Friday, March 2, 2012

India Post crying for a makeover

Dear Comrades,

A name in itself, India Post -once seen as a glamorous career is in the need of an urgent makeover, otherwise it will be doomed once for all, as a result of boom in the Information Technology. The department employs hundreds of thousands of employees but the advent of smartphones and emails have turned the department redundant.

MORE THAN a hundred and fifty –year-old organisation, India Post is one of the giant departments of the government of India. With around 155, 000 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 130, 000 – 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 department’s commitment to provide access to basic postal services to every single person in a largely poor country at affordable cost – a concept that goes by the name of Universal Service Obligation.

Providing a modicum of communication 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. Making further dents in the government finances, 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. In the current era of plummeting mail traffic, shall we go ahead with the service, despite the fact that it makes the department financially sick?

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 no one 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.
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