considering almost 20% as the idle run.

30
3.4.2 The present Committee has gathered the latest data of black and yellow
metered taxis operating on the Ola cabs (App based Aggregator) platform on
metered pricing basis. A pilot study was also conducted on black and yellow
taxis with a control group (operating purely on street hailing) and an experiment
group operating on dynamic pricing of Uber Cabs' App based technology
platform. The Ola Cabs data is based on an average of 3500 taxis operating on its
platform and the pilot study data on a sample of 13 of each (control and
experiment) group. However, the experiment group of taxis was allowed to
undertake street hailing business along with app-based calls. While the black
and yellow taxis operating on the Aggregators' App-based platform (whether on
metered price as on Ola or dynamic price as on Uber) clocked 117 to 120 kms
total run, the control group taxis achieved only 86.4 kms per shift. But
surprisingly, all 3 groups showed an average of 15 to 17% idle run. Even the
Hakeem Committee experiment in 2012 also threw up an idle run of 17%. This
data is presented in a summarized form below.

* - Rs. 3.29 (considering todays CNG rate Rs.43.54)

31
$ In the Uber pilot study in Treatment Group, 26 taxis were attached to Uber app and they were
allowed to do street hailing also.
# In the Uber pilot study in Control Group, 24 taxis were not attached to Uber app. However,
they were required to maintain a diary reflecting above details.

3.4.3 Hence, the Committee would favour a moderate but safe idle run percentage of
18% instead of the 20% finally assumed by the Hakeem Committee. Besides,
since the Hakeem Committee experiment had a much larger sample than the
recent pilot study, its average total run can be adopted. Besides, there are no
disputes about the total kilometers per shift (at 94 kms) among consumers and
drivers. Accordingly, the Committee has decided to adopt the total per shift run
as 94 kms with 18% idle run and the productive run (revenue earning kms) per
shift is fixed at 77 kms.
3.4.4 The kilometers achieved per kg of CNG depends on various factors including the
make, model and mechanical condition of the car. The test check on 39 taxis in
Mumbai carried out by the Hakeem Committee had indicated that the fuel
consumption in terms of kms per kg of CNG varied between 12.25 kms to 27.15
kms, with 21 vehicles (54% of the vehicles) recording more than 17 kms per kg.
Accordingly, the Hakeem Committee decided that the average distance covered
per kg of CNG may be fixed at 17 kms for the taxis.
3.4.5 However, the black and yellow taxi fleet composition has undergone a
substantial change with the phasing out of older models and introduction of
various new models since then. Today, Wagon R, Santro, Maruti Ecco have
sizeable share in the black and yellow taxi fleet. Hyundai i10 is also emerging to
be a very popular model among the permit holders of black and yellow taxis.
Secondly, in 2012 most of the vehicles running on CNG were having retrofitted
CNG kit. However, in the current scenario, in most of the vehicles CNG kits are
fitted at the manufacturing stage itself by the vehicle manufacturer himself as
an original equipment (OE Fitted). These OE fitted kits are more compatible as
compared to retro fitted kits and give more average per kg of fuel (CNG) and
require lesser maintenance. As per the feedback received from the authorized
service stations, some of the taxi drivers, as well as Google search, the average
mileage per kilo of CNG for city travel is between 18 to 20 kms going upto 22 kms
for some models like Wagon-R while that on highways is between 22 to 26 kms.
In view of these facts, we can safely accept weighted average fuel mileage as 18
kms per kg of CNG. In future as the fleet composition changes & if the newer
models with high fuel efficiency replaces the old ones, than the fuel milage per
liter will definitely increase. The R.T.A.s’ should do necessary correction as an
when required.

32
3.5 Annual expenditure on repair and maintenance.
3.5.1 The Hakeem Committee had rightly observed that “the estimation of the annual
expenditure on repair and maintenance of a taxi is somewhat contentious. One
has to estimate an average figure for the amount of money required to be spent
on a typical taxi in a year. Given the vehicles of different makes, of different ages,
operating in different environments (relating to condition of roads and density
of traffic) and maintained with different levels of care, the problem is indeed
difficult. What can be arrived at with whatever precision possible is an average
figure. While this limitation has to be appreciated, it is important to ensure that
the figure arrived at is regarded as fair and reasonable by most of the operators
and passengers.”
3.5.2 The Hakeem Committee did not find it feasible to conduct a survey due to the
multiplicity of factors, viz., make, model, technology, vintage, etc. Hence, it
decided to update the 1996 Committee estimates of repair and maintenance of
Rs. 40,000 per annum. Further, it assumed that 75% of the repair cost is based
on the cost of spare parts (which on average moves with the cost of new
vehicles) and 25% of the repair cost is based on the labour charges (which
roughly move with the CPI). During the period from July, 1996 to March, 2012,
the cost of a new vehicle had increased by an annual (compounded) rate of 4.6%
and the CPI had increased by an annual (compounded) rate of 7.0%. Their
weighted average (in the ratio 75:25) comes to 5.2%. Based on this, the Hakeem
Committee assumed that the figure corresponding to Rs. 40,000 (the estimate
of annual cost on repairs and maintenance assumed in 1996) would be about Rs.
88,520 in March, 2012. It further revised it slightly upwards to Rs. 92,000, on
account of assumed higher maintenance cost of retro - fitted CNG kit. It also
recommended Rs. 1,02,000 as the repair and maintenance cost of a taxi running
in 2 shifts.
3.5.3 However, it also added a caveat that a judgment as to the extent to which this
figure represents the current level of expenditure on repair and maintenance on
taxis will have to be made taking into account changes in important parameters
like (i) much higher variability at present of makes and models than in 1996; (ii)
the age distribution of the taxis in 1996 and 2012; (iii) the fact that taxis now are
all fitted with CNG kits which slightly adds to the maintenance cost.
3.5.4 This shows that the Hakeem Committee was acutely aware of the pitfalls in the
estimation of annual repair and maintenance cost of a taxi. The serious
objections to these estimates by the consumer organizations has proved his
apprehensions to be well founded. In this Committee's view, a survey to

33
 estimate the repair and maintenance cost is not feasible as the drivers do not
maintain a record of such expenses. Besides, most of them carry on with old
batteries / tyres well beyond their useful life and often neglect to go for regular
preventive maintenance. Hence, estimation of such costs on normative basis
together with manufacturers' inputs is the only feasible way out. Given this
background and the tremendous improvements made in the last decade,
especially in tyre and battery technology, introduction of more technologically
advanced models with better fuel technology as well as factory fitting of CNG
kits, this Committee thought it appropriate to collect the estimates from car
manufacturers and also the present actual cost of various items of repair and
maintenance from the market sources including experienced taxi drivers. Based
on these inputs, the Committee has identified all routine maintenance items of
repair and maintenance including labour and spares on actual basis. As regards
all infrequent but essential repairs, viz., engine over haul, clutch replacement
etc., they are clubbed into a liberal life time total divided by permissible life of 15
years in order to arrive at an annual cost. Accordingly, the Committee has
estimated the annual repair and maintenance costs of a black and yellow taxi
running on a single shift and double shift separately. Since it is almost
universally accepted that most of the taxis do not undertake the regular
preventive maintenance services nor replace the tyres and tubes etc as regularly
as the Committee has now assumed on normative basis, the Committee
considers the estimates to be fair and reasonable. Since comprehensive
insurance cost would cover major repairs, which are typically occasioned by
accidents, major contingent repairs are not separately considered or estimated.
3.5.5 The Committee found out during its various interactive meetings that almost all
over the state 70% of the taxis are used in two shifts (though outside Mumbai,
their numbers are negligible). Major replacement items, viz., tyres, batteries
etc are costed on normative basis separately for single shift taxis and double
shift taxis based on the distance travelled and then added them up on weighted
basis for the purpose of calculation of annual repair and maintenance.
3.6 Insurance, taxes and miscellaneous fixed expenses.
3.6.1 Insurance:- The Hakeem Committee considered the annual comprehensive
insurance premium as a recognized item of cost for fixation of taxi fare. The
consumer organizations have taken objection to this on the ground that almost
no taxi takes comprehensive insurance policy and all of them only go for the
mandatory third party insurance policy where the premium is much lower and
such higher cost unnecessarily increases the fare. However, this objection is not

34
 based on sound logic because all taxis under hypothecation during the loan
period are required to take comprehensive insurance policy on the insistence of
financers, though it may be factually somewhat correct for the post-loan period.
When a taxi owner does not take comprehensive insurance policy, he runs the
risk of footing the high cost of repairs when met with accidents. Since it is
difficult to estimate the costs associated with the risk of accidents and
consequential repair costs for such a large number of taxis, a known and
definitive figure such as the comprehensive insurance cost is a fair reflection of
the indeterminate risk of accident related damages and associated costs.
Hence, the higher cost of insurance over and above the third party component
on account of comprehensive insurance is a fair and reasonable cost which this
Committee also endorses.
3.6.2 Taxes:- As regards taxes, the taxi unions have demanded abolition of
professional tax as has been done for the auto rickshaw permit holders. The
Committee is not aware of the background of extending this concession to the
auto rickshaw permit holders. Both the permit holders owning a taxi or auto
rickshaw are compensated for the living costs to the same extent while fixing the
fares. Hence, this Committee does not find any rational ground for making this
distinction. On the other hand, the Professional Tax is also considered as a
legitimate cost for the taxi driver and considered for fare fixation unlike in the
case of the auto rickshaw driver. Hence, in the ultimate analysis, it is not a
burden on the permit holder but passed on to the consumers.
3.6.3 Miscellaneous fixed expenses:- Miscellaneous fixed expenses incurred by a taxi
owner or taxi driver include the costs of permit renewal, driving license renewal,
driver's uniform and shoes. Since these are costs prescribed by the Government
or levied and collected by the Government they ought to be considered as
legitimate costs. Hakeem Committee did not consider these costs for the
purpose of fare fixation. However, this Committee considers them as legitimate
costs which ought to be factored into the fare fixation.
3.7 Fare structure ought to consider the real impact of cost of living.
3.7.1 The taxi unions have variously demanded a liberal cost of living as a component
of the taxi fare structure, which ought to consider the costs they incur on the
health, education and other welfare related expenses of their family. They have
also demanded a pension component to be included in the fare structure.
However, it is instructive to remember that the taxi unions had demanded
before the 1996 Fare Fixation Committee Rs. 4250 as the cost of living per month
including Rs. 3000 towards basic living cost, Rs. 250 for medical expenses, Rs.

