Dear Comrades,
More than a hundred and fifty years old organisation,
India Post is one of the giant departments of the government of India.
With around 155000 post offices it is the biggest postal system in the
world employing close to 500,000 people. A vast majority of the post
offices – approximately 130000 – are located in the country’s rural
recesses and have been instrumental in letting in fresh air into the
hinterland. Most were opened during the period of hectic expansion of
postal facilities commencing around half a century ago under the
department’s commitment to provide to every single person access to
basic postal services in a largely poor country at affordable cost – a
concept that goes by the name of Universal Service Obligation.
Providing a modicum of communicational facilities in
areas that have so far remained untouched by the ever-advancing
communication technology most of the rural post offices are,
nevertheless, a drain on the public exchequer, highly subsidised as they
are, especially those in the backward tribal areas. What is more,
several postal products, such as prepaid envelopes, inland letter cards
and postcards, are sold at much less than their cost-price for the sake
of enabling use by the poor customers, making a further dent in
government finances. Being a political decision one cannot, despite the
illogic, have any quarrel with it, though the conscious policy makes the
department financially sick, more so in the current era of plummeting
mail traffic.
Even less than two decades ago one did not visualise the
then imminent changes in what is now known as hard messaging system. The
digital technology had displayed sufficient progress but none really
expected that it would affect messaging profoundly enough to threaten
the established way people were communicating and doing business. If it
was so in the United States and other economically advanced countries,
it was truer in India which was still a laggard in digital technology.
The post offices, the carriers of hard messages – conventionally called
mail – were then very much in the business of receiving, processing,
transporting and delivering them all over the world. Almost all
industrialised countries were investing even at that time in advanced
technology, with the Japanese system using the optical character readers
to sort pre-coded mail. In 1994-95, India Post was, belatedly, in the
process of upgrading its mail processing facility at Chennai by
installing sorting machines at the Airport to give up the manual system
in order to speed up sorting and transmission. Similar action was
contemplated in Kolkata, Mumbai already having a mechanised sorting
system installed at the Santa Cruz air terminal.
The Post Office is practically nothing minus its mails,
which despite its various other functions, is at the core of its
business model; its unrelenting efforts to reach the received mail
matter to the addressee in the quickest possible time was its core
competence. That came under attack from what was yet an unlikely source.
While couriers, legal and illegal, were nibbling away at its business,
the Post Office, as a more-than-100-year-old government department, was a
giant amongst dwarfs and hence did not have anything to fear from them.
That the strides made with such great rapidity by the digital
communication technology, particularly in a country that even in the
closing years of the last century was not tech-savvy, would impinge on
its core business was not anticipated by even the prophets of doom.
None, curiously, saw the writing on the wall. And, yet slowly but
inexorably that started happening.
The country saw convergence of IT and telecommunications
with the help of the World Wide Web that acted as a midwife to an era of
instant communications. To start with, it was electronic mail – e-mail
or Email in common parlance – by which one could exchange messages
containing text, images, and videos with multiple addresses. While
e-mail was initially restricted only to those who had computers, either
personal or in the office or in cyber cafes that proliferated, the cell
phone put the means of instant communication into the hands of those who
had just a pocket-sized handset. And, India has their owners in
millions (850 million, to be more precise) and is still counting. It put
in their hands the power of communicating and, in the new lingo,
texting to all and sundry having a handset regardless of where one
happened to be – in an urban centre or a remote village. With the advent
of “smartphones”, technology put virtually a portable computer in the
hands of the people with multimedia facility of sending and receiving
e-mails and conversing over long distances. Once “cyberspace” became the
medium of effective communication with the facility of reducing the
message into a “hard copy” the conventional messaging had to take a hit.
