Making India Post dynamic and profitable

Over the past few years, the Department of Posts and subsequently India Post has been undergoing significant changes, adapting to the new market environment. It is now the turn of the young Minister of State for Communications and IT Jyotiraditya Scindia to do his bit to push this exercise forward.

From a mere postal service that also did some savings banking, India Post has certainly come a long way. It has already celebrated 150 years and wants to catch up with business and technology. So, Mr. Scindia has announced a major restructuring exercise — involving a new logo, training of human resources and a mark up in its infrastructure with the induction of new technologies. McKinsey and Company has been appointed consultant for the project and Ogilvy & Mather will help design the brand.
Wide network

Over the past five years, India Post has evolved. The network of over 1.5 lakh post offices across the country, with over 80 per cent of them in remote and far-flung areas, has also become the retail outlet for a variety of financial instruments and even pre-paid cards of cellular phones. In the season, one can see long-winding queues at post offices — to buy the Public Service Commission application forms of the Central and State governments.

Postal savings, small savings, and the public provident fund have remained a major attraction for sections of the people, over decades. When the private courier service came into the country, the Department of Posts faced a major threat.

But it was soon able to refashion its functioning and introduce both a Speed Post and a Business Post to cater to a special clientele. Unfortunately, some of these services proved costlier than the private operators.

But the time to take the exercise forward has come. While the first priority may be to meet the competition, the consultants are sure to find out that utilising and harnessing the unparalleled network of post offices may be the solution.

A lot of the governments’ services and payments could easily be made through this network, with which the rural people can more easily identify — ultimately, aside from the Village Headman, it may be only the postman or now the post-woman who can easily identify every citizen in his or her area of coverage.
New mechanism

What Mr. Scindia has said is to put in place “a mechanism that is fast to respond, quick to adapt new technology, and flexible in its business approach.” That way, it can combine business with service.
The Centre now loses about Rs. 1,300 crore in postal services, mainly because of the pension costs and universal service obligations.

The challenge now may be to meet those commitments and yet become profitable by diversifying business and generating more revenue.

With the growth of the Internet, e-mails, and e-governance, broadband connectivity at post offices can surely be a means of generating business. If people do not find the time or inclination to write or print personal or business letters any more, they cannot be blamed.

In the age of communication revolution, e-mails and SMS may make such ancient forms of communication irrelevant. So, the post offices have to accept and adapt this method of communication and use it to transfer not just information, but also enable financial transactions — such as an instant money order.

But all this will entail a complete revamp of the organisation and reorientation and training of manpower, not just to equip them for the new tasks on hand, but also to communicate these services effectively to the rural populace they cover. Mr. Scindia plans to cover 50 post offices in phase I, by August 15 this year, and extend it to 500 by the end of the year. The restructuring programme has been christened ‘Project Arrow.’

The objective should be not only to generate revenue or earn profits, but also put the network to efficient use and improve the quality of service to the people at an affordable cost. The Indian Railways may be a good model to emulate and Mr. Scindia can well follow the path that his father took in leading the monolith Railway organisation on its path of modernisation.