Consultants to give India Post a makeover
Bangladesh, August 21:
The world’s biggest postal network, India Post, has sought the help of global consultants to spruce up the old-fashioned image of the 150-year-old organisation and become more competitive. R Ganesan, secretary of the Department of Posts, said US-based firm KPMG Consulting would submit a report within two months on ways to restructure the state-owned firm and reduce its losses. “The report will look into the areas where we must focus in the future and the services we have to exit,” Ganesan said, “The aim is to restructure the organisation. If we can’t capture the market or give good service to the public, they will go to our competitors. Our survival depends on it. Our functioning has to improve.”
India Post, set up in 1855 as the Telegraph Department by the British, has 156,000 post offices, more than 90 per cent of them in rural areas. It employs 5.8 million people and delivers 53 million pieces of mail daily. It also provides parcel, money order, banking, insurance and mutual fund services. The post office savings bank has 160 million account holders. But in the past decade private courier firms, electronic mail, short messaging services and electronic commerce have eaten into its revenues. According to a World Bank survey, the domestic courier industry was worth $554 million and India Post’s share was just 10 per cent.
Financial services contributed nearly half of India Post’s revenues of Rs 45 billion Indian Currency (IC) during the last financial year but the government had to inject Rs 14.8 billion IC in subsidies to keep it afloat. The organisation, caught between its legally enshrined duty to provide mail service and products at nominal cost and its commercial interests, is perennially in the red. Ganesan said a postcard sells for half a rupee when the production cost was Rs 6.50 IC. “Most products are underpriced as it is for the common man. It’s the policy of the government to keep it low-cost. If we open a post office in a rural area we suffer a loss of three-quarters of the money invested from day one.”
In a bid to reinvent itself, India Post is pushing ahead with new services such as ‘direct mail’ meant to distribute campaign material of private firms. It also plans to set up 150 “finance marts” to sell banking and insurance products. “Top-notch Indian architects have been roped in to design our one-stop financial service centres which are being rolled out. These marts, like our competitors, will stand out in their appearance,” Ganesan said. It has also embarked on a drive to computerise its post offices and has done 1,500 so far.
“In every sector, be it mail, banking or insurance, we’re facing tough competition,” Ganesan said, “People are asking for quality service and we have to give them exactly that.” S Raghunath, analyst at the Indian Institute of Management, expressed admiration at efforts by what he called an ‘archaic’ organisation to revamp itself. “I’m impressed they are showing a willingness to change in the face of tough competition,” Raghunath said, “The reach of India Post is phenomenal and substantial.” While the post office’s obligation to be a social service provider meant that profit could not be its sole motive, he said there were ways for it ‘to mix and match’ its services and ‘earn handsome revenues.’