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India Post: The network serves functions outside the remit of private competition

Ashok Pal Singh
post office, economy

The article, India Post losses touch Rs 15,000 crore in FY 19; Replaces Air India, BSNL as biggest loss- making PSU, published in the Financial Express dated April 15, 2019, incorrectly places the Post Office, a department of the Government of India as a PSU. The balance sheet of the department also shrouds some public policy dilemmas of financing universal service obligations of the government.

Indeed, 90% of the cost of the department is on human resources. In large measure, this stems from the mandate of the postal service in India physical delivery of basic mail and financial services at each and every door step of the country irrespective of cost. This requires maintaining a network of 155,531 post offices of which 1,39,882 are in rural areas, 1,84,417 full time departmental employees and 2,49,000-part time Gramin Dak Sewaks. Interestingly, at 561 Group A officers, the Indian Postal Service has possibly the most compact officialdom for the size of its network and operations.

It is often passed over that a letter is not delivered at the doorstep in every country of the world. For the record in 2017-18, 634.61 crore mail articles and 659 lakh money orders were delivered. Should India discontinue this and call upon people residing in unremunerated service zones to collect their mail from the nearest post office?

As a department of the government of India, the salary of the employees of the post office is on a par with other government employees. Should post office employees be paid lower wages than their counterparts in other departments? A petition was made before the Pay Commission some years ago that the salary of the postman should be on a par with that of the beat constable. The plea was that both did comparable work. Like the beat constable the postman has a defined beat, like the constable s/he is required to patrol the beat every day and like the constable s/he must visit every doorstep on a need basis. The plea was accepted and the postman started getting the same salary as a beat constable. Who is more visible to the residents a postman or the constable, who services them more often, who do we want to pay more or less?

The post office runs arguably the oldest and the largest bank in India which has 37.40 crore accounts with outstanding balance of Rs 722482.08 crore. Unlike a PSU bank, the post office does not retain or leverage these deposits; they are all appropriated by the government. The post office is remunerated on a cost basis. It also provides life insurance to 1.36 crore policy holders. Despite a nationwide banking and insurance network, why do more people still choose to keep deposits with the post office than any other bank in the country? Should this facility be withdrawn to cut costs?

The popular services provided by the post office include delivery of post cards, inland letters, envelopes, parcels, packets, books and newspapers as also financial services like money orders, savings accounts, and life insurance to name a few. Who are the people using these services in the information age with easy access to online communication and financial services? Should these users be made to pay more by rationalising tariff so that the tax payers pay less to subsidise the post office?

In 2015, the C&AG of India carried out a study of courier services in India and found that while private couriers delivered 90% of letters, Speed Post delivered 99% letters entrusted to it. In major cities, the Speed Post delivered 99% of letters in 1-9 days while the private couriers delivered up to 92% in the same period. In a report tabled in the Parliament, the official auditor said the performance of Speed Post was better not only at local and major city levels but also at the village and tehsil levels. There are 19,100 pin codes in India. The private couriers service approximately 6,500. Should the post office also restrict packet and parcel delivery to remunerative ones or serve the entire country, remote and inaccessible areas included?

The post office, from time to time, is assigned work beyond its original remit. At some point, it dispensed quinine to fight malaria, contraceptives to support smaller families. More recently, it hosts Aadhaar enrolment and update centres as well as Pasport Sewa Kendras. During demonetisation, the post office accepted deposits of Rs 45,650 crore and facilitated withdrawals of Rs 12,247 crore. During natural calamities, it acts as the first point of Disaster Management. Should the utility of the post office be judged by its balance sheet only?

Globally, since mid-1980s, there is trend to corporatise the post office, some have even been privatised. Interestingly, the USA, the mecca of capitalism has continued to run the United States Postal Service as a department of the federal government. The strategic reason for doing so is that, at the end of the day, the federal government must have a touch point with the citizen and the post office is the most appropriate agency to maintain such a physicality. Is the post office merely a service provider or also a strategic arm of the Government of India?
It is widely recognised that the post office is the only arm of the government, central or state that is traditionally service- rather than power-oriented. Do we want to cut it to size, do we want to privatise it or corporatise it into a PSU?

As for the flab it carries alongside mail, good wishes, trust and faith, the postal service is happy to receive suggestions to trim them and act upon them. It thanks this newspaper for the time and attention given to it.