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City Rickshaw Barrier to EntryA Case Study of Biratnagar

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Bikalpa-an Alternative

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City Rickshaw Barrier to EntryA Case Study of Biratnagar

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Acknowledgements

This paper, which is part of the larger initiative of ‘Economic freedom to earn a Living’ would not have been possible without inputs from a lot of individuals and organizations. We would like to begin by expressing our sincere gratitude towards Atlas Network for granting the resources which made it possible for us to conduct the study on city-rickshaw’s barrier to economic freedom.

We would like to thank Ms. Astha Joshi for her immense and valuable support for helping us to write and finalize the study. Without her con-sistent support it would have been difficult for us to come up with the complete study. We would also like to acknowledge Ms. Laura Liu, Eco-nomic and Trade Policy Advisor at Atlas Network who provided valu-able insights for both the initial and the final draft of the paper.

We would also like to extend our gratitude to Mr. Sarwagya Raj Pandey for helping us in proof reading and collecting the primary source of data for the study. We heartily thank our enumerators Mr. Suman Rai, and Mr. Punam Giri for their tremendous support in collecting the data from the target respondents.

Our sincere gratitude and acknowledgement goes out to our sample respondents, city rickshaw drivers, city rickshaw dealers, city rickshaw union, Department of Transport Management (Ithari), Traffic Office (Biratnagar), and Biratnagar Sub-Metropolitan for providing their valu-able time, information and insights for the study.

Finally, we would like to thank Mr. Gopal Bhujel and Mr. Gopi Shah for helping us to reach out to the respondents and in arranging the focus group discussion.

We hope that this paper will lend some insights on the issues city-rick-shaws owners and drivers face on a daily basis and their difficulties in earning a living.

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Abbreviations and Acronyms

DoTM Department of Transport Management

EV Electric Vehicle

GoN Government of Nepal

MoPIT Ministry of Physical Planning and Infra- structure

MFIs Micro Financial Institutions

UPT Urban Public Transport

The mentioned amount in this paper is in Nepalese Currency; 1 USD = 107 Nepalese Currency as of December 17, 2015

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Table of Contents

Overview 1

Statement of the issue 2

Methodology 3

Introduction 5

Discussion on e-rickshaw 6

Findings 7

Policy Changes 15

Works Cited 18

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OverviewE-Rickshaw or city-rickshaw or city-safari as they are popularly known are one of the latest entry in the transport system of Nepal. Flexible, environmental friendly and affordable, these e-vehicles have been pro-viding the answer to the connectivity issue mostly in flat terrain areas of Nepal such as Biratnagar, Janakpur, Itahari, Birtamode, Nepaljung, Butwal, Birjung, Dharan, Hetauda and many other cities where they are in use. In these cities, the numbers of registered city-rickshaws is based on a quota system. The Ministry of Physical Planning and Infrastructure (MoPIT) adopted a policy which directed the Department of Transport Management (DoTM) to register these e-rickshaws from its zonal of-fices, and issued permits by fixing certain quotas for the urban centers. It also restricted the vehicles to speed limit of 25 km per hour (Repub-lica, March 31, 2014). Our research is based on the city of Biratnagar, where the quota system permits registration of 300 of these city-rickshaws. The quota allocated may vary from one municipality to other where these e-vehicles ply on. The government’s decision of regulating these city-rickshaws through the quota system has brought about market distortion not only in Birat-nagar but in other cities as well. Market imperfection has created a dis-tortion between the demand of city-rickshaws and their supply which has prevented customers from getting good service and caused diffi-culty for drivers and owners to earn their livelihood.Furthermore, the registration process for these e-vehicles was done un-der the Ha category, i.e. license category for auto rickshaws under the department of transport. In absence of clarification of relevant provi-sions, the registration process is often difficult and costly for e-rickshaw drivers. In addition to this, the rules and regulations that ensure safety of commuters are also not clearly defined. As per the existing guidelines provided, e-rickshaws cannot load more than 5 passengers including the driver. However, the guideline does not provide specific provisions that address the concerns on speed, vehicle specifications, insurance, lane traffic and licensing procedures. All in all, an economic analysis backed policy framework is essential to address the concerns of both e-rickshaw drivers and its counterparts. This paper aims at highlighting the fact that e-rickshaws need to be integrated into the economic and social system at the policy and infrastructural level, and acknowledged as a legitimate public transport feeder service. In or-der to do so, the government needs to deregulate the quota system.

