Indian Postal Service:

The Indian Postal Service, with 155,333 post offices, is the most widely distributed post office system in the world.[2] The large numbers are a result of a long tradition of many disparate postal systems which were unified in the Indian Union post-Independence. Owing to this far-flung reach and its presence in remote areas, the Indian postal service is also involved in other services such as small savings banking and financial services The postal service comes under the Department of Posts which is a part of the Ministry of Communications and Information Technology under the Government of India. The apex body of the department is the Postal Service Board. The board consists of a chairman and three members. The three members hold the portfolios of Operations & Marketing, Infrastructure & Financial Services, and Personnel. The Joint Secretary and Financial Advisor to the Board is also a permanent invitee to the Board

Types of Postal Services: Mail Services 1. Speed Post: The market leader in the domestic express industry, was started by Department of Posts in August 1986 for providing time-bound and express delivery of letters documents and parcels across the nation and around the world. In the past 20 years , it continues to be the market leader in the express industry with monthly volumes exceeding 1.4 crores. Speed Post ushered in a new era when One India, One Rate scheme was launched @ INR 25 for all destinations across India, from Kashmir to Kanyakumari. Now, Speed Post delivers Value for money to every one every where, delivering local Speed Post upto 50 grams @ INR 12, inclusive of Service Tax. Walk into any of the Speed Post booking centres across the country and experience the joy of communication. For corporate customers and to regular users , Speed Post provides Home collection, credit facilities, on-line tracking, account management and personalised services. Speed Post links more than 1200 towns in India, with 290 Speed Post Centres in the national network and around 1000 Speed Post Centres in the state network. For regular users , Speed Post provides delivery anywhere in India under contractual service. Speed Post offers money-back guarantee, under which Speed Post fee will be refunded if the consignment is not delivered within the published delivery norms. 2. Logistics Post For a corporate customer looking for logistics solutions, Logistics Post services will provides cost-effective and efficient distribution across the country. Logistics Post manages the entire distribution side of the logistics infrastructure from collection to distribution, from storage to carriage, from order preparation to order fulfilment at the lowest possible price. With a high growth Indian economy in India, transport and logistics take on a new dimension in any business. Logistics Post can cater to any demand for moving goods, parcels and consignments in terms of delivery deadline and quality of service. Further, it offers the

possibility of monitoring the delivery progress at all times. Whether you want to distribute your computers across the nation or to send your auto parts to the distributors, Logistics Post provides you a tailor-made solution. Logistics Post uses a special network for carrying and delivering packages and consignments across the nation. It moves the shipments by road, rail and air and ensures safe and timely delivery. There are established Logistics Post Centres across the country. The tariff is based on weight, volume and distance. To make logistics operations cost effective and efficient, Logistics Post provides warehousing options (storage of goods before dispatch/ delivery) to the customers, on payment of warehousing charges. This enables the customer to bring their products closer to the clients. . Logistics Post will make the entire Logistics operations smooth by providing pick and pack facilities based on specific requirements of the customers. Each consignment will be packed with the specific goods, as desired by the customer. India Post runs three exclusive India Post aircrafts touching major towns, providing overnight service to the customers. Apart from carrying mails and Speed Post, the aircrafts carry Express Logistics consignments. 3. Direct Mails Direct Mail can be defined as printed matter usually carrying a sales message or announcement designed to elicit a response from a carefully selected consumer or business market it is the most potent medium for Direct Advertising. In the advanced countries, Direct Mail now constitutes a pre dominant portion of mail traffic handled by Postal administrations. Direct mail can be both addressed as well as un-addressed. Direct Post is the un-addressed component of Direct Mail, and would comprise of un-addressed postal articles like letters, cards, brochures, questionnaires, pamphlets, samples, promotional items like CDs/floppies and Cassettes etc., coupons, posters, mailers or any other form of printed communication that is not prohibited by the Indian Post Office Act 1898 or Indian Post Office Rules 1933. 4. epost: epost is a service under which printed or even handwritten messages of customers are scanned and transmitted as email through internet. At the destination offices, these messages are printed, enveloped and delivered through postmen like other letters at the postal addresses. current rates for the epost service are Rs. 10 per page per addressee. 5. ePayment : ePayment is a smart option for businesses and organizations to collect their bills or other payments on-line through Post office network. It is a comprehensive bill payment service offered by India Post to help meet the needs of the business customers providing a convenient and trusted electronic bill payment facility. This allows collection of bills (telephone bills, electricity bills, university fee, school fee, insurance premia etc) on behalf of any organization. The collection is consolidated electronically using a web based software and payment is made centrally through cheque from a specified post office. The information regarding the payment can be had by the ePayment user on line. All you need is to sign a business agreement with India Post for ePayment and your business will get the bill payments promptly. 6. Business Post:

