Challenges before India Post

            India Post's recent initiatives, which include slotting itself in cyberspace through the ePost Office, are pointers to the manner in which the world's largest postal network can be better leveraged to strengthen the financial and communication infrastructure. The Internet and other affordable alternatives have hit the basic function of post offices: delivering letters and other mails. In India, as an answer to a question raised in the Lok Sabha reveals, the volume of mail traffic fell from 6,677.18 million pieces in 2006-07 to 6,391.15 million in 2007-08, and rose marginally to 6,540.90 million in 2008-09. That the figure for 1997-98 was 15,749.30 million points to the severity of the fall. Internationally too, there are clear signs of the Internet eating into postal systems. Developed economies, in particular, saw postal businesses slump further with the onset of the recession. Statistics provided by the Universal Postal Union (UPU) show that between 2008 and 2009 domestic mail volumes were down 12 per cent globally (translating to about 13 billion pieces). Although there are signs of recovery now, particularly in the parcel and express segments, fundamental challenges posed by the emergence of alternatives to the post remain.

          India's expansion of telephone services — the number of telephone subscribers increased from 76.54 million in 2004 to 764.77 million in November 2010 — and the growth of broadband are important developments that could further eat into the letter-post. Against this backdrop, the ePost Office, through which customers can carry out some basic services such as Money Order transactions, marks the beginning of what could be a new chapter for India Post. Its agreement with the Unique Identification Authority of India (UIDAI) to work more closely in socio-economic areas with the provider of unique identity ID cards will be watched with interest round the world. An excellent way of strengthening India Post's finances would be to build on its biggest strength — as the world's largest postal network whose reach extends to all households in the country — and take a range of services closer to Indian residents: financial services and insurance products, for a start. Optimism over economic growth offers India Post an opportunity to correct its deficit-ridden balance sheets and also play a larger role in development by strengthening business-to-business and business-to-consumer segments. Making this change — while maintaining its key public service role as a provider of affordable services for a country of a billion-plus people — is the strategic challenge facing India Post.

Source: The Hindu, March 7, 2011