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Statement of the IssueBiratnagar Sub-Metropolitan Office issued a quota system for 300 e-rickshaws to ply on its streets. However, in reality the estimated num-bers of e-rickshaws plying on the street are around 500 to 600, which means 200-300 of these e-rickshaws are “illegal” and part of the grey economy. The municipality has till date not justified the quota limit of 300 for these e-rickshaws which is significantly lower than market de-mand (clearly seen with the number of e-rickshaws plying on the street).

The concerned authorities strictly restricted the registrations of further e-rickshaw limiting the quota to 300. However selling and buying of these rickshaws are still going on. The quota system is creating hurdles to these low incomes generating people who are buying these with an aspiration to earn their livelihood. Many of these peoples who have al-ready invested in these vehicles are not allowed to operate and hence their investment has become useless. Even if they decided to ply on the streets, the existing policy renders their activities as unlawful and pe-nalizes them. In a democratic country like Nepal, it is ironic to see such policies being implemented that prevent individuals from trying to earn from their investments.

Furthermore the registration process of these e-vehicles remains un-clear especially in terms of their category and safety regulations. The MoPIT decision allows the e-rickshaws to operate on the streets once they ensure road worthiness and pass the required driving test conduct-ed by government technicians. However, in reality, the category of these e-vehicle and the guidelines regarding their licensing examination are largely unclear. Although these e-rickshaws have been registered under the Ha category, i.e. Light motor vehicles- auto rickshaw, they do not fall under this category as they are not motor-powered vehicles but electri-cal vehicles (that runs on battery power).

Hence, to address these problems Policies need to be drafted that ad-dresses the following issues of e-rickshaws:

• Economic and legal justification in policy framework for e- rickshaws industry

• Roles and responsibilities of the stake holders involved• Registration procedures• Infrastructural changes in the urban cities.• Safety standards and penalty clauses.

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Methodology

The data used in this research is Primary data. Primary data was col-lected through randomly selected structured questionnaire survey and interviews with stakeholders.

Survey sample

We used snow-balling and random sampling method to identify our survey respondent. We requested the e-rickshaw dealers to provide us with the name list of the e-rickshaw drivers they had in their database. We also went to one of the main street junctions in Biratnagar- Mahen-dra Chowk and randomly selected e-rickshaw drivers on the street for our survey. The survey was carried out by five enumerators.

The questionnaire included of mostly close-ended questions, except a few open-ended one. We divided the survey questions in four parts to glean information as per the findings of initial interviews with govern-ment officials, e-rickshaw dealers and e-rickshaw drivers. The first part was to identify the nature of the ownership, the second to identify the ease of access to finance, third regarding the registration process, and finally the difficulties faced by the e-rickshaw due to legality issues.

In order to understand the issue better, we also held focus group dis-cussion between concerned e-rickshaw dealers, e-rickshaw drivers. To understand the legal side of the issue we interviewed officials from the Municipality, the Department of Transport, and Nepal Traffic Police.

In order to understand the demand side, we designed a questionnaire for consumers. Random sampling was used for this. The questions for the consumers were mostly close-ended. We chose Mahendra Chowk, one of the busiest junctions for consumer survey.

After completing the data collection, each questionnaire was edited to maintain high quality of data. IBM SPSS 20.0 was used for data entry and analysis. Simple descriptive analysis is used on the data. The types of analysis predominantly used were frequency/ percentage tables, cross-tabulation.

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Limitations:

Some of the limitations of our survey are as follows-

1. Our study was only focused in Biratnagar and did not include other areas where e-rickshaws are in use.

2. Some of the respondents did not wish to answer some ques-tions regarding income, problem they faced on the road, due to which we had few missing data in our survey.

3. The total number of e-rickshaws plying on the street is still not clear. Estimates are around 500 to 600 out of which 300 are reg-istered. Assuming the number to be 500 we surveyed 10% of the e-rickshaw driver.

4. For our consumer survey, we surveyed 50 people based on ran-dom selection method at Mahendra Chowk, one of the busiest streets of Biratnagar.