35
 500 for house rent and Rs. 500 for retirement benefits. The Committee, after
considering all aspects, considered Rs. 3750 pm as adequate, which was about
88% of the demand. The unions and consumer organizations had accepted the
same. However, Hakeem Committee had updated this accepted cost of living to
the then consumer price index figures and arrived at the figure of Rs. 10,880.
But it had added another 10% to this estimate to meet the unions' demand of
1996 almost in full and recommended Rs. 12000 per month as the cost of living.
However, consumer organizations took strong objection to this and the
Government finally accepted the updated figures of 1996 estimates, albeit by
rounding it off to Rs. 11,000 pm.
3.7.2 Given this background, this Committee would like to adopt the formula which
was adopted in 1996 and accepted by both the stakeholder groups. Accordingly,
the Committee has adopted the updated cost of living as per the current
consumer price index figures. It is also pertinent to state here that the
Committee has worked hard on devising a “Taxi and Auto rickshaw Drivers'
Welfare and Insurance Corporation” with identified sources of revenue and a
broad framework of various welfare activities including education, health and
pension. This corporation can be incorporated and operationalised within
about a year without even waiting for the amendment to the Motor Vehicles
Act, 1988 for mandating it with taxi and auto rickshaw insurance business in
Maharashtra. Hence, the Committee considers the updated cost of living as
adequate.
3.7.3 Cost of living applicable to Mumbai and other regions of the state.
It was brought to the attention of the Committee that many R.T.A.s in the
mofussil areas are often not clear as to which price index center to be taken as
reference for their jurisdiction. Besides, they may be facing difficulties while
adjusting for the linking factor. Hence, this Committee has not only worked out
the cost of living for the recognized price reference centers in the state but also
identified the R.T.O.s / Dy.R.T.O.s to be attached to these centers for adoption of
the cost of living for fare fixation. The Committee hopes, this will solve a major
factor of confusion in the fare fixation in the non - Mumbai regions.
3.8 Number of working days for consideration of revenues and costs.
3.8.1 The Hakeem Committee considered 300 days as normative number of working
days for the purpose of estimation of costs and revenues for the drivers. Every
driver needs a weekly off day for rest and rejuvenation as well as family time,
thereby leaving 313 days out of 365 days. The driver also needs to be given

36
 some allowance for attending to personal work, health related visits to hospitals
and for vehicle fitness passing. The taxi may also have occasional on-road
breakdown needing urgent repair and maintenance apart from regular
preventive maintenance. Hence, 300 days as net effective working days in a
year is a fair and reasonable estimate.
3.8.2 Hence, this Committee agrees with the Hakeem Committee on this count and
accordingly adopts 300 days as the normative number of working days in a year.
Individual variations of a few days more or less cannot be considered for fare
calculation.

Working Days - Taxi driver responses

18% 14%

Less than 6 days

6 days
7 days

68%

The survey results demonstrate that nearly 70 percent of drivers work

for 6 days a week i.e. 312 days a year.

3.9 Useful life of a taxi

3.9.1 In a passenger transport vehicle, the passenger's safety and riding comfort are of
paramount importance. The law also provides as much. As per the provisions of
section 74(2)(xi) of the Motor Vehicles Act, 1988, a contract carriage must give
comfortable service to the passengers. For that purpose, the age factor of the
vehicle is an important parameter. As per Rule 82 of the Central Motor Vehicles
Rules, 1989, maximum age limit for All India Tourist Taxis is only 9 years. State
Transport Authority, vide its resolution no. 97/1982 dated 01.04.1982, has fixed
the age limit of 10 years for buses plying on stage carriage permits on interstate
routes. The said decision was upheld by the State Transport Appellate Tribunal,
Maharashtra.
3.9.2 There are a plethora of Supreme Court and High Court decisions backing the
desirability of and the need for prescription of age limit for commercial /
transport vehicles, especially passenger vehicles. Honorable Supreme Court in
writ petition no. (civil) 13029/1985 (M.C. Mehta v/s Central Govt. & others) on
22.09.1998 directed that no commercial or transport vehicles above 15 years of
37
 age should be allowed to ply in NCR (Delhi). Honorable High Court of Mumbai in
PIL 1762/1999 passed an order on 17.10.2001 to restrict the age limit for all
transport vehicles plying in the Mumbai Region to 8 years unless converted to
clean fuel. When the decision of RTA from Uttar Pradesh of imposing age limit of
7 years for mini buses (contract carriages) was challenged, the Hon'ble Supreme
Court (AIR 1980 SC 800) had endorsed the decision of the RTA. The crux of the
judgment is that passenger safety and comfort are of paramount and primary
concern in any commercial transport vehicle. Prescription of maximum age of
the model in addition to fitness of the vehicle is a necessary and desirable
additional condition in the interest of passenger safety. Mere fitness cannot
obviate the need for prescription of age limit.
3.9.3 The six-member Committee appointed by the Government of Maharashtra in
1996 under the chairmanship of then State Principal Secretary (Transport), Mr.
P.M.A. Hakeem had categorically recommended that after two to three years,
the Govt. should take decision of fixing maximum age of taxis at 15 years.
However, the State Transport Authority prescribed age limit of 25 years for taxis
only in 2008. When the said decision was challenged in the Mumbai High Court
vide Writ Petition No. 2237/2008, the Hon'ble High Court upheld the S.T.A.'s
decision. In the wake of the Hakeem Committee report in 2012, the state
government decided to limit the age of taxis and auto rickshaws to 20 years and
16 years respectively. Accordingly, the S.T.A. gave effect to this decision with
effect from 01.08.2013.
3.9.4 It will be instructive to note that while computing the fare structure, this
Committee has considered the total annual weighted average running of the
taxis and auto rickshaws at about 48,000 kms and 42,000 kms respectively
(considering that 70% of the taxis and auto rickshaws operates in 2 shifts). At this
rate, the total distance travelled by taxis and auto rickshaws in 15 years will be
around 7,20,000 kms and 6,30,000 kms respectively. The actual mileage for the
taxis and auto rickshaws running in two shifts, in fact, will be much higher. Even
this much mileage in the life time of a taxi is way too high in as much as after
about 4.5 lakh to 5 lakh kms, the quality of service and comfort of rides tends to
deteriorate sharply. However, reducing the age limit to more desirable levels
below 15 years at this stage is likely to disrupt the fleet availability in the short
term and hence, moderation in the policy is desirable. Considering the
provisions of Motor Vehicles Act 1988 and rules made there-under, the
resolutions passed by S.T.A. and R.T.A.s from time to time, the orders passed by
the various Hon'ble Courts and recommendations of the Hakeem Committee in
1996, (referred to in the preceding para 3.9.3), this Committee is of the

38
 considered view that in order to safeguard the safety and comfort of the
passengers, the age limit of taxis and auto rickshaws in MMRTA region should be
restricted to 15 years only. The taxis between the age limits from 20 years to 15
years, plying in the Mumbai Region can be phased out in 3 stages as shown in the
table below:

Revised age limit for taxis

Date of reckoning
in MMR region (years)
By 01.08.2018 18
By 01.08.2019 16
By 01.08.2020 15

3.9.5 Since for the taxis and auto rickshaws plying in the rest of the Maharashtra state
(other than Mumbai region), no resolution restricting the age limit has ever
been passed by the State Transport Authority, some relaxation in the timeframe
for reduction in the age limit for those taxis and auto rickshaws is called for.
Hence, the Committee suggests that the age limit for taxis and auto rickshaws
plying in the rest of Maharashtra should also be fixed at 15 years from the date of
initial registration, but over a period of 4 years instead of 3 years applicable to
Mumbai region. The reduction in the age limit for the non-Mumbai regions can
be implemented as follows:

Revised age limit for taxis in

Date of reckoning
other than MMR region (years)
By 01.08.2018 20
By 01.08.2019 18
By 01.08.2020 16
By 01.08.2021 15

3.9.6 The non metered jeep type taxis, operating in rest of Maharashtra (other than
MMR Region) are mostly in dilapidated/ruined condition (as a result of age and
neglected maintenance). They often operate between two towns or villages and
ply on state highways and national highways also. These taxis even carry more
number of passengers than permitted seating capacity. These jeep type taxis are
more prone to accidents & hence need to be in better mechanical condition for
passengers’ safety. This Committee therefore recommends that the same age
limit as that of metered taxi should also be applicable for these non metered
jeep type taxis. This should be implemented as explained in above para no. 3.9.5.

