Surge pricing in India

With Delhi implementing Odd/Even scheme surge pricing is in the news in India. The government and some people argue that this is price gouging and should be banned. The free market supporters argue that this is a solution to the problem, and artificially limiting the price hurts supply and hence causes more problems than it solves. Let us try to analyze the issue a little.

The core of Uber’s argument is that surge pricing increases supply and hence the demand would be met. This is true when you have a lot of supply-side elasticity — which Uber’s model in the US gives, where many Uber drivers do it part time, and that is (possibly) one of their options among other no-contract job options they may have. They may do whichever job pays more, and hence surge pricing will attract them to drive a cab and increases the supply.

I am not sure that is the case in India. AFAIK, most (if not all) of the Uber drivers in India are either 1. full-time cab drivers, or 2. drivers working for a taxi-company which owns the car. In case 1, that is their only occupation. So increasing the price does not cause more drivers to emerge (since there are no part-time drivers in India). In either case, there is never a case where some supply is idling because the price is not right. Which means, surge pricing does not really increase the supply, except of course, existing drivers decide to drive longer hours than they normally would, which is not healthy for the drivers and is a risk for the passengers.

Please correct me if there is anything wrong with my analysis.