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Introduction:

E-rickshaw in recent years has become a choice of commute due to its advantages (affordability, ease of commute and environmental friendly nature) in many developing countries around the world including Thai-land, Egypt, and India. These vehicles known by many names are used in Nepal’s Terai belt which has flat lands. But they are also operating in few hilly regions (comparatively elevated areas) of Nepal namely Dharan and Hetauda. Ever since their entry into the market, e-rick-shaws have received both applauds and criticisms. They also face lot of oppositions from other public vehicles who believe that e-rickshaws are stealing away their customers. A number of protests have taken place in various cities by micro and bus drivers in order to drive them out of the market. The Municipality of Biratnagar had decided to allow the rickshaws to run on ten routes in the inner city. However, the rules do not allow them to ply on the highway route and pick-up passengers, but the rules have not been strictly implemented yet. Fares are often decided on a word to mouth agreement by the dealers and drivers as per the route. At this point, entry of e-rickshaw as an economic and environ-mental friendly feeder service to the main public transportation system remains challenging. Not having proper policy framework on e-rick-shaw has made people suffer in many different ways who want to pursue their livelihood through these means. 1100 e-rickshaw registration in Koshi (Personal communication, Bishnu Poudel, December 21, 2015) and 1000 in Mechi Zone (Personal communication, Janardan Acharya, December 21, 2015) suggest that despite the existing challenge, number of e-rickshaw is in increasing order and there is more market demand for it (These numbers does not include the unregistered rickshaw, which exists in large number in the market place).

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Discussion on e-rickshaw:

Informal transport services, according to Cervero and Golub (2007), are described as vehicles that include three wheelers, minibuses, taxi and such that operate without official endorsements, and mostly owned by individuals. They are mostly para-transits that provide door to door services, picking up passengers in undesignated spots largely in urban areas. Informal transport services are also defined as a system that is independent from the formal system which often do not have rules and regulations clearly defined and implemented in regards to license, ve-hicle registration, traffic, and technical standards to ensure passengers safety (TERI, 2012). Intermediate-para-transit vehicles does not always fall under informal transport service as para-transit vehicles in coun-tries like India have regulations in terms of vehicle registration, tariffs, as well as safety and emission regulations. However, this para-transit service is flexible in terms of routes as it does not have designated routes (Workshop on Informal Transport, India, 2012).

In developing countries, e-rickshaws play an important role in urban development. They act as para-transit vehicles which connect people who live in relatively cheaper suburban areas from their homes to the main public transport lines or cities. They are considered a medium that helps to connect those who are away from the main public transport services which would take them to the cities to conduct any business or leisure activities. Meanwhile, these informal services are also found to be an attractive employment opportunity for low-skilled and migrant workers in many developing cities (Cervero and Golub, 2007).

According to studies (Balassiano, 1998; Torres, 1998; Cervero, 2000) the prevalence of these informal transport services are due to poor qual-ity of public transit service, inefficient route design of the main lines, poor services with regard to comfort and safety, as well as the increasing fares and waiting time for passengers traveling via public vehicle servic-es. Para-transit smaller vehicles such as auto rickshaws offer passengers experience far better than traditional transport services such as easier access, privacy, comfortable sitting room, and convenience to drivers and riders in terms of pick up spot and the ability to navigate through heavy traffic. (Cervero and Golub, 2007; CIVITAS 2010). However, e-

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rickshaw as a kind of informal transport service lacks official endorse-ments and remains uninsured in many ways (Cervero and Golub, 2007). This challenge is posited by Hernando De Soto who also points out how productivity of the informal sector was often undermined by a lack of property right, poor access to finance and governmental inter-ventions (de Soto, 2000).

According to Hall and Sobel (2006) (as cited in Sobel, Clark and Lee, 2007) government policy impact entrepreneurship in two ways- The first are the inputs that go into making of the entrepreneurial process such as education, venture capitalist and such. This first channel is also impacted by targeted tax relief/ government subsidies or regulations. The second is the impact of policy on the institutional structure that determines the “incentive and rewards structure faced by economic agents within the economy such as security of private property rights, constraints of government action, legal and the reliance on unregulated market price signals and freedom of exchange.”