39
3.10 Possibility of introduction of telescopic fare rates.
3.10.1 The Hakeem Committee had examined this issue and abandoned it as infeasible
as it does not depend on passenger load factor like mass public transport.
Besides, mass transport operators operate their vehicles as stage carriages and
hence, need to incentivize long distance passengers to improve their overall
earnings. Taxis, on the other hand, operate as contract carriages for individual
commuters up to a fixed destination and hence there is no scope for differential
pricing. At present, taxi commuters get cheaper fares only through the
mechanism of share-a-taxi on designated routes due to multiple passengers
sharing a taxi for the same destination. However, a pre-identified group, viz, a
family travelling together in a taxi pays only the fixed fare.
3.10.2 However, the entry of technology-driven taxi Aggregators has changed the
market dynamics in the last 3 to 4 years. Due to better asset utilization through
larger number of trips, reduced idle run, more comfortable (AC) rides and
convenience of booking and availment of service at door step, these drivers
typically earn much more per shift than a black and yellow taxi. Hence, the
Aggregators are able to offer more competitive fares, especially for longer
distances. In the process, the black and yellow taxis have lost out to these new
entrants on the long distance passengers. Recognizing this ground reality, some
IPT unions and some individual drivers have specifically complained about loss
of long distance business to App-based Aggregators. However, that the black
and yellow taxis can also improve their asset utilization and earnings through a
good mix of long and short distance commuter rides has been successfully
demonstrated from the data available from black and yellow taxis affiliated to
Ola Cabs and the pilot study experiment group of taxis recently operated on
Uber Cabs platform. Black and Yellow taxi fare tends to be uncompetitive vis -a-
vis Aggregator taxis as the distance of the trip increases. This will be clear from
the following graphs :

40
Note : Fares of Ola and Uber services are subject to changes in pricing strategies of respective
companies
At Peak City Speed
● Non-AC B&Y taxis start becoming more expensive than Ola Micro for distances between
12 km and 17 km
● Non-AC B&Y taxis start becoming more expensive than Uber Go between 17 km and 22 km
● Non-AC B&Y taxis start becomingmore expensive than Ola Mini between 22 and 27 km
● AC B&Y taxis start becoming more expensive than Ola Micro, Ola Mini, and Uber Go
between 8 km and 13 km
● AC B&Y taxis are more expensive than Uber X for a trip distance of 20 km or greater

41
Note: Fares of Ola and Uber services are subject to changes in pricing strategies of respective
companies
At Non-Peak City Speed
● Non-AC B&Y taxis start becoming more expensive than Ola Micro between 7 and 12 km
● Non-AC B&Y taxis start becoming more expensiv than Ola Mini and Uber Go between 13
and 23 km
● AC B&Y taxis start becoming more expensive than Ola Micro, Ola Mini, and Uber Go
between 8 km and 13 km
● AC B&Y taxis are more expensive than Uber X for a trip distance of 15 km or greater

42
3.10.3 In view of these developments, the Committee explored the feasibility of
providing a mechanism for telescopic pricing for long distance commuters to
enable black and yellow taxis to compete in the market place better by offering
competitive fares for long distance commuters. It is confirmed from the meter
manufacturers and technologists that such telescopic fare mechanism can be
built into the electronic meters. That they are now allowed to operate AC on
optional basis on commuter's choice and all new models of taxis come with in-
built AC system should also help. Since the marginal cost for extra distances
covered by a taxi in a working shift over and above its usual run is only the fuel
cost which is barely 20-25% of the total cost, it makes better economic sense to
incentivize long distance commuters by giving some concession in the fare
beyond specified distances so as to maximize the taxi driver's gross earnings and
net income. It is better than altogether lose out on long distance commuters'
business due to lack of competitiveness. Hence, the Committee is
recommending telescopic price mechanism with appropriate fare discounts
after specified distances. Accordingly, it is recommended that for a commute up
to 8 kms. the fare will be at regular rate & a reduction of 15% in the basic fare for
the distance from 8.1 kms. to 12 kms. & a reduction of 20% in the basic fare for
the distance beyond 12 kms.
3.11 Additional charges for late night journeys.
3.11.1 The Hakeem Committee has recommended 30% additional charges for late
night journey of the basic fare. However, the Government accepted 25%
additional charges only. Presently, additional charges for late night journeys
between 12 midnight to 5 am are payable @25% of the basic fare. There has
been a demand from the unions (both of taxis and auto rickshaws) to increase
the extra charges to 50% and the timing from 11 pm to 6 am, especially in the
rural areas. Some unions from the rural areas and small towns have even
demanded to apply it from 10 pm onwards.
3.11.2 The Committee has gone into this issue carefully. Metropolitan cities like
Mumbai, Pune have now a much livelier night life and commercial activities till
late night. Even other Municipal Corporations areas are much more active farely
late into the night and hence getting passengers is not a big problem nor empty
runs. However, other municipal towns and villages fold up at night much earlier
and getting ridership or return fares are that much more difficult. It is also a fact
that late night charges were 50% of the basic fare in some areas prior to the
Hakeem Committee recommendations. Hence, some consideration for the
small towns and rural areas is warranted. At the same time, it has to be balanced
with the commuter interests.

43
 Findings of the survey for late night surcharge
4%
4% 8%
18% 16%
36% 12% 27%
20% 26%
63%
36% 11%
18% 36% 75%
18% 47%
40% 14% 5%
5%
5% 18%
9% 11% 2%
5% 3%
Commuter response Taxi response Union response Commuter response Driver response Union response

10 percent 15 percent 20 percent 25 percent 50 percent 12 am to 5 am 12 am to 6 am 11 pm to 5 am

11 pm to 6 am Did not answer

3.11.3 Accordingly, the Committee recommends to allow additional charges for late
night journeys in all municipal corporation areas in the state from 12 midnight to
5 am and in all other areas from 11 pm to 5 am. The demand for extending it
upto 6 am is rejected because human activities start in all areas in the morning
by around 5 am. As regards the late night charges, the same may be continued
@25% in all municipal corporation areas but since in the non-municipal
corporation areas, the chances of ridership or a return fare are relatively less, to
compensate for the same, it is recommended to allow late night charges in those
areas at 40% of the basic fare. It is hoped, these recommendations will improve
the availability of IPT services in semi urban and rural areas in lean hours at night.
3.12 Possibility of Happy hours discount.
3.12.1 Everyone in MMRTA region is familiar with the concept of peak hour and lean
hour traffic. Whether it is the suburban trains or BEST buses or taxis and auto
rickshaws, the commuter traffic thins out after 11-11.30 am till about 4.30 - 5.00
pm. Lean hour discounting is a very popular and widely accepted concept to

Happy hour discount - Commuter response survey

whether discount should be given % of discount
6% 4%

22% 13% 3%
20% 10%
7% 15%
10% 26%
7%
25%
24%

10%
13%
76% 17%
67% 68%

37% 37%
27%

MMR PMR Other Regions MMR PMR Other Regions

Yes No Can be piloted Did not answer 10 percent 15 percent 20 percent 25 percent

44
 boost the business during the low response period. This concept is often
adopted by airlines, hotels and multiplex cinema halls etc. Because of the
attractive discounts offered during this lean period, the customers who don't
have fixed time schedule get attracted to such discounted services. For
example, the multiplex cinema hall tickets which normally sell in the range of Rs.
300 to 400 for evening shows are easily available at around Rs. 100-150 for early
morning shows or the flight tickets during lean hours or seasons are discounted
to the tune of 30% to 50%.
3.12.2 That during the early afternoon hours, IPT business thins out substantially was
corroborated by the App-based Aggregators during the Committee's interactive
meetings. Similarly, the results of the online survey conducted by this
Committee prominently shows that the ridership of taxis and auto rickshaws is
as low as 5% during the afternoon period (from 12 noon to 4 pm). The
commuter survey (1200 responses) shows that 67 and 68 percent favored this
concept in MMR and PMR respectively. Surprisingly, a higher 76% commuters
from other areas favoured the idea. As regards possible discount percentage, 27
to 37% commuters favoured a 10% discount while 10 to 17% favoured 15%.
Around 25-26% favoured 20% discount. Response of the taxis and auto
rickshaws (2179 responses) shows that 39, 28 and 16% from MMR, PMR and
other areas respectively favoured this concept. Interestingly, more than two –
thirds majority (99% in MMR) were favourably inclined to a moderate 10%
discount. Another 5-6% favoured 15% discount. This shows that there is a wider
acceptability of this concept which is likely to increase the business during the
non-peak hours in the early afternoon. As regards percentage discount, while
commuter expectation is for more discount, the response of the service
providers is expectedly more conservative.
3.12.3 All in all, in order to attract more number of commuters, discounting the fare in
this lean period sounds to be a good idea. Hence, the Committee recommends
that during the time period from 12 noon to 4 pm, the taxi and auto rickshaw fare
shall be discounted by 15% barring the 1st stage minimum fare (i.e., fare for the
first 1.5 km). This new concept will turn lean hours to happy hours, especially for
housewives and senior citizens who normally don't have fixed time schedule for
their outings. This will fetch more ridership to the taxi and auto rickshaw drivers
during the lean period and also work out as happy hours for them too. This idea
of happy hour discounting will, hopefully, create a new trend in commuter travel
patterns during happy hours and thereby encourage the IPT sector.

