Call to cut expenditure on Indian Postal Service

The continuing deficit in the country’s postal service that hampers its competitiveness calls for collective efforts to reduce the burgeoning expenditure, according to the Post Master General (PMG), M.S. Ramanujam.

Inaugurating a symposium on `Modernisation of postal service: merits and demerits’, organised in connection with the State conference of the Federation of National Postal Organisations (FNPO) here today, Mr. Ramanujam said the postal service could not improve unless constructive efforts were taken to manage the resources of the service.Stating that the Postal Department was in the midst of a crisis, the PMG said that though the India Post was sought to be corporatised by 2007, policy-makers appeared to have a re-thinking on that.

“The general feeling is that the moment to turn the Department into a corporate had not arrived as the corporatisation should be preceded by internal restructuring,” he said. The Government, however, was interested in making the postal service a corporation because of the difficulty to fund the deficit of the service.

The deficit in 2002-2003 was to the tune of Rs. 1,500 crores. The major source of revenue was sale of postal stamps, postal realisation in cash, business post and commission from money orders, he said adding that as much as 80 per cent of the revenue was spent on establishment.

“The deficit is reported to be growing at the rate of 10 per cent per annum, revenue at the rate of two per cent and expenditure at the rate of 12 per cent. Where is the scope for us to compete,” he asked.

While the rural sector was highly subsidised under the universal service obligation, the premium products such as Business Post, Speed Post, ePost, retail post, etc., concentrated in urban areas, were supposed to be run commercially. “Service is often equated with charitable service here,” the PMG said.

Dwelling on the lack of competitiveness in the postal service, Mr. Ramanujam said that though it had been 17 years since the Speed Post was started, it was yet to have even 10 per cent of the market share.

“It is not because of higher tariff rate that we cannot catch up with the courier services. In international Speed Post, our rates are cheaper than international courier services. Still we cannot catch up with them,” he said.

“The problem is that we have not been able to encash the massive public trust that the India Post enjoys.

“We have squandered that trust,” Mr. Ramanujam said.

He also said that the transport companies slowly turning into logistics companies were also emerging as another threat to the department whose parcel market was also steadily declining over the years.

“Modernisation has to come about in terms of increase in your market share,” the PMG said.

He said the postal service was getting increasingly marginalised in urban areas.

Of the 20,000 departmental post offices, 50 per cent of them were Class C and 50 per cent of the Class C post offices had no workload of more than four to five hours, he said.

“The idea is not to close down post offices.

The idea is to manage our resources,” he pointed out.

The FNPO leader, K. Kunhikrishnan, presided over the function.