Findings

Biratnagar Sub- Metropolitan city lies in Morang District of Koshi zone in the Eastern Development region of Nepal. It is the second largest city of Nepal which covers an area of 59.9 square kilometers. The sub-metropolitan city is divided into 22 wards. Urban Passenger Transport (UPT) is mostly provided by tempos, (three wheelers) that operate in three recognized routes, minibuses that provide transport from Birat-nagar’s Centre to the Indian Border, and finally pedal-rickshaws which are in huge number. Apart from these, mini-buses which are unauthor-ized UPT provide “taxi-style” services. Transport services in Biratnagar have serious deficiencies with the lack of designated parking spaces, less number of UPT especially microbuses and tempo causing overcrowd-ing. Although rickshaws are readily available, they are considerably ex-pensive, with fares being decided through bargaining (ADB, 2014).

Demographics – Age and Educational Level

Of all the people we have surveyed, the median age was found to be 32.4, with the youngest being at 17 and the eldest at 60. Out of the total respondents, a large number had attained education level from grade 6

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to 8 and 8 to 10. Only 7 percent had a high school degree or equivalent. Meanwhile, 5.4% percent had never attended school and the rest had only attained primary education.

Ownership Status –Owned Property versus Rental Property

Out of the all drivers surveyed, 84.62% claimed their rickshaws as owned properties compared to 15.38% who claim to have rented their vehicles. The data shows that drivers have a high willingness to purchase their city-rickshaws, which indicates a high market demand for these three wheeler e-vehicles.

LegalityAccording to our survey sample, out of the total number of city-rick-shaw owners, 67.3% were registered and 17.3% was unregistered. Of the ones who rented the city-rickshaws, 13.5% drove registered rick-shaws 1.9% of the total city-rickshaw renters drove un-registered city-rickshaws. Due to the Municipality decision to give registration to 300 city-rickshaws, about 300 other city-rickshaw drivers are forced to be part of the grey economy.

Due to their illegal nature of operation, they are often subject to higher risks regarding road safety and losing the ownership of city- rickshaws. Furthermore, their illegal status makes them vulnerable to attacks such

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as extortions. Legality also determines how much a city-rickshaw driver can earn. Having the right to travel on the main road allows them to get more passengers. Furthermore, the illegal nature means the higher chances of being fined if caught plying on the main streets.

Distortion in Market Equilibrium by route permits and regis-tration hurdlesRegulating the market through the quota system creates distortions in the market equilibrium between market demand and supply. Due to the quota system, many dealers are registering the city-rickshaws from cit-ies that are nearby Biratnagar like Rangeli and Duhabi. When these city-rickshaw drivers are caught plying on the streets by the Traffic police, they are fined because according to the Traffic Police they cannot pick passengers outside their jurisdictions. However, this does not apply to pedal rickshaws that are plying on Biratnagar’s streets.

Market distortion of market equilibrium was best illustrated in the case of the “Law of unintended consequences”. Unlike what Adam Smith claimed invisible hand as a guide to market equilibrium between the demand and supply, the ‘Law of unintended consequence’ distorts con-sumer behavior and causes harms instead of strengthening the economy as the government intended to do. (Norton, 2007).

Another example of “Law of unintended consequences” has been dem-onstrated by the case study of the auto-rickshaw of Chennai City (CI-VITAS, 2010). Various laws issued by the Government of Chennai, in-cluding a ban on issuance of permits for new 3-seaters auto-rickshaw, and auto-rickshaws to ply on certain streets have seriously distorted the market equilibrium. These bans were carried out to alleviate road con-gestion. Apart from the ban, the Government of Tamil Nadu has al-lowed the registration of 5+1 seater Vikram autorickshaws which does little to improve the situation.

The city-rickshaws in Biratnagar are allowed to ply on 10 routes which do not include the highway. As per the rule they can pick passengers from Point A of these main roads and drop them off at the highway (Point B). However, according to the rule they cannot carry passengers from the highway (Point B) to another Point A. If they are caught by the traffic police, they are liable to pay fines. This rule reduces the ef-ficient utilization of the city-rickshaws creating “Dead Headings”. Dead

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headings incur additional cost of transportation to the driver and due to this city-rickshaw drivers could refuse service to the customers, or even if they do, they could pass on the additional cost to the passenger by charging them more money, i.e. making them pay for the empty seats too. This has been noted in the study conducted by De Vany 1977 (as cit-ed in the report by the Federal Trade Commission Bureau of Econom-ics on “An Economic Analysis of Taxicab Regulation, 1984) which was analyzed the tax-cab behavior in metropolitan cities of the United States where taxicab licensing prevented drivers from picking passengers from outside their jurisdiction which meant the taxi’s utilization in terms of their occupancy per mile decreased. These metropolitan included cit-ies “fragmented into independent political jurisdiction” and companies that had exclusive franchise especially at the airports.