45
3.13 Fare fixation for prepaid taxis operating from airports and railway stations.
3.13.1 The Committee has perused with Hakeem Committee recommendations as well
as the MMRTA decision on the fares for pre-paid locations giving specified
incentives to the drivers. The incentive is given to compensate for the long
waiting period and empty return trips. However, it is observed that now-a-days
around 2500 taxis are booked daily from the Mumbai International terminal and
about 2000 taxis from the domestic terminal. The Airport Authority also
provides free parking and other facilities, viz., washroom, cafeteria, restroom
etc. for the taxi drivers. There has been almost 75% increase in passenger
through-put in the last 10 years. Most of the international flights are also
operated at night, especially late night. This shows that the taxi booking at both
terminals at Mumbai Airport have gone up substantially, especially at night,
thereby substantially reducing the average waiting time. The same logic also
applies to long distance trains and buses operating from major railway stations
and bus stations. Hence, the Committee feels that there is scope for some
moderation in the incentive amount for taxis operating from the airports and
accordingly has proposed appropriate changes in the existing incentive
structure.
3.14 Fare Fixation for Fleet taxis and Radio taxis.
3.14.1 Government of Maharashtra introduced the Fleet Taxi Scheme in 2006 to
provide higher end passenger taxi service for more comfort and better quality
service. The fleet owners acquired the permits from existing permit holders to
run their self - owned taxis. In 2010, government auctioned some of the lapsed
permits at very high premium to some more fleet owners under the Phone -
Fleet Taxi Scheme. Since both the schemes were essentially premium taxi
service for higher fare paying passengers, their services did not conflict with the
low-fare, basic service of the black and yellow taxis. The S.T.A. fixed the fares for
them.
3.14.2 However, with the arrival of the App-based Aggregators, the competition for
them has been fierce due to the comfortable, AC taxi service provided by the
Aggregators at cheaper fares. The high premium paid for the permits (to the
original permit holders in the 2006 scheme and auction price paid to the
government in the 2010 scheme) added to the capital cost of the Fleet taxi and
Radio taxi operators, thereby making their break - even points steeper and their
operation has become unviable especially after the entry of the Aggregators.
The aggressive marketing by the Aggregators through subsidies to the drivers
and occasional incentives to the commuters has further eroded their

46
 operational efficiency as well as overall business. Hence, they have been
vociferous for bringing the Aggregators' operations and pricing mechanism
under strict regulation.
3.14.3 The Committee has had multiple, focused discussions with both the stakeholder
groups to understand the issues and their view points. While the government
has recently (in March, 2017) brought the Aggregators under the regulatory
regime through the newly introduced Maharashtra City Taxi Rules, 2017 and
included these operators also within its scope, there are issues therein which
this Committee has addressed in the City Taxi Fare Fixation chapter (chapter - 5).
However, there are some legacy issues for the fleet taxi owners which need to be
addressed and redressed in order to enable them to compete on equal footing.
The Committee's approach to these issues are detailed below.
3.14.4 The fleet taxi owners of 2006 paid substantial premium to the original permit
holders as per the then prevailing market conditions. The fact that the permit
holders transferred them on long term basis shows that they do not need them.
In any case, these permit owners have already benefitted financially and their
permits have lost the premium value after the recent removal of permit limits.
Hence, the Committee strongly recommends that permits presently in the
possession of the Fleet taxi owners be transferred permanently in the name of
the fleet taxi owners or they be issued with equal number of fresh permits under
the Maharashtra City Taxi Rules, 2017 by charging the permit fee as specified in
rule 75 of Maharashtra Motor Vehicles Rules, 1989. As regards the phone-fleet
taxi owners, they have already paid very high premium to the government for
their permits in the auction. Given that they had to face the competition from
the Aggregators within a short span of time, they have incurred substantial
financial losses. Hence, the Committee strongly recommends that if they so
wish, they may be issued with the remaining permits won by them in the auction
but not taken, by charging the permit fee as specified in rule 75. This will
mitigate their financial losses to some extent.
3.14.5 To face the competition, the fleet taxi owners have acquired appropriate app-
based technology for booking in addition to their existing call centers. However,
the main hurdle for them to compete with the Aggregators has been their fixed
fare system as fixed by the S.T.A. Since now they are included within the scope of
Maharashtra City Taxi Rules, 2017 they will be able to operate on dynamic
pricing subject, of course, to the lower and upper limits as would be applicable to
the Aggregators.

47
3.15 Fare fixation for black and yellow taxis operating in the state outside MMRTA
region.
3.15.1 There are around 56,000 black and yellow taxis in Mumbai whereas only about
8,000 black and yellow taxis are there in the rest of Maharashtra. Excluding the
Mumbai region, in the rest of Maharashtra state the black and yellow taxis are
not available for street hailing. These taxis operate only on designated routes
and mostly on share-a-taxi basis.
3.15.2 The fixed cost factors like cost of living, costs towards cost of capital,
depreciation, repairs and maintenance, taxes and insurance remain almost the
same for Mumbai as well as the rest of Maharashtra barring slight changes due
to marginal differences in the average revenue earning kms per shift and the
percentage of idle run. However, depending on the type of fuel used in the taxis
outside Mumbai, the average kms per unit of fuel will be different from that of
Mumbai.
3.15.3 The Hakeem Committee, while assuming average revenue earning kms per shift
for Mumbai region as 75 kms and percentage of idle run as 20%, had
recommended the following bandwidth (range) for R.T.A.s in the rest of
Maharashtra.

rea Average revenue Percentage of

earning kms per shift idle run
Municipal corporation areas 72 - 77 19% to 22%
Other than Municipal 70 - 75 21% to 24%
corporations

3.15.4 The Hakeem Committee has discussed, in some detail, the inter-play of fuel
economy (kms per kg or liter of fuel), idle run and revenue earning kms and
based on its analysis, has provided the range of revenue earning kms and
percentage of idle run from which the respective R.T.A.s are expected to pick up
definitive figures as per local conditions. However, in reality, since the
midpoints of these ranges almost coincide with the Mumbai values for
Municipal Corporation areas and are marginally different for the other areas,
they lend themselves to the R.T.A.s to accept almost the same figures as that of
Mumbai region. Secondly, giving such a range adds complications and creates
confusion among R.T.A.s in calculating basic fare at the time of every fare
revision, especially since they do not have the wherewithal to quantify the result
of the inter-play of various factors. Thirdly, choosing any value within this

48
 bandwidth hardly affects the basic fare per km. On the flip side, the scope of
choice within such bandwidths also creates scope for disputes between
consumer forums and taxi / auto rickshaw unions.
3.15.5 In addition, this Committee feels that since most of the non-Mumbai black and
yellow taxis run mostly on inter-city roads on point-to-point basis rather than
intra-city roads, they get higher fuel economy and idle run is unlikely to be
higher than that of Mumbai. It is acceptable that in other than Municipal
Corporation areas, the average revenue earning in kms per shift may be
marginally less.
3.15.6 Hence, to simplify the matter for the R.T.A.s without adversely affecting any of
the stakeholder groups significantly, this Committee is of the opinion that the
values of revenue earning kms per shift may be adopted at 77 kms for all
Municipal Corporation areas and 72 kms for all other areas. As regards
percentage of idle running, 18% of idle run as adopted for Mumbai may be
considered for all black and yellow taxis operating in the rest of the state
including municipal corporation areas.
3.15.7 The only difference in the basic fare per km in Municipal Corporation areas will
be due to the change in variable (fuel) cost per km since black and yellow taxis in
the rest of Maharashtra are either plying on LPG, diesel or petrol (mostly on
diesel). For other areas, the revenue earning kms per shift being accepted as
somewhat less at 72 kms per shift, the fare for CNG as well as petrol, LPG and
diesel vehicles will also need to be worked out based on the principles adopted
in Mumbai. The Committee accordingly suggests that the mileage per kg or CNG
or liter of petrol can be adopted as in Mumbai and average run of kms per liter of
diesel or per kg of LPG and per kg of LPG be determined by the Motor Vehicles
Department.
3.16 Fare fixation for Share-a-taxi system.
3.16.1 Almost all stake holders have championed the cause of share-a-taxi scheme. In
fact, there was a demand to identify and increase the number of routes
dedicated to this scheme. The evidence of its popularity can be seen especially
in the commercial hubs connecting to the suburban railway stations. The
reasons are not difficult to fathom. This is a win-win arrangement for the driver
as well as the passengers as the driver earns more because of the permission to
charge one-third more on the metered fare while 4 passengers share the total
fare, thereby effectively paying only one-third of the single fare.

