Tuesday, September 27, 2016


The postal service department is in for exciting times. But it needs to revamp functioning if it has to make full use of the new avenues which are opening up 

India Post, with its unparalleled reach and omnipresence, is one of the oldest and most recognisable public agencies in India. This Indian icon, which once faced apparently insurmountable challenges in the form of the mobile revolution, is poised to take up a new role in the financial inclusion mission, with the acquisition of payments banking licence and incorporation of the India Posts Payments Bank. However, the postal department would need a critical overhaul of its staffing and operations to leverage its strengths and become an efficient and modern machine which would not only deliver the new services but also continue to fulfill its traditional role. 

India Post is the largest postal network in the world with over 1.5 lakh post offices, out of which 89 per cent are located in rural areas. A post office is available for every 8,354 citizens, which makes the postal department much larger than any single Union Government agency. The postal department facilitates the traffic of about 602 crore articles every year, along with being the last-mile deliverer for multiple social and financial schemes like the Postal Savings Account, national savings and most recently the Sukanya Samridhi Yojana. In spite of these advantages, the financial and departmental efficiency of the department remains questioned. The Department of Posts has estimated a gross expenditure of Rs 23,500 crore, of which a mere Rs 406 crore was earmarked for capital investments. The department also needs a budgetary support of about Rs 9,000 crore from the exchequer in FY 2016-17 alone. While India Post has in the recent past introduced new initiatives like monetisation of real estate, distribution of financial instruments and digitization which can contribute to increased revenue, costs due to salaries and pensions too have gone up by almost 10 per cent. Though the postal service is not a purely commercial enterprise and is bound by the service obligation of providing facilities to all, it is important that efficiencies be ingrained to get more returns for every rupee invested from the public treasury. 

Some planned investments have the potential to transform the institution, but that needs more focus. Project Arrow, which was initiated to improve the core operations and user experience in post offices, requires further increased investment. The Panchayat Sanchar Sewa Kendra and the franchise scheme aims to extend the postal service network to areas where the postal department could not open outlets but where services are required. The targets and achievements in these verticals have been modest, primarily due to request-based nature of these models. The department needs to proactively identify areas which are eligible under the guidelines for PSSK and franchise and invite individuals to participate in extending the network. Similarly, the tie-up with e-commerce companies for delivering parcels, along with the c ash-on-delivery model (currently operational only in 18 major cities), presents enormous scope for expansion, given the size of the e-commerce market. 

While IT induction and modernisation has been taken forward at the circle/urban post offices, the rural post offices still lack basic IT equipment to create a seamless IT-enabled postal network. The scheme for rural post office connectivity and hardware has been plagued by lack of interest from bidders for execution. Lack of adequate funding for IT modernisation has also led to a long drawn process which is often outpaced by technology. Effective IT modernisation of the the postal department urgently needs renewed focus and a high-powered decision making body. 

In addition, innovative methods and new commercial avenues will have to be explored. Pricing of postal services has always been a trade-off decision between public good and commercial viability. Multiple committees in the past have recommended better pricing mechanisms for postal services. A model of differential pricing with categories of premium/ordinary service with adequate flexibility is the need of the hour for the postal. The Automated Mail Processing Centres (APMCs) have improved the lead time on postal deliveries. However, these are limited to four major cities and handle only about 20 per cent of the registered traffic.

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