One of the reasons given by the authorities for not allowing city-rick-shaws to pick passengers on the highway includes the possibility of ac-cidents as well as higher chances of drivers and passengers sustaining serious injuries compared to heavy vehicles. This argument could be reasoned if we look at the haphazard parking of the city-rickshaws on the main highways during the rush hour, where city-rickshaw might stop wherever the passengers stop them, then that could cause acci-dents. However, if there is proper city-rickshaw stands allocated in the highway route, this could be avoided.

Regulatory hurdles over registration do not only affect the quality of service, it also creates a space for rent seeking. With regulations over registration, the price of City-rickshaws would increase more than their actual value. It may also encourage the existing owners to create a mo-nopoly, which will ultimately leave the consumers without any other choice and force them to pay higher cost than in the competitive mar-ket. With limited registration quota, the possibility of rent-seeking from officials and dealers would increase. Also the cost of registration would become higher from a new comer’s prospective who are seeking to earn a living through this trade.

The fares of the city-rickshaws has not been mandated by the govern-ment but is based on an unwritten agreement between the city-rickshaw dealers and drivers. However, due to the limited registered city-rick-shaw, city-rickshaw owners, or dealers could come together to create a lucrative franchise. With limited number of registered city-rickshaws

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that can ply on the main street, creating a franchise under a firm would mean creating a space for monopoly. This would mean that the firms demand will not be elastic to the price.

Drivers would have the opportunity to quote a high rate for each ride. Profit per driver would increase, given the small number of registered city-rickshaws. They could also deny service to the customers if the sum the customer offers does not meet their expectations. City-rickshaw owners who rent out their vehicle could increase the daily rent charge for drivers too. Since, the rent is not done on a written contract basis; owners can decide to rent it out to the driver who is willing to pay them more. This means the drivers who rent out city-rickshaws would have added pressure to ensure they get more customers on a daily basis.

Access to FinanceFrom our survey, we found out that the city-rickshaw owners had got loans and finance from multiple sources, i.e. friends and family, savings, banks etc. From the total survey respondents, 38.6% got funds from friends and relatives, 67.4% accessed funds from financial institution, 9.3% from their savings and 18.2% of the total respondent stated other means of funding, which according to the survey comprised of gold.

Of the total survey respondents who had accessed loans from financial institutions, 71.4% took out loans from cooperatives, 14.3% from micro financial institution, 10.7% from Development Bank and 3.6% from Ag-riculture Development Bank.

One of the reason stated by the respondents that made it difficult for them to approach financial institutions, especially bigger banks was the amount of paper work required, which included valuation, as well as placement of collateral, time period, and the uncertainty of whether their loans would be approved.

This is also reported in the report “State of Microfinance in Nepal,” by Shankar Man Shrestha for the Institute of Microfinance (2004) which highlights the role of micro financial institutions (MFIs) in Nepal for poverty alleviation. The microfinance consists of formal and informal sector with the formal comprising of the commercial, development, sav-ing and cooperatives, SFCL and NGOs. Majority of the loans, i.e. nearly three quarters are from the informal sector. The main reasons for the majority of the people’s choice for acquiring loans from the informal

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sector despite the high interest rate is reported to be due to the short period for loan delivery, the ease of access and the flexibility with ap-proval on the maximum amount a person is able to receive. The report states that despite the claims by the bureaucracy and elites circles which states that MFI’S charge higher loans to the poor, the poor people seek MFI’s service due to the lack of collateral required for the loan and the less lengthy formality, i.e. paperwork.

However, our survey report found that a large percentage of people who had taken loans from cooperative had to place collateral. Furthermore, the need to place collateral was seen higher in the survey respondents, i.e. 51.7% who had taken loans from cooperatives with loan maturity of 1 to 2 years. But our interviews with city-rickshaw owners did recon-firm the fact that most of them had approached MFI’s due to the less paperwork, i.e. property valuation, bank statement, required by them to access the loans.