And it did. The volume of mail traffic in India fell to
6,677.18 million pieces in 2006-07 from the figure of 15,749.30 million
in 1997-98 – a hit of severe proportions. Internationally too, there are
clear signs of the Internet eating into postal systems. Developed
economies, in particular, saw postal businesses slump and they slumped
further with the onset of the 2008 recession. Statistics provided by the
Universal Postal Union (UPU) show that between 2008 and 2009 domestic
mail volumes were globally down 12 per cent. Obviously, the World Wide
Web had a worldwide impact and India was not alone in losing its “bread
& butter” business. Its mail volumes dried up making it somewhat of
an insignificant player in the nation’s economy. It had to downsize its
mail establishment by stopping recruitment. Over a period of a decade
and a half the lack of infusion of manpower told on its efficiency. At
many places daily multiple mail deliveries were cut down to one and
employment of casual workers for want of regulars was unable to lift its
sinking image. Whatever mail it received – mostly the documents,
periodicals and other 2nd class stuff – got delayed in
delivery. Corporations, banks and other mailers, quite predictably,
migrated to couriers further impacting the postal traffic.
India Post became a pale and shrinking shadow of itself.
Time was when it was acknowledged as one of the finest departments of
the government of India in so far as its basic services were concerned.
It had a reputation of being straightforward and efficient. Although
utterly unglamorous and working a monopoly in transmission of mail
matter it had that in-built spirit of service to the community. Its
motto was and still is “Service before self”. Its unrelenting efforts to
provide ever-improved services made it a very dependable department.
With all 1st class mails being flown without any surcharge
(not prevalent even in the West) and in-train sorting of letter mail
items in almost all trunk and most branch railway routes the department
developed an unique capacity to reach most of the letters to distant
destinations within 48 hours. Occasionally, letters would reach faster
than the then-prevalent telegrams. No wonder, internationally India Post
collected a fabulous reputation. The Universal Postal Union, the
specialised agency of the United Nations in postal matters, held India
in high esteem. It used many of its officers as consultants in
developing countries under the concept of Technical Cooperation among
Developing Countries (TCDC) so much so that The Statesman Delhi came out
with a feature in early 1980s entitled “Join the Postal Service and see
the world”. The 60s, 70 and 80s were the glorious decades. Later,
unfortunately, the Railways became somewhat difficult. Speeding up the
trains and in order to enhance their passenger carrying capacity it did
away with the coaches in which mail used to be sorted depriving India
Post that edge which had given it its quality. Thereafter, somehow it
was downhill, the new technology giving it, seemingly, a decisive push.
But this does not happen to be the entire story. There
seems to be a silver lining. The same new technology that robbed it off
its business, coupled with the rapid economic growth, is giving rise to
what has been dubbed as exponential growth in the volume in mail matter.
IndiaKnowledge@Wharton, an online resource that offers the latest
business insights, information, and research from a variety of sources,
found to its surprise that Pitney Bowes, the U.S.-based provider of mail
management services, is bullish about India and has established direct
operations in the country – even as official statistics on mail traffic
warned of a downward slide. According to IndiaKnowledge@Wharton, Pitney
Bowes found that though mail volumes were reportedly declining, business
people on the ground felt that it was growing exponentially. “The
country's high GDP growth rate, the rapid increase in cell phone
subscriber-base, statement-based credit and debit card usage, and
computerized billing by utilities were all indicators that mail traffic
was in fact going up, not down.” Only it was not being reported as,
despite the monopoly on mails of certain weight lots of small-scale
couriers were carrying and delivering mail undercutting the department
with impunity. Laws being weak and enforcement non-existent India Post
is up against illegal competition. Obviously, the need of the hour is
enactment of stronger laws and their stricter enforcement to channelise
all the mail floating around into the mainstream in a bid to recapture
the vibrancy of yore.