Business Post provides total mailing solutions to the businesses from mail preparation to mail delivery. It is a one-stop shop service that manages entire mail-out process, for small businesses as well as large companies. Customers can choose from a range of cost-effective and professional mailing services, including printing, collating, inserting, sealing, and addressing to meet their specific business needs. In order to speed up the mail delivery, special despatch direct to destination post office and special delivery arrangements can also be made under Business Post. Business Post Centres are available at major post offices. Business Post centres can also be set up at the premises of the customers, specially at Bank Head quarters or company Headquarters where the business volumes are very large. 7. Media Post India Post offers an unique media concept to help the Indian corporate and the Government organizations reach potential customers through Media Post. Creative, cost-effective and personalized , it is over packed . Absolutely no other media can match the sheer expanse of India Post in terms of volume and reach. Media Post - an innovative & effective vehicle for Brand and Marketing managers to communicate their corporate messages across the nation. Your brand could take the fast track and reach the masses at a low cost with Media Post. India Post delivers 1,575 crore mails every year linking every nook and corner of the country through a network of 1,54,149 post offices and 5,64,701 letter boxes. The following for your branding exercise. Advertisement on postcards, letters, aerogrammes, postal stationary etc. Space sponsorship options on letter boxes. India post handles more than 3000 million pieces of unregistered mail every year, reaching out to million of households in the country and the world. Every time a person sends or receives a postcard, an inland letter or an envelope, he gets to see your logo or your message. The Aerogramme even gives you the opportunity to make a global impact. Postcards, Inland Letters and Money Order Forms can carry your message in any Indian language or in English. Aerogramme will carry your message in English only. On Aerogramme and Postcards, the printing can be done in four colors of your choice. Financial Services: 1. Postal Life insurance: Postal Life Insurance was started in 1884 as a welfare measure for the employees of Posts & Telegraphs Department under Government of India to the Secretary of State. Due to popularity of its schemes, various departments of Central and State Governments were extended its benefits. Now Postal Life Insurance is open for employees of all Central and State Government Departments, Nationalized Banks, Public Sector Undertakings, Financial Institutions, Local Bodies like Municipalities and Zila Parisads, Educational Institutions aided by the Government etc. Rural Postal Life Insurance : On 24th March, 1995, the benefits of Postal Life Insurance were extended to rural populace of the country under the banner of Rural Postal Life Insurance.

2. Money Order: A money order is an order issued by the Post Office for the payment of a sum of money to the person whose name the money order is sent through the agency of the Post Office. A Payee is the person named in money order as the person to whom the money is to be paid. The advantage of sending money to someone through money order is that the money is delivered at the house or his place of stay 3. Instant Money Order: IMO is an instant web based money transfer service through Post Offices (iMO Centre) in India between two resident individuals in Indian territory. You can transfer money from INR 1,000/- to INR 50,000/- from designated iMO Post Offices. It is simple to send and receive money. 4. International Money Transfer As a result of the collaboration of the Department of Posts, Government of India with the Western Union Financial Services, USA, a state of the art International Money transfer Service is now available through the post offices in India, which enables instantaneous remittance of money from 185 countries to India. The recipients can in fact collect the money in minutes after the sender has made the remittance. The service is targeted to particularly fulfill the needs of NRI dependent families in India, visiting International tourists and foreign students studying in India. 5. Mutual Funds With an objective to leverage the strength of the postal network and skills Department of Posts had started retailing mutual funds and bonds. On 22nd January 2001, India Post in partnership with IDBI-Principal, launched a scheme for distribution of mutual funds through post offices. A pilot project was started from the four cities of Delhi, Mumbai, Kolkata and Patna. Thereafter from 15th June 2001 onwards, the scheme was extended to cover post offices in all major capital and other cities all across the country. At present select schemes of Principal, SBI, UTI, Franklin Templeton and Reliance Mutual Fund are retailed through designated post offices in the country. Post Office Savings Schemes
SCHEME Interest Payable, Rates, Periodicity etc. 3.5% per annum on individual/ joint accounts. Investment Limits and Denominations Minimum INR 50/-. Maximum INR 1,00,000/for an individual account. INR 2,00,000/- for joint account. Minimum INR 10/- per Salient features including Tax Rebate