Out of the total respondents who had taken loan from cooperatives, 52.9% stated having put up their private property and 11.8% stated that they put their e-rickshaw as collateral. Of the ones who had taken out loans from Micro finance, 17.6% placed their private property as collat-eral and 5.9% deposited their belongings such as gold and silver. Mean-while 5.9% each of the respondent who had taken out loans from Devel-opment bank and Agricultural Development bank placed their private property as collateral. 82.4% of the total respondents who had taken out loans from various financial institutions put up their private property as collateral.Where did you get the loan from?(financial institution) * If yes what did you place

as collateral? Cross tabulationIf yes what did you place as

collateral?TotalPrivate

propertyCity

Rickshaw Other

Where did you get the loan f r o m ? ( f i n a n c i a l institution)

Cooperative 52.9% 11.8% .0% 64.7%Micro Financial institutes and others

17.6% .0% 5.9% 23.5%

Development Bank 5.9% .0% .0% 5.9%Agriculture Development Bank 5.9% .0% .0% 5.9%

Total 82.4% 11.8% 5.9% 100.0%Table 1: Total percentage of City-rickshaw owners (both registered and un-registered) placement of collateral for loans from financial institutions.

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Licensing procedureCity-rickshaws have been registered under auto- rickshaw, a light motor vehicle category which also includes three wheelers such as tempo. Un-der this, City Rickshaw registration has been done under Ha (Public). The table illustrates the category.

Zonal code Private Public Governmental Corporation TouristAs mentioned in Clause (a) Sa Ha Ksha Tra Pa

Tra Ksha Ha Sa Ya Ksha Tra Sa Ha Ya Ha Sa Tra Ksha Pa(Source: Motor Vehicles and Transport Management Rules, 2054(1997)Table 2: Light motor vehicles Registration Categories (three wheelers such as tempo and auto rick-shaw)

However, electric-rickshaws are e-vehicles for which the government does not have a separate provision. In order to start its licensing proce-dure, proper guidelines regarding the license test needs to be devised, according to Raghubar Shah, head of the License office Biratnagar Ko-shi, at Itahari (Makalu Television, 2015). In absence of proper guidelines for registration and licensing procedures, city-rickshaw drivers will have difficulty in ensuring their legal status. Furthermore, they are not guar-anteed property rights either. According to Shah, in case of accidents or such, even if the city-rickshaws have bought insurance policies from the insurance company, insurance companies will not release the amount until unless the city-rickshaw driver can provide a license.

A few city- rickshaw drivers from our survey had stated purchasing in-surance; the procedures facilitated by the dealers they bought their city-rickshaw from. Moreover, without a license for e-vehicle, if in case they ever get into an accident resulting in someone’s death, the city-rickshaw driver can get charged with manslaughter with a 20 years jail sentence (Personal Interview, Raghuvar Shah, July 7, 2015). This further pulls the city-rickshaw driver into the vicious circle of constant battle for the legal nature of their work.

EarningsOut of the total city-rickshaw owner, 16% each stated that they earned Rs 300-600, and Rs 600-900. 28% stated that they earned between Rs 900-1200 and 20% stated that they earned between Rs 1200-1500.

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On the other hand, only 2% drivers who rented city-rickshaw stated that they earned more than Rs 1500. 6% stated that they earned be-tween1200-1500. 4% stated their earnings to be Rs 900-1200 and 2% each stated their earnings to be Rs 300-600 and Rs 600-900. The findings pointed out that ownership increased the possibility of higher earnings. Do you ride your own rickshaw or rent one? * How much do you earn on a daily basis? Cross tabulation

How much do you earn on a daily basis?Total

300-600 600-900 900-1200 1200-1500 1500 and more

Do you ride your own rickshaw or rent one? (own) 16.0% 16.0% 28.0% 20.0% 4.0% 84.0%

(Rent) 2.0% 2.0% 4.0% 6.0% 2.0% 16.0%Total 18.0% 18.0% 32.0% 26.0% 6.0% 100.0%

Table 3: Earning and Ownership.

Legality also affected the earning of the city-rickshaw drivers. City-rick-shaw drivers who were registered could ply on the main street and their earnings could reach up to Rs 1500 or more. Meanwhile, un-registered drivers earnings were limited to Rs 900.

