Auto-rickshaw FAQs Part 2: Fares, Strikes and Fair Prices

This post is part of a series on auto-rickshaws and second post on Auto-rickshaw FAQs.

Why do auto-rickshaw drivers refuse to take passengers to certain areas/ localities in the city?

Unlike buses and trains which are operated by large publicly (sometimes with private equity) owned enterprises, each auto-rickshaw is a ‘privately owned’ and privately operated entity[i] subject to some regulation; i.e. a for-hire vehicle. Auto-rickshaw drivers are self-employed businessmen offering mobility services against cash payments. Just like in any other business, the driver seeks to minimize his operational costs, particularly his expenditure on fuel. It is this concern that partially motivates his refusal. In general, most auto-rickshaw drivers have familiar neighborhoods that they prefer to operate in and do not want to venture too far away from. Therefore, a driver’s decision to agree or refuse to take passengers to any particular area could be due to any of the following factors:

  • Unfamiliar location: The driver may not know the address and does not want to venture too far out of his familiar territory.
  • Prior commitments: The driver has other commitments around that time (e.g. going home to be with his family or picking up a commuter with whom he has a monthly contract[ii]) which require him to be in the vicinity of a particular location and therefore he might not want to travel too far away from it.
  • Fear of not getting fares from the destination: He may be afraid that he will not get another commuter there to return to his regular territory. The driver may refuse to go to Kukatpally, Hi-Tech City, Ramoji film city, LB nagar or Kattedaan etc., as he has to return empty[iii] or as the idiom goes ‘kavve bhara leke aana padta’[iv]
  • Safety concerns: Drivers refuse to go to particular locations where they feel threatened or worry that they will be harassed. Drivers learn of these site specific dynamics of the city from personal experience as well as hearsay, both of which are informed by common-sense perceptions about the city.
  • Regulatory boundaries: Seven-seater auto-rickshaws are allowed to operate only on particular corridors along the ring road. Four-seater auto-rickshaws registered in Ranga Reddy district were not allowed to operate in Hyderabad district until some years ago. These regulatory boundaries limit the free movement of auto-rickshaws across the Greater Hyderabad Metropolitan Region.

To incentivize auto-rickshaw drivers to go to places from where they may not get other fares, the government allows them to charge 50 per cent on top of the regular fare at night time. This is what is referred to in Hyderabad as ‘half return’[v].

Why is it that the drivers go on strikes to increase the minimum meter fares whenever there is an increase in petrol cost but nobody demands a reduction in tariff when there is a reduction in fuel prices?

Firstly, there has not been a major reduction in fuel prices in India in recent years to justify the above question. But seriously, we must first understand how auto-rickshaws run. 4-seater auto-rickshaws in Hyderabad run on liquid petroleum gas (LPG) or compressed natural gas (CNG) since fuel emission regulations were introduced in 2002. Only about 2 – 3 % of vehicles still operate with a petrol fuel kit.[vi]

Like petrol, LPG and CNG prices also keep fluctuating. The resultant costs are borne by individual auto-rickshaw drivers and often impinge upon their daily incomes. The Indian Auto LPG Coalition releases data on fuel prices across cities every month.

Fluctuations in fuel prices depend upon the market and occur several times in a year. So even if they decrease in April, they could rise substantially by the end of the year. A classic case in point was reported by The New Indian Express early last year. Increments in meter fare on the other hand are nominal, subject to governmental regulation and occur, as evidenced in government orders (GOs), only once every two years. These fare revisions aren’t necessarily associated with changes in fuel price. Therefore, to argue for a decrease in meter fare with decrease in fuel costs without taking into consideration the rise in cost of living, or increase in costs of vehicle maintenance, is highly problematic. Fare revisions, are largely politically mediated and are outcomes of strikes and subsequent negotiations between drivers, stakeholders and the government[vii].

Why do auto drivers not turn on the meter and bargain with customers? What are the factors that make an auto driver demand “exorbitant amounts of money”?