49
3.16.2 The Hakeem Committee did not change the then prevalent incentive given to
the drivers by way of one-third extra fare over the permissible fare as it had
found universal acceptance among the taxi drivers as well as commuters. This
Committee also does not find any reason to disturb this system and endorses
the same.
3.16.3 Given its popularity and financial benefits both for the driver as well as
commuters, the demand for more routes is natural. The Motor Vehicles
Department, in consultation with the traffic police authorities and local self
government authorities, should pro-actively identify such routes where the
present demand for taxis far exceeds the supply. It is also expected that in the
next few years on completion and operationalisation of more metro railway
lines in Mumbai Region, the taxi (or for that matter, auto rickshaw) demand
patterns are bound to undergo change and the taxis will have to realign at many
locations to the role of feeder services to provide the last-mile connectivity to
the metro stations as they do now for the suburban railway stations. At that
time, the share-a-taxi scheme will need to be further expanded.
3.17 Fare fixation for Electrical taxis.
3.17.1 The Committee has also been asked to fix the fare for electrical taxis as the
Government wants to promote clean and renewable energy in the long term
interest of the environment. Electrical vehicle technology is relatively new and
still evolving. Globally, annual sale of electrical vehicles at present constitutes
about 1%. But most governments are promoting them as the automotives of
the future. In India, the technology is being deployed by a couple of car
companies while others are trying to get in. The Government of India also has a
subsidy scheme to promote the clean technology car.
3.17.2 In order to get a holistic view on the technology and the feasibility thereof for the
taxi industry, the Committee had a detailed discussion with the technical
representatives of M/s. Mahindra & Mahindra which is manufacturing electrical
cars at present. They also provided the relevant data on technology, pricing and
operational parameters. The main concerns arising out of the present level of
the technology which impinge on the feasibility of such cars as taxis are listed
below:
a. The price of the base model at about Rs. 12 lakh is more than two and half times
the average price of the cars presently entering the black and yellow taxi fleet.
Hence, their economics are not attractive at the present prices for prospective
taxi drivers.

50
b. Battery cost was reported to be almost 60% of the total cost and it would need
replacement almost every one to one-half years (considering the taxis run
almost 30,000 to 56,000 kms in one year) and hence, cost recovery through
higher fare from passengers does not seem a feasible or practical proposition at
this point of time.
c. The raw material, viz., lithium for the present lithium battery comes
predominantly from China and this near-monopoly situation does not envisage
early reduction in battery price. Besides, China is also ramping up its own
production of electrical cars and two wheelers, thereby increasing the
uncertainly element for long term growth of the Indian auto industry based on
lithium battery technology.
d. Presently, it takes about 7 to 8 hours to charge the battery fully. Hence,
effectively such cars can run only on a single shift. 70% of the present taxis do
double shifts. Hence, the economic feasibility and acceptability of the electrical
car as a street hailing taxi further gets eroded.
e. Battery charging cost at the commercial rate of electricity will further add to the
operating cost.
f. Without adequate charging stations and / or battery exchange stations,
induction of electrical taxis by individual drivers is unlikely at the present
juncture or in the near future.
g. Most importantly, the present single charge provides only about 130-140 kms of
run on test conditions and about 100 kms on road conditions. Hence, chances of
the car stalling midcourse towards the end of the shift, especially with a
passenger inside, can be a commercial nightmare for the taxi drivers.
3.17.3 Given these practical and commercial constraints, the Committee does not
visualize any individual taxi driver opting for such cars in the near future till the
major constraints highlighted above are adequately addressed through
appropriate R. & D. and commercial facilitation leading upto better financials. It
is understood that one of the App-based Aggregators has introduced some
electrical cars into its fleet in Nagpur. Since the Committee proposes to provide
a fare range to them to operate on, they may be able to experiment on their
financial viability. It is recommended that the Government may obtain their
operational data, say, after a year or so and examine its feasibility. Hence, this
Committee does not propose to get into fare fixation for electrical taxis at this
point of time.

51
3.18 Distance for which minimum fare is chargeable.
3.18.1 The Hakeem Committee had reduced the distance for which minimum fare is
chargeable from 1.6 kms (essentially conversion of 1 mile to the metric system)
to 1.5 kms. This Committee, through its stakeholder survey through structured
questionnaires had asked this question through multiple options. The opinions
varied. But most of the replies favoured 1.5 kms, i.e., maintenance of status quo
while some of them favoured 1 km or 2 kms.
3.18.2 The Committee considers 1 km as too small to incentivize the drivers and it has
the potential to increase the incidence of fare refusals. Besides, for 1 km
distance, people will tend to prefer walking and may not opt for the IPT mode of
transport. On the other hand, 2 kms will increase the minimum fare by 33.33%
and will certainly create strong resentment among commuters and discourage
short distance passengers from availing of taxi service. Since 1.5 kms as the
basis for minimum charge has been by and large accepted by all groups of
stakeholders without any strong reservations, the Committee would
recommend its continuance. There is not much ground for considering different
minimum distances for different regions, urban or rural. Hence, this norm may
be applied throughout the state.
3.19 Compensation for waiting period.
3.19.1 As per the pre-Hakeem Committee system, when taxis had to wait, viz., at traffic
junctions or move extremely slowly (lower than a km in ten minutes), a fall of
200 meters in the fare meter would occur for a cumulative time of two minutes.
Thus, for every minute of waiting, the taxi driver would get compensated to the
extent of the fare for 100 meters, i.e., 10% of the basic fare per km.
3.19.2 Hakeem Committee rationalized the meter operation system for both taxis and
auto rickshaw to this fare changing for every 100 meters with the minimum fare

Stakeholders’ survey for minimum fare distance

Commuter response Taxi driver response Union response

MMR MMR Other regions

48% 48%
5%
17% 21%
35%
30%

41% 22%
17% 53%

37% 26%

1.0 km 1.5 km 2.0 km 0 1.0 km 1.5 km 2.0 km 1.0 km 1.5 km 2.0 km

52
 fixed for 1.5 kms. Accordingly, at present, the waiting charges get calculated for
every minute (instead of 2 minutes) at the rate of 10% of the basic fare per km.
This Committee also endorses the same system without any change.
3.20 Luggage charges.
3.20.1 Presently luggage charges are payable @ Rs. 6 per piece of luggage of size equal
to or greater than (60 x 40) cms dimension while a brief case, handbag, attaché
case or bag of lesser dimension is not chargeable. The Committee does not see
any justification to change this and accordingly, recommends its continuance.
3.21 Air conditioning charges.
3.21.1 Till very recently, black and yellow taxis were not allowed to use or charge for air
conditioning facility. Most of the older models of taxis in any case did not have
AC facility in their taxis. However, to meet growing commuter demands and in
order to facilitate black and yellow taxis to meet the challenges of the fast
changing market conditions and competition from the Aggregators, the
Committee had decided to recommend use of AC facility, which is now inbuilt in
all new models used as taxis, subject to payment of an appropriate additional
charge.
3.21.2 However, the Government, after constitution of this Committee, has permitted
with effect from 17.04.2017 use of AC facility in black and yellow taxis on specific
consumer request on payment of an additional fare of 20% over the base fare.
However, the Committee was not consulted.
3.21.3 While welcoming the government decision, the Committee has looked into the
reasonableness of the charge which should not be too high or too low. The
Committee has also consulted the car manufacturers whose models are being
used as black and yellow taxis in this regard. The Committee gathered that the
only additional cost incurred by the taxi drivers for running the AC is
consumption of additional fuel by upto 25%. All other factors of costing
contributing to the costing of fare remain unchanged. Hence, it is only fair that
the additional charges for use of AC should be relatable to the cost of
incremental fuel consumption only with appropriate rounding off. Too high
charge for AC has the potential to further impair the competitiveness of black
and yellow taxis vis-à-vis the Aggregators while too low charge would
disincentivize the driver. The Committee accordingly proposes to review the
20% additional charge and fix it in relation to the consumption of additional fuel
for running the AC facility.

53
3.22 Rounding off of the fare.
3.22.1 For the sake of the convenience of both the driver and the commuter, it is
necessary to round off the fare payable to the nearest rupee. However, the
rounding off has to be done only once to avoid possible loss to either the
commuter or the driver due to double rounding off. In this regard, the Hakeem
Committee has explained the methodology as follows:
“The minimum fare will be indicated after rounding off; however, the base fare
for a km will be indicated as worked out by applying the formula without
rounding off. The fare payable by a passenger is calculated by multiplying the
distance travelled in kms with the basic fare per km. The amount so arrived at is
rounded off to the nearest rupee; if this amount is less than or equal to the
minimum fare, the electronic meter will display the minimum fare which the
passenger will have to pay; if it is more than the minimum fare, then the meter
will display the higher amount, which should be paid by the passenger. (In
respect of mechanical meters, tariff cards to be used till switch over to the
electronic meter takes place will be prepared on this basis). While rounding off,
1 to 49 paise are to be ignored and 50 to 99 paise are to be rounded off to the
next higher rupee.”
3.22.2 This Committee endorses the same. However, since mechanical meters are no
more in vogue, that part of the methodology recommended by the Hakeem
Committee becomes redundant.
3.23 Frequency of fare revision.
3.23.1 The Hakeem Committee has recommended an annual review of the fare based
on the changes in the relevant cost factors and give effect to the revision with
effect from 1st of May. However, Government of Maharashtra put the caveat
that if the cost escalation per km is less than 50 paise then such fare revision
shall not be carried out that year. However, in extraordinary situation if the hike
in the cost is more than 20% then the fare revision can be done expeditiously
without waiting for the next 1st May. The next fare review and revision (if
necessary) can be done on the normal due date, i.e., 1st of May provided the
time gap between the 2 revisions is at least 2 months or more.
3.23.2 Interestingly, inspite of such an elaborate mechanism provided for the
frequency of fare revision, widely divergent views were presented to this
Committee from commuter as well as driver groups. The suggestions on the
frequency of fare revision ranged from as low as one month to 2 years.