The survey also found that a large majority of city-rickshaw owners and renters were dependent on their daily earnings to run their household. 78.4% out of the total 84.62% of the total city-rickshaw owners and 13.7% out of the 15.38% city-rickshaw renters of the survey respon-dent stated ‘Yes’ to their income being used to run the household. These numbers shows the need to bring about appropriate policy changes and deregulating the quota system to ensure the right of city-rickshaw own-ers and drivers to earn their living.

Fig2: Ownership and Spending

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Difficulties faced by City-Rickshaw drivers

The confusion in their legal stature and definition has created many hur-dles for this e-vehicle. According to the survey a large majority of city rickshaw drivers both registered and on-test, respondents mentioned how they faced problems from the traffic police. The problems faced by the city-rickshaw drivers are-

• As they have not been designated proper stops, stopping at a point and loading passenger makes them liable for fines.

• The addition of one more passenger makes them liable for fines.• Unregistered (on-test) vehicles are not allowed to ply on the street.

Doing so would mean a fine of Rs 1000.

To avoid such confusion, the government needs to assign these vehicles under the e-vehicle category. Plus, setting safety standards, baggage lim-it, checking roadworthiness and such would help in ensuring that these e-vehicles will be integrated to the feeder service effectively.

Policy changes

Legal Status : Provisions in Transport Laws for e-rickshaw has to be introduced as an e-vehicle. Battery powered 125 Ampere battery and a minimum 1000 watt motor to be governed by Municipal Corporation. There is a need for licensing procedure under e-vehicle which guaran-tees their access to insurance policy which would strengthen their prop-erty rights. As of now, e-rickshaw drivers do not have license due to which if they are involved in any accidents as such even if they have an insurance policy, they cannot claim it since insurance companies do not release the insurance amount without a valid license. This means that if they get into any unfortunate accident, they would have to arrange money for repairs and compensation to third party by themselves. In many cases that would mean seeking out loans from loan sharks at a higher interest rate, or through MFI’s where the interest rate is high.

Finance : Provisions for financing e-rickshaws should be eased through appropriate processes. Minimal interest rates with ease of formalities should be enabled for supporting e-rickshaw drivers and owners. Ease

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of access to finance should be enable those city-rickshaw drivers who rent them to become owners’ themselves. With the government’s help, customized finance schemes for these e-rickshaws can be developed which would promote electric vehicles. Furthermore, policy needs to encourage financial operation through a regulated market action where all the stakeholders involved, i.e. suppliers, owners and financial institu-tions need to take an active interest to develop the market.

Operation : The Biratnagar city is fast expanding. This is an opportu-nity for such environment friendly vehicles to become better alterna-tives as they are ecologically and economically beneficial compared to petroleum driven vehicles. As of now, the Municipality of Biratnagar has allocated 10 permit routes for these e-rickshaws. These mostly fall in the main road. Given its flexible nature, there is no doubt that they can be used as a feeder service in areas far from the main road. Fur-thermore, they can be answer to the last mile connectivity issue from work, home, and the market place. It can connect passengers from areas that are not connected with the main transport mode. Considering the current scenario, e-rickshaw should be allowed to ply on the highway routes, since the present route allocated to these vehicles are inadequate and the current rules excludes the e-rickshaws from using the highway which runs through the center of the city. Moreover these are the routes where these e-rickshaws pick up most of the passengers. So, not allow-ing them to operate on these routes will cause them to lose most of their passengers. One of the reasons given by the authorities for not allowing city-rickshaws to pick passengers on the highway includes the possi-bility of accidents as well as higher chances of drivers and passengers sustaining serious injuries compared to heavy vehicles. But if there is proper allocation of e-rickshaw stands, dedicated stops and traffic man-agement, this problem can be resolved. Moreover speeding up the ongo-ing constructions of highway, inner and alternative routes to highways will greatly ease the operation of these vehicles. This will also ease up traffic congestion and address future concerns

Registration : Registration process should be simplified with a one-window approach, reducing the number of line agencies involved. Since the unregistered low income e-rickshaw owners have already invested in e-rickshaw, Municipal authorities should open the registration pro-

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cess to the unregistered e-rickshaw and allow them to be the part of the formal economy. The present policy of introducing quotas systems has had bad repercussions in the overall market as they have distorted the demand and supply chain. Hence the government should abolish the quota system and allow the market to function based on the demand-supply chain.