The department’s answer to the couriers, the EMS Speed
Post, has shown enormous promise since it was introduced in 1986. It
handles a billion and three quarters pieces per annum. And yet, a study
undertaken in 2008 has shown that couriers in the country have overtaken
that figure. A Google search indicates the number of reputed couriers
operating in the country. These and thousands of smaller fry tell the
story of the depth of the mail market. As a government department, India
Post is somehow unable to shed that rigidity which hinders the trapping
of all the traffic. Though the heads of circles are of adequately high
status they have no power and authority to orient the service to the
requirements of local needs. A large portion of the traffic is lost to
the private operators for want of local dynamism, inter alia, in making
minor adjustments to tariffs for, for instance, bulk bookings or
need-based deployment of available human resources for providing greater
convenience to customers. The private sector, ever smart and flexible,
has, therefore, the field open to them. The department, however, has
substantially captured the traffic under another premium service called
Business Post that offers value-addition to all business mail in the
shape of collection, insertion, addressing, sealing, franking and
printing through sophisticated digital technology. The service seems to
be doing better than Speed Post and earned a hefty amount (Rs.107077.61
lakh against Rs 57827.74 lakh for Speed Post in 2008). Other new
products like Express Post, Retail Post, Satellite Post, etc. have so
far failed to make any impression. Perhaps infusion of local autonomy
and a little dynamism is all that is wanted for the Post Office to
thrive once again in its mail business.
Modernisation and computerisation is underway in a big
way through the Project Arrow to meet the challenges of developments
that overtook it a couple of decades back. Regardless of the belated
start, mostly because of financial stress, computerised post offices
hold out a promise of bridging the budgetary gap, enabling, as it will,
to more actively participate in national missions, more so in the rural
areas that are now throbbing with developmental activities. It has
already become a conduit for payment of wages under the Mahatma Gandhi
Rural Employment Guarantee Scheme and has been roped in to work with
Unique Identification Authority of India (UIDAI) as also by the Pension
Fund Regulatory and Development Authority (PFRDA) to participate in the
New Pension Scheme. Electronically well-equipped post offices would be
able to render service under them more efficiently. Postal Life
Insurance as also its rural variety are totally computerised. They have
captured a very fair share of the market, especially in rural areas,
thus providing succour to the weaker sections of the population.
Computerisation underway of savings bank operations, a
very major function of the department that it undertakes on behalf of
the Ministry of Finance, will in due course help in its aspirations to
function as a full-fledged banker for the people, offering a new facet
of its activities. Post Office Savings Bank (POSB) is the oldest and the
largest banking institution of the country which has taken its small
savings operations to even the remote villages. With 225 million
accounts and a balance of around Rs.38 trillion POSB has the largest
amount of deposits, contributing in a very positive way towards
maximising the country’s household savings. With the recent hikes in the
rates of interest in the small savings the Bank should get a fillip. If
managed professionally – currently a dire need and will be more so if
bestowed with the responsibility of carrying out full banking functions –
it could become as strong as the Japanese postal bank that happens to
be the world’s largest financial institution. For millions of Japanese
the post office is the only bank and that which corners about 30% of the
country’s household savings. The bid to privatise it shook the Japanese
government. Selling savings and insurance products, the Bank is so
strong that it supports the country’s public finance. One can only hope
that in the immediate future our own postal bank acquires such a
stature, imparting a new personality to the Post Office.
For a total makeover, as desired by the Ministers of
Communications in the past and the present, the department has to
reinvent itself with greater autonomy and professionalism. It is far too
weighed down by the political needs of the government of the day even
despite the disconnect that they have with the current realities. If
subsidies can be cut down or discontinued in other sectors the same
approach could be adopted towards postal business to unshackle the
department and unburden the government. It is high time that the
unremunerative offices are closed down wherever possible and tariffs of
postal products and services are brought around close enough to reflect
their costs in the current highly inflationary economy. This will
release resources for their re-deployment to raise enough revenues to
make the whole gamut of postal operations self-sustaining, maybe even
earn profits, a commercial organisation as it is though fulfilling
social needs. The use of the same technology that hit it is so hard will
go a long way to put it again on firm footing.
For achieving all that, however, what seems to be
necessary is giving the department enough independence or even to
corporatize it with the specific mandate of striking a balance between
rendering service to earn profits and, simultaneously, to fulfil the
needs of progressively scaled-down Universal Service Obligation in view
of the country's now-rising living standards.
Earlier published in "Upkram", a periodical public sector enterprises
http://www.groundreport.com/Business/Reinventing-the-Indian-Post-Office/2944560