54
3.23.3 The pitfalls of too frequent or too infrequent revision of fares is too obvious.
While frequent revision is cumbersome, impractical and mostly not worthwhile,
too infrequent revisions can be detrimental to protecting the real earnings of
the driver. Hence, a periodicity of yearly review and revision is both reasonable
and fair, especially since in a low-inflation scenario, the revision will not happen
even after the review if the cost escalation translates to less than 50 paise per
km. Besides, the provision for extraordinary situations also provides for quick
relief to the drivers.
3.23.4. However, extraordinary situation is most likely to occur only in a situation of
rapid rise of fuel cost. Hence, for ease of quick action, the hike of fuel cost by
25% should trigger the fare review rather than 20% of all costs. As regards date
of effect of normal fare revision, since the consumer price index data for the
preceding 31st March may not be available before the end of April, no time is
effectively available to the R.T.A.s to effect the change w.e. from the 1st of May.
Hence, this Committee recommends the fare revision, if warranted, may be
made with effect from the 1st of June every year.

Survey result - Frequency of fare revision

Commuter response Taxi driver response Union response

7% 6%
9%
7% 5% 5%
18% 9% 5% 16%
24% 5%
27%
2% 45%
36%

47% 7%
7%

25%
27% 59%
17% 68%
11%
5%
MMR PMR Other regions

6 Months 1 Year 1.5 Years 6 months 1 year 1.5 years 6 months 1 year 2 years
2 Years 2.5 Years Did not answer 2 years 2.5 years 2.5 years Did not answer

3.24 Comparison of the last 3 years' rate of fare revision vis-à-vis rate of actual cost
escalation.
3.24.1 One of the terms of reference of the Committee is to compare the rate of fare
increase given in the last 3 years vis-à-vis the rate of actual cost escalation,
apparently to test its reasonableness. While the terms of reference do not give
any background reason for the said term of reference, the Committee was able
to discern the same from the representation of the consumer organizations.
They have, inter alia, complained that the Hakeem Committee formula over-
compensates the taxi drivers vis-à-vis the actual cost escalations. However, this
Committee is of the view that any post-mortem of the past fare revisions vis-à-

55
 vis actual cost escalations will not give any meaningful relief either to consumers
or to the drivers if any positive or negative divergence is found therein. It will
serve no useful purpose.
3.24.2 Hence, the Committee decided to concentrate on reliable cost estimates of
various cost factors on normative and factual basis, as may be appropriate,
rather than merely updating the past cost estimates to present day inflation
index numbers. To be fair to both sides (commuters and drivers), the
Committee also adopted universally acceptable financial and accounting norms
and principles for identification of cost elements, viz., cost of capital (surrogate
for return on investment) instead of interest. Similarly, depreciation is also
calculated based on financial accounting principles. Detailed reasons are also
provided why certain costs are considered and why not others, viz.,
comprehensive insurance cost rather than third party insurance cost. These
approaches have already been discussed in the preceding paras.
3.24.3 Accordingly, the Committee consciously decided not to go into conducting a
futile post-mortem on the past three years' fare revisions for testing their
reasonableness.
3.25 Commuter complaints for refusal of taxi drivers to ply.
3.25.1 Allegations of refusal by taxis and auto rickshaws to ply has been a sore point
with the commuters. While the taxi / auto rickshaw driver may sometimes have
genuine grounds to refuse, viz., lunch break, rest, returning home, but they do
sometimes refuse passengers of short distances, which leads to disputes and
complaints. Earlier when there were mechanical meters, from the position
of the flag passengers could easily identify whether the taxi / auto rickshaw is
engaged or available for hire. However, after introduction of e-meter, in many
cases it is not possible to identify the availability of taxi / auto rickshaw from the
position of the flag because many electronic meters do not have flag and most of
them are fitted inside the taxi.
3.25.2 It is equally irritating for a commuter to waive his hand to stop every taxi / auto
rickshaw approaching towards him only to find it occupied. In order to avoid
such disputes and confusion, there is a need to provide an appropriate indicator
about the taxi's / auto rickshaw's occupancy status. An illuminated LED
indicator on top of the taxi / auto rickshaw can be provided to clearly indicate
from a long distance as to whether the taxi / auto rickshaw is hired or empty
(available for hire) or off duty.

56
3.25.3 As per the information gathered from the Transport Commissioner's office, an
initiative was taken in 2014 to implement roof top light indicator system on taxis
and auto rickshaws to enable the passenger to understand its occupancy status.
In fact, a draft notification was also issued but the scheme could not be
implemented for lack of follow up action in issuing the final notification. The
Committee feels, it is high time to revive the proposal and implement it.

Commuter response - Service Quality Levels: Taxis : MMR

Good Average Poor Did not answer

8% 8% 8% 9% 8% 9%
20% 12%
30% 23%
29%
55%
43%
41%
53%
51% 52%
28%
31% 35%
9% 11% 10% 16%

Acceptance of ride Charging by the Conduct/Courtesy Appearance Reliability & Safety Knowledge of city
meter roads
Acceptance of ride fares very poorly with
more than 50% of commuters indicating refusal rates are high.

3.25.4 In this regard, the Committee had a meeting with a reputed technocrat from
Pune, Mr. K. D. Dighe, who is also a pioneer in electronic fare meter
manufacturing since, 1988. He gave demonstration of the Roof Top Light
fitment for taxi and auto rickshaw showing its occupancy status.
3.25.5 The technical details of the Roof top light fitment for taxis can be as follows:

1 Operating voltage : 12 V + 3V DC Battery Voltage

2 Multi colour LED : 1000 HrsMTBF
3 Height of letters : 50 mm
4 Thickness of letters : 5 mm
5 Power dissipation : Max 500 W per legend
6 Dimensions of the box : 300 (L) x 70 (W) x 140 (H) mm

Since auto rickshaws are having rexin hood, the LED fitment cannot be fitted on
roof top as it will puncture the hood. Hence, occupancy status indicator in auto
rickshaw can be mounted in the top portion of the wind shield glass from inside.
The size of the fitment can be 500 (L) x 50 (W) x 150 (H) in mm.

57
 This Roof Top fitment will indicate 3 positions of occupancy status, viz.,
1. FOR HIRE - also indicated by the sign ( ) sign in green Colour.
2. HIRED / ENGAGED - also indicated by ( X ) sign in red Colour.
3. OFF DUTY - (may be break down or driver resting) also indicate by ( ) sign in
white Colour.
3.25.6 The LED indicator can be bi-lingual, i.e., Marathi on one side and English on the
other. Such bi-lingual signage will be user - friendly to both tourists as well as
locals. An LED indicator provides sharp and clear indication from at least 100
meter distance. Hence, the Committee strongly recommends that this system
must be implemented. The inspecting authorities shall ensure that the said
fitment is fitted in each and every taxi and auto rickshaw at the time of renewal
of fitness certificate so that all taxis and auto rickshaws in the state will be
covered within a year. This will drastically reduce disputes about refusal to ply.
3.25.7 The officials of Motor Vehicles Department also must take stern action against
the drivers and permit holders who refuse to ply or behave arrogantly with the
commuters.
3.26 Permission for advertisement on taxis.
3.26.1 This demand was also made by the taxi and auto rickshaw unions before the
Hakeem Committee which had recommended to the Government for
permitting it. However, it seems that no action has yet been taken. Taxi unions
have again raised the same demand before this Committee.
3.26.2 As per Rule 134 of the Maharashtra Motor Vehicles Rules, 1989, Regional
Transport Authorities are empowered to grant the permission for display of
advertisement on any transport vehicles and as per rule 134(a), the fees for the
advertisement are also prescribed. It may also be noted that Rule 5(11) of the
Maharashtra City Taxi Rules, 2017, allows to carry advertisements on city taxi
vehicles. Hence, the Committee doesn't understand as to why such legitimate
demand of the taxi unions, which is legally permissible, has not yet been
considered favourably. Permission for advertisement will fetch some additional
income to the taxi permit holder and the Government will also get the revenue
by permitting such advertisement.
3.26.3 Hence, this Committee recommends that advertisements may be permitted on
side doors and back of front seat on black and yellow taxis and city taxis as well
excluding the space for mandatory display of information pertaining to the
registration, make and taxi permit details etc and glass windows and wind
shield. This will provide an extra source of income to the permit holders.

