Thursday, May 22, 2008

Economics of Cycle-Rickshawaala

Before starting to talk about the economics of cycle rickshawaala, let’s look the evolution of these street entrepreneurs, first. Cycle rickshaw has evolved from being hand pulled to leg operated tri-cycle rickshaw, utilizing technological evolution of cycle chains. Subsequently these cycle-rickshaws are giving ways to auto rickshaws running on petrol/diesel or CNG gases! Going towards the same fate as of hand pulled carts that we now see in old Indian movies only!

As incomes rise, people switch from using the non-polluting, energy-saving bicycles and non-motorized cycle rickshaw to highly polluting motorcycles and three-wheelers, and taxi, resulting in a dramatic increase in air pollution. Despite the environmental benefits of the cycle rickshaw and the economic importance of the industry particularly to low income families, public attitudes towards the cycle rickshaw in India are negative. Negative attitudes about the cycle rickshaw are based on views that their use is exploitative to the driver, the vehicles are not safe, and are backward. Much of the stigma against the vehicle was based on its perception of being 'backward.' In fact, the current vehicles in operation are 'backward,' in the sense that the technology being used was developed more than fifty years ago based on indigenous modifications of a British-designed bicycle, and only very limited modifications have occurred since then.

However, cycle rickshaws offer something which most of the ‘modern’ public transport vehicles do not: energy conservation! People might wonder why would we need energy if not for vehicles. Do you want your fan to be running in the hot Indian summer or not? Well they are not the ones to be blamed it’s the unawareness about the severe shortage of energy options. Countries are struggling to keep their economy growing in the era of energy shortages. Recent spike in global crude oil prices are just one symptom of much worrying phenomena.

Let’s try to look at how can economy benefit from wide usage of cycle and cycle rickshaws. I’ll start with cycle against the motor cycle and alike. Cost saving both for the rider and for the economy due to saving on fuel, steel is obviously the first one. Second benefit would be in form of reduced air and noise pollution. Third one increased employment, wondering how? Well production of one cycle compared to one motor cycle requires 30% more labor! More people employed means more wide distribution of growth, reduction in poverty, increased happiness and last but not the least reduced crime rate.

Moving on to the economics of cycle rickshawaala……