Red-letter day for privatisation
The grand old department of posts and telegraphs will soon be opening its doors to the private sector. For the first time in its century-old history, the postal department is planning to allow private participation in day-to-day core operations.
According to sources, the first privatisation bid of the department will consist of appointing a network of franchisees in more than a dozen catchment areas.
The idea of privatising parts of postal services was moved for the first time by the ministry of communications and information technology around March last year. Following this, a committee was set up to work out various modalities.
After several rounds of discussions, the ministry is now learnt to be keen on adopting franchising as a model. “The government is looking at franchising as an optimum option to expand access to basic postal facilities without increasing dependence on budgetary resources,” according to an India Post official.
The exact franchising model that the government is considering is not known yet. Sources, however, say the department will tie up with multiple franchisees across the country. This will include all kinds of services that a post office provides, including outsourcing services like address verification of banks, financial intermediaries, telecom companies and Internet cafes.
“The department will pursue the option of franchising post office facilities during its next round of expansion. The option will be considered in places where it is not possible to open post offices due to non-fulfilment of norms, or scarcity and high cost of real estate,” the source added.
The model will be mutually viable for both India Post as well as the franchisee, particularly in emerging satellite townships, where there isn’t any physical postal infrastructure at present. For instance, the nearest post office for New Gurgaon, comprising projects by private builders, is more than 5 km away. Similarly, most upcoming SEZs and integrated townships do not have post offices.
According to sources, India Post is aggressively looking at revamping its existing network from 1.55 lakh to 2 lakh in the next couple of years. In this regard, it is also in talks with some other government departments for taking over dysfunctional real estate infrastructure. “For instance, in some rural areas, there are health centres that have closed down. We have requested the health ministry to hand it over to us,” the official said.
Though this will be the maiden private participation in the department’s core business, India Post has in the past ventured into quite a few outsourcing deals with well-known companies in the telecom and financial sectors.
In fact, over the last couple of years, the department has been high on adding more businesses to its fold, which has helped it reduce losses substantially. Sources point out that core businesses such as handling of postal services like letters, parcels etc now form only about 55-60% of the department’s overall business volume.
It has lost ground to private courier players in its core business. Diversified business interests have infused a fresh lease of life to India Post, which was in a seriously ailing state around 2001-02. This is evident from the fact that the department’s losses have come down.