PostOffice Savings Account

Cheque facility available. Interest Tax Free.

5-YearPost

On maturity INR

One withdrawal upto 50% of the

Office Recurring Deposit Account

10/- account fetches INR 728.90/-. Can be continued for another 5 years on year to year basis. Rate of interest 7.5% (quarterly compounded). Interest payable annually but calculated quarterly. Period Rate 1. yr.A/c 6.25% 2 yr.A/c 6.50% 3 yr.A/c 7.25% 5 yr.A/c 7.50% 8% per annum payable i.e. INR 80/- will be paid every month on a deposit of INR 12000/-.

month or any amount in multiples of INR 5/-. No maximum limit.

balance allowed after one year. Full maturity value allowed on R.D. Accounts restricted to that of INR. 50/denomination in case of death of depositor subject to fulfillment of certain conditions. 6 & 12 months advance deposits earn rebate.

PostOffice Time Deposit Account

Minimum INR 200/- and in multiple thereof. No maximum limit.

Account may be opened by individual. 2,3 & 5 year account can be closed after 1 year at discount. Account can also be closed after six months but before one year without interest. The investment under this scheme qualify for the benefit of Section 80C of the Income Tax Act, 1961 from 1.4.2007.

PostOffice Monthly Income Account

In multiples of INR 1500/- Maximum INR 4.5 lakhs in single account and INR 9 lakhs in joint account.

Maturity period is 6 years. Can be prematurely encashed after one year but before 3 years at the discount of 2% of the deposit and after 3 years at the discount of 1% of the deposit. (Discount means deduction from the deposit.) A bonus of 5% on principal amount is admissible on maturity in respect of MIS accounts opened on or after 8.12.07. Deposits qualify for deduction from income under Sec. 80C of IT Act. Interest is completely tax-free. Withdrawal is permissible every year from 7th financial year. Loan facility available from 3rd Financial year. No attachment under court decree order. A single holder type certificate may be issued to an adult for himself or on behalf of a minor or to a minor, can also be purchased jointly by two adults.

15year Public Provident Fund Account

8% per annum (compounded yearly).

Minimum INR. 500/Maximum INR. 70,000/in a financial year. Deposits can be made in lumpsum or in 12 installments. No limit on investment. Available in denominations of INR. 100/-, INR. 500/-, INR. 1000/-, INR. 5000/-, INR. 10,000/-, in all Post Offices and INR. 50,000/in all Head Post Offices.

KisanVikas Patra

Money doubles in 8 years & 7 months. Facility for premature encashment. Rate of interest 8.4% (compounded yearly)

National Savings Certificate (VIII issue)

8% Interest compounded six monthly but payable at maturity. INR. 100/- grows to INR 160.10 after 6 years. 9% per annum, payable from the date of deposit of 31st March/30th Sept/31st December in the first instance & thereafter, interest shall be payable on 31st March, 30th June, 30th Sept and 31st December.

Minimum INR. 100/- No maximum limit available in denominations of INR. 100/-, 500/-, 1000/-, 5000/- & INR. 10,000/-.

Senior Citizens Savings Scheme

There shall be only one deposit in the account in multiple of INR.1000/maximum not exceeding rupees fifteen lakh.

