You opened my eyes, brother!
Thanks for your clarification and to-the-point answer.
Anyway, the problem has been solved. We have adopted Option 1. And, my car would be used.
The following expenses are taken into account for per day travel -
1. Toll charges - Rs. 38
2. Fuel Expense - Rs. 270
In addition to this, Rs. 100 have been accounted (per month) for parking charges (at malls, movies, etc.). This brings a monthly total of Rs. 7600, divided among the other 4. Now, each one (except me) has to pay Rs. ~1900 each month (which is still less than the Rs. ~2600 we had to pay to the cab owner) to me at the start of the month.
I decided to agree at last because I have virtually NO expenses. I don't have to bear fuel costs and toll charges. In case of a fender bender, I would have to take the responsibility though. Maintenance and wear & tear are also my responsibility. My earlier expense used to be Rs. ~100 per day and it is party time for me! As, I will save Rs. ~30000+ per year and tyres would need replacement in 1 year (~16k and service costs of ~6k per year), and the rest of the money is saved. If a fender bender occurs though, I might be in trouble.
PS. Challans and puncture costs are also to be borne by me.
Thanks for pouring in your valuable suggestions. Let us see for how long this arrangement holds up.