58
3.26.4 Advertisements on taxis will not have the same visibility levels as road side
advertisements due to the constraints of size and often the taxi being on the
move. The advertisement, if any, on the back of the front seat will have even less
visibility, essentially confined to the passengers using it. Hence, it should be
taken up with the local government authorities, preferably through the Urban
Development Department, to levy concessional license fees for such
advertisements as the revenue earnings of the taxi owners would not be
substantial.
3.27 Demand for taxi Stands.
3.27.1 Inadequacy of taxi stands (auto rickshaw stands as well) has been a perennial
grouse of the taxi drivers. It increases their empty runs and thereby adversely
impacts their net revenue earning kilometers and earnings apart from
increasing instances of punitive action by the traffic police for wrong parking. It
also greatly inconveniences the passengers. Often the taxis occupy the bus bays
creating conflict with public transport officials and passengers. The present
metro work going on in Mumbai has further reduced, albeit temporarily, the
availability of taxi stands.
3.27.2 The grievances of the taxi drivers on this count, especially in Mumbai, are
genuine and need to be expeditiously and sympathetically addressed.
Accordingly, the Committee recommends that the Motor Vehicles Department
in urgent and close coordination with the traffic police and local government
authorities, identify additional potential taxi stands and the local government
should develop them in a time bound manner within, say, the next one to two
years.
3.27.3 After completion of metro railway lines in Mumbai, the patterns of demand for
IPT (and of course, buses) will undergo dramatic changes. There will be need for
providing adequate bus, taxi and auto rickshaw stands at the metro stations for
ease of quick traffic dispersal and provide the last mile connectivity. MMRDA is
already planning for adequate infrastructure at the metro stations for this
purpose. The Motor Vehicles Department should keep close liaison with the
MMRDA and metro implementation authorities to take care of the needs of the
taxi and auto rickshaw drivers.
3.28 Meter recalibration, testing and complaints of meter tampering.
3.28.1 There were no complaints of meter tampering since they have been converted
to electronic meters. The meter manufacturers also vouched for the tamper-
proof nature of the electronic meters. However, if and when any such complaint

59
 is received, the Motor Vehicles Department would need to take it up with the
concerned meter manufactuer(s) and take necessary remedial measures.
3.28.2 However, there were a number of complaints from the consumer organizations
about operation of taxis and auto rickshaws (mostly the latter) without using
meters and even non-fixation of meters, especially in semi urban and rural
areas. It was also reported that some commuters also insist on non-use of
meter and bargain on the fare, primarily because of their distrust of the
accuracy of the meter. The Committee recommends that the Motor Vehicles
Department must enforce the electronic meter system in all areas and also take
the initiative, with the help of the consumer organizations and the unions, to
educate and sensitize the drivers and commuters in this regard.
3.29 Reduction of one time additional permit fee.
3.29.1 When the number of permits issued to black and yellow taxis were frozen in
1997 and no new permits were issued till lifting of the freeze in June, 2017, the
permits were unofficially sold or leased out at an exorbitant premium in the
market. This informal permit transfer fee being demanded by permit holders
from the transferees was a sort of 'pagdi' system similar to that obtaining in the
property tenancy market in Mumbai. Hence in this controlled, supply – scarce
market, when the Government auctioned 4000 permits in the year 2010-2011
for a premium taxi service distinct from the black and yellow taxis, it fetched the
price of Rs. 2.61 lakh for each permit quoted by Tab Cab company. However, the
company which took those permits failed to acquire the full quota of 4000
permits and acquired only 2800 permits, because there was no demand for
premium service of that magnitude and the exorbitant premium made them
financially unviable.
3.29.2 Prima facie, in order to tap a part of the unofficial premium prevailing in the grey
market of unofficial transfer of taxi and auto rickshaw permits, the Government
had introduced additional permit fees under the newly introduced Rule 75A of
Maharashtra Motor Vehicles Rules, 1989 as recently as in February 2016,
ranging from Rs. 10,000 to Rs. 25,000 in addition to the normal permit fees
under rule 75.
3.29.3 However, after the removal of restrictions on the issuance of permits in June
2017, now the permits are freely available and hence no permit will command
any worthwhile premium in the market, let alone Rs. 2,61,000. Hence, there is
no logic behind such exorbitant additional permit fees as prescribed in the
Maharashtra City Taxi Rules, 2017. This additional fee will lead to immense
increase in capital cost and thereby result in increased fare per kilometer,

60
 putting avoidable extra burden on the commuter's pocket. This is against the
motto of promoting use of IPT in complementarity to public transport, in order to
discourage private transport and facilitate decongestion of city roads and parking
spaces. It is also worth noting that, in no other state in India such huge additional
permit fees are imposed. All taxi and auto rickshaw Unions and Aggregator
companies have also vehemently opposed such additional permit costs as illogical
and unfair.
3.29.4 In the Committee's considered opinion, the so-called discovered price of Rs.
2,61,000 obtained in a highly supply-restricted market cannot be a rational basis
for charging additional permit fees in a liberal, no-restriction market to which the
state has now moved. Permit fees are not levied in lieu of any service provided.
Hence, the Committee is of the view that the permit fees should not be reckoned
as a revenue earning source and such huge permit fees cannot be justified in a
free-market regime. However, the Committee is elsewhere proposing to transfer
a part of the additional permit fee levied under Rule 75A of Maharashtra Motor
Vehicles Rules, 1989 to a Welfare Fund for the taxi and auto rickshaw drivers.
Hence, it does not recommend its complete removal but recommends for
substantial reduction and overall rationalization. Accordingly, the Committee
recommends that the additional permit fee under rule 75A of the Maharashtra
Motor Vehicles Rules, 1989 for black and yellow taxi should be reduced to Rs.
5000/- and for auto rickshaw to Rs. 3000/-. The Committee has also recommended
similar rationalization of the additional permit fee for the App-based Aggregators'
taxis in the relevant chapter. The Committee also recommends that half of the
amount of this additional permit fee received from the city taxis, black and yellow
taxis and auto rickshaws should be deposited into the proposed state-controlled
Welfare Corporation for such drivers.

***

61
 CHAPTER - 4

FARE STRUCTURE PROPOSED FOR BLACK AND YELLOW TAXI

4.1 Determination of Fare structure for black and yellow taxis in Mumbai.
4.1.1 As stated in the opening paragraph of the preceding chapter, most of the black
and yellow taxis operate in Mumbai city. All taxis in Mumbai use CNG as fuel.
Hence, we will develop a fare structure for these taxis first. This structure will be
suitably modified for application to taxis elsewhere, whether based on CNG or
petrol or any other fuel.
4.2 Cost elements.
4.2.1 We have already identified the cost elements that go into consideration for
determination of the fare structure. We will determine the actual cost of
operating a taxi for a unit distance (namely, a kilometer) based on these cost
elements which are as follows:
i. Fixed costs represented by cost of capital and depreciation on the capital
cost of acquiring the taxi;
ii. Other fixed costs such as taxes, insurance premium for comprehensive
policy and other levies and expenses;
iii. Estimated cost of repair and maintenance of the taxi;
iv. Provision for the cost of living of the family of the driver of the taxi;
v. Estimated number of revenue earning kilometers run by a taxi during one
working shift.
vi. Average number of kms run on unit quantity of fuel, i.e. in the case of
Mumbai, kms per kg of CNG;
vii. Estimated percentage and actual kilometers of idle run out of the total
distance run by a taxi;
viii. Percentage of taxis which are run on a second shift by a driver different from
the one operating the first shift.
The contribution of each of the above elements to the cost of operating the
taxi are worked out in the following paragraphs.
4.3 Cost of (return on) capital.
4.3.1 As discussed in chapter - 3, with the induction of newer makes and models, the
composition of the taxi fleet in Mumbai is constantly undergoing change. For

62
 example, the Premier Padmini model which at one time was the dominant
model in the taxi fleet is now almost extinct. On the other hand, Hyundai Santro
which now constitutes almost 50% of the taxi fleet is no more getting added to
the fleet due to stoppage of its manufacturing. I-10, Wagon-R and Ecco are the
models which are becoming popular. In order to compensate the newer models
entering the market in terms of cost of capital, it is desirable that it reflects the
current composition of the fleet in terms of the models that are entering or have
entered the market in recent years. From the record of the Regional Transport
Office, Mumbai (East), Ghatkopar and the survey conducted by officers of the
Motor Vehicles Department, it is found that the shares of various models of
black and yellow taxis in the present fleet are: Omni-20%, i10-10%, Wagon R-
10%, Ecco-10% and Santro zing-50%. It may be noted that since models like
Premium Padmini, Beat, Ritz, Indica, Alto have negligible share in the fleet, they
have been ignored for the purpose of calculation of the fleet composition.
Accordingly, the weighted average price of the latest inductions into the
Mumbai taxi fleet in terms of their present shares in the fleet is given below:

Sr.No. Model % Share Price for CNG Weighted Price

*(Rs.) (Rs.)
1 Omni 20 3,35,000/- 67,000/-
2 i10 10 5,30,000/- 53,000/-
3 Wagon R 10 5,00,000/- 50,000/-
4 Ecco 10 5,00,000/- 50,000/-
5 Santro Zing 50 4,35,000/- 2,17,500/-
Total (1 to 5) 100 4,37,500/-
Rounded off to 4,40,000/-
*Price includes CNG Fitment, Electronic Fare Meter price, but does not
include Insurance and Tax as it is considered separately.
4.3.2 As discussed in chapter - 3, considering that car loans for taxis are typically given
for 5 to 7 years, we have assumed the higher tenure for the sake of benefit of
such borrowers. Assuming that margin money requirement is 25% , 0.35X is the
share of cost of the car that bears the burden of interest and 0.65X is the share of
the cost that becomes the investment of the taxi owner where 'X' is the price of
the car. The details of how these shares are arrived at are given in para 3.2.1 of
the previous chapter. Presently, the median rate of interest charged on car loans
by the nationalized banks is 9.00 to 9.50%. We have adopted 9.5% for our
calculation. For the taxi owner's own funds, the rate of interest paid by
nationalized banks on a one-year fixed deposit is, on an average, 6%.