A single holder type certificate can be purchased by an adult for himself or on behalf of a minor or to a minor. Deposits quality for tax rebate under Sec. 80C of IT Act. The interest accruing annually but deemed to be reinvested will also qualify for deduction under Section 80C of IT Act. Maturity period is 5 years. A depositor may operate more than a account in individual capacity or jointly with spouse. Age should be 60 years or more, and 55 years or more but less than 60 years who has retired on superannuation or otherwise on the date of opening of account subject to the condition that the account is opened within one month of receipt of retirement benefits. Premature closure is allowed after one year on deduction of 1.5% interest & after 2 years 1% interest. TDS is deducted at source on interest if the interest amount is more than INR 10,000/p.a. The investment under this scheme qualify for the benefit of Section 80C of the Income Tax Act, 1961 from 1.4.2007.

Sec 80C benefit: Investments up to INR 1 lakh in specified securities (maximum of INR 70,000 in PPF) qualify for deduction Compounded half-yearly Compounded yearly Compounded quarterly Payable quarterly

Key Issues Key Issues Characteristics Low Customer Satisfaction: Late deliveries of mail, Quality of Service, Lack of facilities to customers Competition: Private Courier Services, Banks, Private Mutual Funds, LIC Management Structure: Government Organisation Inefficient Employee Force Large Number of Services: Majority Unproductive Vast reach in the interiors of the country: Potential not realised.

Gap Model Analysis Future of India Post Rural Dimension

India has the largest Postal network in the world with 1,55,618 Post Offices at the end of the financial year i.e. 31.3.2003 including 1,39,081 Post Offices in rural areas. At the time of independence, India had 23,344 Post Offices, which were largely confined to urban areas and selected villages. During the last 50 years it has grown almost seven times. On an average, a post office serves an area of 21.13 sq. km & population of 6,602. At the time when the Indian Postal Department was set up, only telegraph facilities were available in limited areas since 1851 and the first Telephone Exchange was set up in Shimla as late as 1914 with the result that till the first quarter of 20th century the Postal Department was the only means of communication. All other means of communication other than telephones which are existing at present like fax, internet, email etc. have only developed during the last few years. 2. With such a large network the question invariably is whether such a large network

is beneficial to the common man or not. If the postal system enables to ensure optimal utilization of its infrastructure then it can be said that the network justifies itself, but if the utilization is low then there is a case for having a re-look at the existing infrastructure

particularly in the rural sector. An analysis of the various policy initiatives undertaken during the past five year plans would reveal that the postal planning was based on a number of assumptions which have not fulfilled expectations as there is a difference between the market demand and our policy assumptions as the following table will show:

Sl. No. 1.

Policy Assumptions

Reality reality is that economic

Whenever a post office is The

established, it contributes to development leads to demand for the development of the area. postal service and not the other way round. The Postal Services network were to a certain extent mandatory in the early years of the 20th century but as time passes and rural sector gets linked up to electronic means of communication including telephone land lines, importance of

development of postal network is continuing to decline except in some remote, hilly and tribal areas.

Otherwise, development of roads, telephones and local market to

encourage movement of agricultural products has become more important. 2 If any post office is set up As Savoor Committee and Talwar then over a period of time its Committee reports would reveal, a traffic increases till the post large number of post offices have office becomes a profit- been opened particularly in the rural sector without adequate justification and they have not contributed to the increase in traffic with the result that the traffic has been static in the large

earning center.

number of rural areas. 3 If the State Governments are NRC has been paid by some State asked to contribute to the cost Governments only as first installment of the post office, then the and thereafter most State

part of the cost will be Governments have not paid for NRC recovered. 4 thereby contributing the losses.

As rural post offices are The reality is that since DA and other opened, the cost per post allowances are being revised

office is minimal and remains continuously the cost per post office static over a period of time. continues to grow even if there is no increase in traffic.

Post office has a Universal The extent to which this Universal Service Obligation(USO) and Service Obligation of the nation can therefore, the Govt. is duty be met depends on the health of the bound to open post offices economy and the priorities and one wherever they are required. should remember that there is no such thing as free lunch and somebody has to foot the bill for this USO.

As number of post offices Economies of scales work only when increase economies of scale the traffic is increasing faster than the starts working to the cost involved but as the traffic is static or declining the economies of scales will not work.

advantage of the post office.

