The bill with wrong address
One wonders why the India Post Amendment Bill has been mooted. It is just not worth the effort. And it doesn’t matter if the bill gives monopoly rights to the government carrier in a certain weight category, or if it forces private courier companies to charge many times more than India Post. In the first place, this is simply a restrictive trade practice. From a business perspective India Post is simply picking a lemon.
Consider their argument for seeking a monopoly right to carry letters and documents that weigh less than 150 grammes. DoP believes that it alone services the universal service obligation (USO) because it has thousands of branch offices in the rural areas where there are no courier services. It loses Rs 700 crore annually to run these branch offices. In doing so, DoP incurs extensive losses on almost every product that it delivers. So why is it hankering to do more of the loss-making business? If DoP actually gets to implement what it is looking at then its losses will compound.
The situation might actually be worse. This segment has been growing at a slower pace when compared with the express parcels and logistics segment. According to the latest survey conducted by the universal postal union (UPU), almost two thirds of public operators across the globe are anticipating a drop in the proportion of income generated by the letter post, with the proportion of income generated by parcels & logistics and to a lesser extent by postal financial services set to increase accordingly. Compared to express parcels and logistics, projected to grow at almost 25% over the next three years, the letters and post segment is projected to grow at only 8% to 10%. It is intriguing, then, why India Post still wants to create a strong foothold in this segment while its cousins abroad—Deutsche Post and US Postal Service—are focussing largely on parcels & logistics services.
DoP has cited international examples to strengthen its case for retaining exclusive privilege. While most countries allow the official postal department to reserve certain segments of the postal business, the international trend is toward opening up the postal sector. The European Union has made it mandatory for its members to open up the postal sector by 2009. Japan also plans to completely privatise Japan Post, a state-owned entity, by 2007.