63
 Accordingly, the weighted average cost of capital will be (0.35x9.50%) +
(0.65x6%) = 7.225% which can be rounded off to 7.25%. Accordingly, on the
weighted average car price of Rs. 4,40,000/- the cost of capital @7.25% per
annum will be Rs. 31,900.
4.3.3 For the sake of comparison, details of interest paid on a 7 year bank loan of Rs.
3,30,000 (75% of the cost of taxi) @9.50% on EMI basis and opportunity cost of
own funds @6.00% are given in the following tables.
EMI Schedule for Rs.3,30,000/- for 7 years @ 9.50%
(Figures in Rs.)
Monthly Principal
Sr.No. Interest Balance
Installment
- 3,30,000
1 5,394 2,613 2,781 3,27,219
2 5,394 2,590 2,803 3,24,416
3 5,394 2,568 2,825 3,21,591
4 5,394 2,546 2,848 3,18,743
5 5,394 2,523 2,870 3,15,873
6 5,394 2,501 2,893 3,12,980
7 5,394 2,478 2,916 3,10,064
8 5,394 2,455 2,939 3,07,126
9 5,394 2,431 2,962 3,04,163
10 5,394 2,408 2,986 3,01,178
11 5,394 2,384 3,009 2,98,169
12 5,394 2,361 3,033 2,95,136
13 5,394 2,336 3,057 2,92,079
14 5,394 2,312 3,081 2,88,997
15 5,394 2,288 3,106 2,85,892
16 5,394 2,263 3,130 2,82,762
17 5,394 2,239 3,155 2,79,607
18 5,394 2,214 3,180 2,76,427
19 5,394 2,188 3,205 2,73,222
20 5,394 2,163 3,231 2,69,991
21 5,394 2,137 3,256 2,66,735
22 5,394 2,112 3,282 2,63,453

64
 (Figures in Rs.)
Monthly Principal
Sr.No. Interest Balance
Installment
23 5,394 2,086 3,308 2,60,145
24 5,394 2,059 3,334 2,56,811
25 5,394 2,033 3,360 2,53,451
26 5,394 2,006 3,387 2,50,064
27 5,394 1,980 3,414 2,46,650
28 5,394 1,953 3,441 2,43,209
29 5,394 1,925 3,468 2,39,741
30 5,394 1,898 3,496 2,36,245
31 5,394 1,870 3,523 2,32,722
32 5,394 1,842 3,551 2,29,171
33 5,394 1,814 3,579 2,25,592
34 5,394 1,786 3,608 2,21,984
35 5,394 1,757 3,636 2,18,348
36 5,394 1,729 3,665 2,14,683
37 5,394 1,700 3,694 2,10,989
38 5,394 1,670 3,723 2,07,266
39 5,394 1,641 3,753 2,03,513
40 5,394 1,611 3,782 1,99,731
41 5,394 1,581 3,812 1,95,919
42 5,394 1,551 3,842 1,92,076
43 5,394 1,521 3,873 1,88,203
44 5,394 1,490 3,904 1,84,300
45 5,394 1,459 3,934 1,80,365
46 5,394 1,428 3,966 1,76,400
47 5,394 1,396 3,997 1,72,403
48 5,394 1,365 4,029 1,68,374
49 5,394 1,333 4,061 1,64,313
50 5,394 1,301 4,093 1,60,221
51 5,394 1,268 4,125 1,56,096
52 5,394 1,236 4,158 1,51,938
53 5,394 1,203 4,191 1,47,747
54 5,394 1,170 4,224 1,43,523

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 (Figures in Rs.)
Monthly Principal
Sr.No. Interest Balance
Installment
55 5,394 1,136 4,257 1,39,266
56 5,394 1,103 4,291 1,34,975
57 5,394 1,069 4,325 1,30,650
58 5,394 1,034 4,359 1,26,291
59 5,394 1,000 4,394 1,21,897
60 5,394 965 4,428 1,17,469
61 5,394 930 4,464 1,13,005
62 5,394 895 4,499 1,08,506
63 5,394 859 4,535 1,03,972
64 5,394 823 4,570 99,401
65 5,394 787 4,607 94,795
66 5,394 750 4,643 90,152
67 5,394 714 4,680 85,472
68 5,394 677 4,717 80,755
69 5,394 639 4,754 76,001
70 5,394 602 4,792 71,209
71 5,394 564 4,830 66,379
72 5,394 526 4,868 61,511
73 5,394 487 4,907 56,605
74 5,394 448 4,945 51,659
75 5,394 409 4,985 46,675
76 5,394 370 5,024 41,651
77 5,394 330 5,064 36,587
78 5,394 290 5,104 31,483
79 5,394 249 5,144 26,339
80 5,394 209 5,185 21,154
81 5,394 167 5,226 15,928
82 5,394 126 5,267 10,660
83 5,394 84 5,309 5,351
84 5,394 42 5,351 -0
Total - 1,23,055 3,30,000 -0

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Return on capital during the life of the taxi – yearwise statement of interest on own
capital and interest on borrowed fund.

(Figures in Rs.)
Year Own Fund Borrowed Fund Total
Principal Interest@6% Principal Interest Interest
1 1,44,864.28 8,691.86 2,95,135.72 29,857.88 38,549.74
2 1,83,188.76 10,991.33 2,56,811.24 26,397.69 37,389.01
3 2,25,316.86 13,519.01 2,14,683.14 22,594.08 36,113.09
4 2,71,626.06 16,297.56 1,68,373.94 18,412.96 34,710.53
5 3,22,531.34 19,351.88 1,17,468.66 13,816.89 33,168.77
6 3,78,488.85 22,709.33 61,511.15 87,64.66 31,473.99
7 4,40,000.00 26,400.00 -0.00 3,211.01 29,611.01
8 4,40,000.00 26,400.00 26,400.00
9 4,40,000.00 26,400.00 26,400.00
10 4,40,000.00 26,400.00 26,400.00
11 4,40,000.00 26,400.00 26,400.00
12 4,40,000.00 26,400.00 26,400.00
13 4,40,000.00 26,400.00 26,400.00
14 4,40,000.00 26,400.00 26,400.00
15 4,40,000.00 26,400.00 26,400.00
Total 3,29,160.97 1,23,055.17 4,52,216.14
Average per year 21,944.06 8203.67 * 30,147.73
Note * : Distributed over 15 year life of the taxi.
It can be seen from the above table that the annual weighted average cost of
capital comes to Rs. 30,147.73. But since the actual cost of capital in this
method varies from year to year due to the EMI system of bank loan, for ease of
calculation and to compensate for the higher interest component on earlier
years' EMIs, the previously calculated return on capital of Rs. 31,900 is adopted
by the Committee as fair and reasonable.
4.4 Depreciation.
4.4.1 Depreciation is usually calculated over the useful life of a vehicle. The Hakeem
Committee had assumed it to be the equivalent of a distance of 4,50,000 kms or
roughly 12 years with a salvage value of 10% at the end of this period. Then it
divided the balance amount by 12 to arrive at the annual depreciation amount.
However, thereafter, it went on assuming different salvage values for taxis of
different values and calculated the annual depreciation on them and then

67
 accumulated the weighted average thereof as the depreciation value to be
allowed as a cost. There was no rational basis to these assumed salvage values.
As discussed in para 3.3.1 of the preceding chapter, this method under-valued
the depreciation of recent models entering the taxi market to the extent of Rs.
9,703. It was unfair to the newer taxis.
4.4.2 Hence, the Committee has adopted the more rational and fair method of
allowing depreciation on the basis of the weighted average price of the latest
models of cars entering the taxi fleet and allowing depreciation on that average
price net of salvage value over the permissible useful life of the taxi. Since we
have already arrived at the weighted average capital value at Rs. 4,40,000 and
considered 15 years as the useful life of the taxi, the depreciation is calculated on
these parameters after deducting the salvage value. After 15 years of intensive
usage as a taxi, the vehicle will be left with essentially its scrap value which can
be assumed at 5%. Thus, the annual depreciation to be allowed will be (Rs.
4,40,000 x 0.95) ÷ 15, i.e., Rs. 27,867.
4.5 Insurance, taxes and miscellaneous fixed expenses.
4.5.1 As regards comprehensive insurance costs, different taxi models carry different
premiums. Based on their respective market shares in the taxi pool, the
weighted average cost of annual comprehensive insurance premium will be as
follows:

Sr. Insurance premium Weighted

Model % Share
No. (Rs.) average (Rs.)
1 Omni 20 22,000 4,400
2 I10 10 28,500 2,850
3 Wagon R 10 30,500 3,050
4 Ecco 10 28,500 2,850
5 Santro 50 25,000 12,500
Total Weighted Average premium Rs. 25,650.

4.5.2 Currently, the one-time motor vehicle tax is Rs. 7,150 (considered of 6 seater
black and yellow taxi) which on annual basis comes to Rs. 480 (Rs. 7150 ÷ 15
years = Rs. 477, rounded off to Rs.480). The Profession Tax is Rs. 1500. Thus, the
total cost of taxes comes to Rs. 1,980 per annum.
4.5.3 As regards miscellaneous expenses, they are as given in the following table
considering that 70% taxis are run on double shift.

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