There are over 6 lakh villages When many existing Branch Post and it is important to provide Offices(BOs) do not have any traffic, cheap and efficient service to it can be presumed all the villages. with certain

exceptions that the traffic will not be adequate to justify opening of more B.Os.

3.

There is no doubt that the post office has enormous capacity and capability to

provide services because of its unique position but the problems have arisen due to over blown infrastructure over the years which has not taken into account the cost involved and the extent to which these costs can be met. During a survey conducted in 1973, it was noticed that 9 out of 11 Branch Post Offices were opened on the basis of questionable data, which was only to enable opening of unviable post offices. This problem was compounded by the fact that during the period starting from III five-year plan, targets were laid down and there was pressure on Postal Circles to open post offices even when many of them were not viable. In the 70s, invariably the targets were received by the Circles in the last quarter of the financial year and therefore, a number of post offices were opened in great haste ignoring the economic viability. This is not to suggest that the infrastructure created is of no use but it is relevant to have a re-look and to emphasize on the quality of infrastructure created with a view to ensure that optimal results are obtained. This is not very difficult if only we take into account the reality of the situation. 4. It needs also to be emphasized that no social purpose will be served by opening

post offices, which do not generate any worthwhile work. Even if there is no increase in the cost, the cost of operations goes up by 8% per annum as DA on Salary and Pension has to be paid to the working employees and pensioners as the case may be. There are two ways of approaching this problem; one is to cut down the cost of operations and the other is to increase the volume of transaction provided, the business generated is economically profitable. Though down sizing offers a real opportunity to cut down the cost, the fixed cost cannot be reduced as fixed costs account for 90% of the expenditure including cost of salary, pension, diesel/electricity and rent and other establishment matters. In India, the Department of Posts has no control over the cost of infrastructure as bulk of the cost comes from the Pay Commission recommendations and there are well established interrelations with other Departments in this regard. Therefore, the possibility of savings on salary and pension is very limited particularly after 5th Pay Commission which has increased the cost of operations fairly substantially after 1996. This has resulted in the Department being out-priced by the private couriers who pay between 1/3rd to 1/4th the salary of an average Postal Assistant or Postman for courier

work. On the other hand, generating traffic is also challenging because of monopoly culture and mindset prevailing for several years in the Department. It will take years to develop a truly competitive culture as we are still being guided by earlier monopoly culture even when our monopoly is there only on paper. Therefore, there are very real problems both in marketing postal products and also in affecting savings through down sizing. Ultimately, both the approaches will have to be adopted but in addition to the above the criteria for opening of post offices would have to be revised substantially in accordance with the post office traffic. The only workable criteria appears to go by cost and strictly by the work load (minus time spent on Sub Accounts in the parent office which will not exist if the post office itself is closed down.) The other two criteria namely distance and the population are of hypothetical interest only because if the relevant rural area does not generate any traffic what so ever then the population and distance are not material. It is pertinent to mention here that the Indian Post Office Act 1898 confers monopoly on the post office for letter posts, but if letter posts itself is running into a loss then it is unlikely that the post office can earn profit. Hence it is essential that the pricing of the products should be such that it should generate profit as having a monopoly if at all, in a losing product is of no economic use. 5. Therefore, it needs to be emphasized that laws of economics/marketing are

asserting themselves over legal monopoly of Post Office created through an Act of Parliament. All delivery systems are now being controlled by the market and it is difficult to identify any delivery system where monopoly has not been eroded through market forces. One can say, that there is complete monopoly of the State in regard to printing of currency notes but it is also true that this monopoly has also been eroded by credit cards and ATMs which reduce need for printing currency as economies are heading towards cashless transactions. 6. There are therefore, two alternatives in dealing with the existing situation. The

first alternative is to increase rural traffic although this may also lead to increased loss to the Department as discussed above and also because a perusal of Table 15 of Annual Report 2003-04 of the Department would reveal that the average revenue earned by the Department in respect of post card, letter cards, letters, money orders and speed post are less than the cost involved. Therefore, an increase in the traffic may actually end up in