Quality of Service : Regulations that concerns the drivers qualifica-tion, (age limit, health, criminal records etc) vehicle safety as well as insurance coverage would increase the quality of the city-rickshaw ser-vice.

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Works CitedAsian Development Bank (ADB). (2014). Nepal Urban Trans-

port Planning and Management. Final Report Vol-1: Urban Transport Strategy and Policy Brief. Retrieved from: http://www.adb.org/sites/default/files/project-document/159816/44238-012-tacr.pdf

Balassiano, R. (1998). Van transportation—what should be con-sidered during the process of regulation. (Transporte Por Vans-O Que Considerar No Processo De Regulamentac-a˜ o?). Transportes 4, 87–105.

Cervero, R.( 2000). Informal Transport in the Developing World. United Nations Commission on Human Settlements, Nai-robi, Kenya.

Bishnu Poudel. Personal Communication. December 21, 2015

Janardhan Adhikari. Personal Communication. December 21, 2015.

Cervero, Robert., and Golub, Aaron. (2007). Informal Transport: A Global Perspective. Elsevier.Transport Policy 14 (2007) 445–457.

Civitas Consultancies Private Limited (CIVITAS). ( 2010). Study on Autorickshaw sector in Chennai. Chennai:Sukanya Garg, Archana Sudheer Gayen, Prasant Jena, Gincy Susan Jose, Lakshmi Ramamurthy, Jiyad K M ,D Dhanuraj.

De Soto, H. (2000). The mystery of capital: Why capitalism tri-umphs in the west and fails everywhere else. New York: Basic Books

Federal Trade Commission.(1984). An Economic Analysis of Taxicab Regulations. Washington DC: Bureau of Economics of the Federal Trade Commission.

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Makalu Telvision. (10 July 2015).Sarwazanik Sunwai(Public Hearing) on “City Rickshaw as a Problem or Solution?”.Bi-ratnagar: Makalu Television.

Norton, Rob.(2007). The Concise Encylopedia of Economics, Chapter: Unintended Consequences. Second Edition. Re-trieved from: http://www.econlib.org/library/Enc/Unin-tendedConsequences.html

Personal Interview. Raghuvar Shah. July 7, 2015.

Republica. (2014, April 1). Govt to allow electric rickshaws in urban centers. Republica. Retrieved from: http://myrepub-lica.com/portal/index.php?action=news_details&news_id=71965#sthash.jsDyV5Ed.dpuf

Shrestha, Shankar Man.( 2004). State of Microfinance in Nepal. Retrieved from: http://www.inm.org.bd/publication/state_of_micro/Nepal.pdf

Sobel, Russell S., Clark, J. R., & Lee, Dwight R.(2007). Freedom, barriers to entry, entrepreneurship, and economic progress. Springer, Rev Austrian Econ, 20:221–236. DOI 10.1007/s11138-007-0023-3.

TERI. (2012).Workshop on informal transport:”Mobility for poor: Improving informal Transport.” 3 to 5 October, Maple Hall, India Habitat Centre, New Delhi: Teri, Energy and Resource Institute.

Torres, A. (1998). Policies to control informal transport—the Rio de Janeiro case. In: Freeman, P., Jamet, C. (Eds.), Urban Transport Policy: A Sustainable Development Tool. Pro-ceedings of the International Conference CODATU VIII, Cape Town, South Africa, Balkema, Rotterdam

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Bikalpa-an AlternativeMahendra Margh, House no 4, Mahendra Chowk, Biratnagar-15,

Morang, NepalEmail: bikalpabrt@gmail.com

Website: www.bikalpa.net

Bikalpa-an Alternative is a public policy think tank, working on a

grassroots seeks to develop the culture that favors individual and

economic freedom in spears of personal life and policy issues. It

strives to do so through research, education and civic

engagements.

Vision: Bikalpa-an Alternative envisions a Nepal where rule of law

is supreme and citizens can exercise their natural rights to life,

liberty and property in a vibrant and free society.

Mission: To defend the fundamental rights of the citizens, spread

the idea of freedom and prosperity through research, education and

public engagement to create a free and open society which is based

on democratic principal.

Bikalpa-an Alternative