India Post also delivers various government welfare benefits to citizens, such as MGNREGA and old-age pension payments.
By Gopal Goswami,
The Department of Posts, now known as India Post, has been the backbone of the country’s communication for over 150 years and has played a critical role in the social and economic growth of the country. It affects Indian citizens in a variety of ways, including delivering mail, accepting deposits under Small Savings Schemes, providing life insurance coverage under Postal Life Insurance (PLI), Rural Postal Life Insurance (RPLI), providing retail services such as bill collection, form sales, and so on. India Post also delivers various government welfare benefits to citizens, such as MGNREGA and old-age pension payments.
It is the country’s only network of post offices, with the task of providing communication, banking, and insurance services to all residents. With a high level of popularity among rural residents, having lesser trouble connecting to its network, it is among India’s oldest institutions, with well-established and time-tested procedures. The workforce in rural areas, where 85 percent of post offices are located, is mostly local and thus familiar with the community served by the Post Office. Many of the products and services offer features that are appropriate for the typical person, such as daily delivery on the doorstep, delivery of money orders in cash at the doorstep, and minor transactions in the Post Office Savings Bank.
Following new rules, the Reserve Bank’s criteria for the issue of new banking licences in 2013, India Post Launched Banking system, Prime Minister Narendra Modi inaugurated India Post Payments Bank on September 1, 2018. With 23,483 post offices currently connected, the Post Office Core Banking Solution (CBS) system is the world’s largest at present. India Post Payment Bank has the potential through 1.56 lakh post offices around the country, India Post serves more than 50 crore Post Office Savings Bank (POSB) customers.
India Post with its main features which can fetch wonders are as follow: –
• Nearly 156,000 post offices, with 90% of them in rural areas.
• Almost 416,000 employees, with 41 percent being direct employees and 59 percent being Gramin Dak Sewaks in the rural area again.
• Estimated total revenue of Rs 13,600 crore, losses of Rs 14,800 crore, and pension payments of Rs 10,000 crore per annum.
The banking arm of India Post has deposits of Rs 8.23 lakh crore, more than Punjab National Bank. PNB has 100,000 employees, which is less than a quarter of IP. Deposits of Rs 8.23 lakh crore are not sufficient to support over 400,000 workers. India Post’s biggest opponent right now is its fixed cost, which is eating away its revenues and turning it into the country’s largest loss-making PSU.
Given its existing wide network, India Post needs to incrementally increase its network and reach out to cost-effective franchisee with outsourcing models. This would improve India Post’s overall viability and efficacy, and to enable inclusion of many individuals who are currently unserved or underserved, primarily in rural areas. The government’s focus on equitable growth presents an opportunity to use the network for last-mile deliveries. MNREGA, old age, and a variety of other pensions are already being paid.
The following are a few areas where India Post’s vast network can make a difference: –
• Large-scale mail parcel services and transactional B-C mails. An average Indian receives ten mail parcel items a year, compared to 200 in Germany and 600 in the US.
• Insurance services, whether life or general, do not cover 80 percent of the rural market.
• There is untapped potential in terms of migrant money transfer and small enterprises that serve the entire India market.
• 40% of the rural population lacks access to institutional credit, despite the fact that India Post, with its payment bank already in place, has the largest access.
• Currently, there are no bill collection systems in place in rural areas, residents are forced to pay their electricity bills, telephone bills, insurance premiums, and property taxes in the nearest town. People will not object if India Post can collect those bills with a low service charge, because they are spending a whole day and few hundreds of rupees paying bills.
The other hot area is E-Commerce, a rapidly growing industry in India. Volumes are increasing at a dizzying pace, with revenue estimated to reach Rs 15-20 lakh crore by 2025/26, representing a six-fold increase since 2016/17. Even online grocery sales are predicted to expand at over 55 percent annual growth rate, reaching Rs 1.5 lakh crore in 2024. There is little doubt that e-commerce will grow in the next few years as internet access and smartphone usage rise, and consumers discover the convenience of shopping online.
• Rural India is the largest e-commerce market, but it is mainly untapped. This is where India Post has a significant advantage over the competition.
• The ‘last mile problem,’ or getting goods to the buyer from the last point where bulk items can be carried, is a major challenge for all e-commerce businesses. The last delivery leg is the most expensive in the E-Commerce delivery system, but India Post has a network in place and hence has an advantage over the competition.
• India Post provides extensive coverage in rural regions, with each post office servicing an average of 21 square kilometres.
• Because postmen are used to covering huge areas on a daily basis with tiny items and delivering them to locations, they require little training to become E-Commerce delivery chain’s “last mile carrier.”
• There is also a substantial chance for reverse delivery. Postman can also pick up courier packets for onward delivery while on his rounds delivering letters and e-commerce goods.
• The Modi government has put a strong emphasis on Make in India and other programmes, which are paying off well and turning rural India into a manufacturing hotspot; the India Post E-commerce delivery system, with its extensive collection network, may assist them in reaching out to urban consumers.
• There is no other organisation in India with such a broad reach across the country with such a huge force of well-trained “Postmen.” All that is required is for it to organise its capabilities, form partnerships with big E-Commerce and courier companies, and take advantage of its geographic reach (especially in villages).
With an annual loss to the exchequer of Rs. 19,000 crores in fiscal year 2019 and Rs. 15541 crores in 2020, the postal department has been India’s top loss-making entity. We can very well turn this loss-making corporation into a successful organisation in the coming years with the Bill collection system and the E-Commerce services in place in rural India.
(The author is Research Scholar, NIT Surat. Views expressed are personal and do not reflect the official position or policy of the Financial Express Online.)