According to a recent news report, on June 17, 2017, the Maharashtra State Government ordered an end to the requirement for permits for auto rickshaws and taxis in various cities of the state. The state government terminated the order that exerted limit on the number of vehicles plying on the roads. The cities covered are Mumbai, Pune, Thane, Nashik, Nagpur, Aurangabad and Solapur. This is popularly referred as ‘Permit Raj’ or ‘License Raj’ by local autowalas and taxi drivers in Maharashtra.
“Permit Raj” System Drawbacks
The system for the need for permits was in action since 1997. It was mandatory for owner of a transport vehicle, especially a taxi or an auto to obtain permit. There were more than 60,000 dead permits all over the state affecting the growth of the market as it forced the drivers to recover the high permit cost.
According to report on “Society of Indian Manufactures’ Performance of Auto Industry 2016-17”, the sales of three wheelers declined by 4.93% in April-March 2017, reducing the passengers growth by 8.83% over the same period last year.
R C Maheshwari, president CV business, Bajaj Auto Ltd, was of the opinion that these permits were one of the root causes of corruption in the system. The cost of these permits was around Rs 18,000 and these were being sold at a very high rate of Rs 1 lakh in Pune and other cities in Maharashtra. In Delhi, the permits were sold at Rs. 5 lakh. The permit was given for a period of 5 years and it excluded the actual vehicle price. The pressure to recover this high cost of permit was on the drivers and indirectly it affected the service offered to customers.
Fresh permits were supposed to be issued in the state but there was a delay in the process. Ultimately, as per the new Central Motor Vehicle Act of the central government, the government has now made amendments and scrapped the entire system of issue of permits for autos and taxis in the cities of Maharashtra.
Permits will no longer be obstacles in the market. Removal of the system will help create employment opportunities. The sales of auto rickshaws were directly related to the number of permits issued by every state. With the end of the permit system, there will be more demand for auto rickshaws. This will indirectly help in the petroleum sector because the three-wheeler segment in the country, especially Bajaj Auto, has 96% share in the petrol segment.
To sum up
Gujarat has already ended Permit Raj and Maharashtra government has just announced it. It is time for other state governments to follow suit. Immediately after the announcement in Maharashtra, the Bajaj Auto stock went up by 0.039% to close at 2,820 on the Bombay Stock Exchange on Monday, June 19, 2017.