Now, one way to explain this is by doing a basic revenue-expense analysis of operating an auto-rickshaw. That was the basic objective of the survey we conducted with 50 auto-rickshaw drivers in different parts of the city in early July 2015. It told us that despite overcharging, the financial burden on individual auto drivers who are primary bread-earners in their family is quite significant and they lack sufficient income given the number of members they have to support. Our survey data suggests that the mean household size is 6 members with 3 children per household which means that on average an auto driver supports a family of 5 other members. So overcharging becomes a strategy to ensure certain basic needs for their dependents beyond the costs of running an auto-rickshaw.

Like any other business, to run an auto-rickshaw there are certain fixed costs and certain variable costs. Fixed costs are those operating expenses that are unavoidable irrespective of the number of services delivered and include costs such as daily rents to the contractor or monthly installments to the financier, expenses on fuel, vehicle maintenance such as repair and spare parts, and costs of obtaining and renewing auto-rickshaw documents. Variable costs on the other hand vary with the number of hours the driver works for, the trips he takes, and the kilometers he travels and so on and includes expenses on fuel, engine oil, daily refreshments and e-challans.

The average revenues, expenses and net incomes, for different categories of drivers have been standardized for a monthly basis and are presented in the following tables.

Notes on Tables:

  • On average an auto driver works for 26 days a month.
  • All values included in the tables are standardized average values

Table 1: For drivers with regular contracts (ratab) – 42% of sample

Type of Driver Daily Revenue Daily Expenditure on – Net Daily Income Cumulative Monthly Income Monthly Income (including revenue from regular contracts) Monthly Expenditure on – Net Monthly Income
Fixed Costs Variable costs Fixed Costs Variable costs
Rent Fuel Oil Chai/ Pani EMI Maintenance Auto docs E – Challans

(14 %)

950 195.7 211 40 81.5 421.5 10959 13929


142.85 260.35 13505.8

(4 %)

500 175 17.5 55 252.5 6565 14000 818.75 315.42 50 12815.8
Owner under EMI

(24 %)

808 215 35 80 478.5 12441 18250 4927.5 897.99 227.99 181.18 12015.32

Table 2: For drivers without regular contracts – 58% of sample

Type of Driver Daily Revenue Daily Expenditure Daily Income Cumulative Monthly Income Monthly Expenditure Net Monthly Income
Fixed costs Variable costs Fixed costs Variable costs
Rent Fuel Oil Chai/ Pani EMI Maintenance Auto Docs E – Challans

(38 %)

982 227. 4 234 35 59.5 416.21 10821.5 198.51 176.58 10446.41

(6 %)

933 233 50 67 593 15418 833.33 266.95 75 14317.72
Owner under EMI

(14 %)

1115 264.5 43 111.5 696.5 18109 5826 857.14 269.88 165.72 10990.26

Overcharging is also an outcome of the geography of the city, gender, age and class of the commuter, and the no of idle kilometers or idle time that the auto has spent. But as these factors are difficult to quantify, they have been left out of this analysis.

[i] In many cases, the owner of the vehicle is the driver himself. But often, the auto-rickshaw is owned by a contractor, who owns several such vehicles. In our investigations we have found that there exist several individual contractors in the city who own even over 200 – 250 auto-rickshaws.

[ii] Several auto drivers establish verbal contracts to provide pick up and drop services to school going children and regular commuters in the city. Such regular contracts are commonly referred to as ratab.

[iii] This leads to wastage of fuel and inflates the driver’s operating costs. Henceforth such wastage of fuel due to travelling empty will be referred to as ‘dead kilometers’ or ‘idle kilometers’

[iv] Meaning he will have to pick up passengers individually and charge per head rates i.e. operate like any other share auto-rickshaw.

[v] The implementation of ‘half return’ as night fare came into effect in 1978. It was in fact the result of several agitations taken out by auto-rickshaw drivers and unions – Interview with leaders of the Telangana Auto Drivers Joint Action Committee (TADJAC) – 3rd March 2015.

[vi] Interview with a union leader from the Indian Federation of Trade Unions (IFTU) – 10th March 2015

[vii] Interview with Joint Transport Commissioner, Regional Transport Authority of Telangana State – 20th April 2015

Post by Ojas Shetty with inputs from the HUL Team.

The auto-rickshaw research was conducted primarily by Ojas Shetty and Harsha Devulapalli.

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