increased loss for the Department. The second alternative is to have an understanding with the Ministry of Finance regarding the extent of subsidy to be given to the Department as a whole and there after the Department may be allowed free hand to manage its postal operations in such a way that the Department is not able to exceed subsidy promised. This may involve either closure of non remunerative post offices or increase in rates of postal products or out sourcing postal services in rural areas. Para 3.2 of the Annual Report 2003-04 of the Department indicates that Panchayat Sanchar Seva Kendras are useful for retailing some basic services like sale of stamps and postal stationery. In this, the cost involved is much less than normal postal system. If Ministry of Finance agrees to this arrangement then the extent of loss agreed upon can be treated as subsidy for a specific period as social obligation towards the nation. This is all the more important as there is no single product existing or proposed, which can wipe out the loss sustained by the Department to the extent of about 1500 crores per annum given the reality that the cost per employee goes up to the extent of around 8% per annum as DA even when there is a decline in postal traffic. 7. The Department has completed 150 years of its existence and at the time when

Postal Department was created it served a very powerful purpose in ensuring linking all villages, towns and cities. The traditions, conventions and the initiatives taken by the Department so far would make any Department proud but it needs to be remembered that the past is no guide to the future keeping in view the rapid changes in technology, organizational functions and labour costs involved. Therefore, the Department has to draw upon its proud traditions but at the same time it would require radical changes in working environment and traditions because the world of 2004 is very different of the world of 1854. The fact that the old organizations like Tatas and Indian Army have been able to draw upon good management practices from the past while developing new initiatives, give hopes to the Department of Posts to try for a fresh organizational approach. 8. A question which is invariably asked is about what will be the shape and size of

India Posts in the year 2025. Notwithstanding some bold predictions, it will be very difficult to predict future of any Department dealing with communication as similar predictions have not bourn fruit in the past. Since the pace of technology and availability

of cheap technology like mobile phones, email and money transfer facilities is so fast, it is difficult to make, any such prediction. However, as the country entered into

development of rural economy which has pumped in huge money with richer and middle class farmers, there is a likelihood of increased expenditure on fast moving consumer goods which may indirectly make an impact on the prosperity of the post offices. The extent to which such prosperity will be affected by such increased expenditure is difficult to predict. Further, the recent experiences have show that there is an enormous scope for Rural PLI, Savings Bank and Savings Certificates in the enforceable future although the extent of share of rural post will be influenced by the level of competition. We have seen one Cooperative Bank fail after another but the public confidence in India Post remains intact and if we are able to improve the quality of services offered by India Post in rural areas then the gap between revenue expenditure and cost involved will decline substantially. 9. In conclusion, it can be said that the ability of India Post to compete in the rural

segment will depend on the extent with which such new initiatives are pursued with more intensive use of infrastructure. The decline of the conventional letter mail is a known phenomena. This trend is not confined to India Post alone, but other similarly placed countries also face similar challenges. However, innovative restructuring, right sizing along with new initiatives may reduce the extent of financial loss and that is the bottom line all of us have to aim at.

12604 post offices in India computerized

India Post ties up with eBay to purchase commemorative postage stamps online
Thursday, August 05, 2010

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NEW DELHI, INDIA: Minister of State for Communication and Information Technology, Gurudas Kamat, today said that the Department of Posts has computerized 12,604 post offices in the country as on March 31, 2010, as part of the IT modernization project under XI Five Year Plan. The Department has submitted a proposal for approval of IT Project to computerize all post offices including all the rural post offices along with development of integrated modular software for all services and operations to be completed by September, 2012, said the minister. The proposal has been recommended by the Expenditure Finance Committee and is under the process of obtaining administrative approval from the Competent Authority. The minister also said that as on March 31, 2010, 138,889 villages were having post offices out of the total number of 620,515 inhabited villages in the country. However, all inhabited villages have access to Postal facilities. Meanwhile, the Department of Posts said that commemorative postage stamps issued by the India Post are now available for online purchase through eBay. It will have the price of the stamp, cost of packaging and transportation charges and charges payable to eBay, said an official statement. Currently approximately 100 stamps are available along with some philatelic ancillaries for online sale. The minister also informed Parliament that the Government has plans to set up automatic mail processing centres for sorting of mail in the country during the Eleventh Five Year Plan. In Delhi and West Bengal orders have already been placed for installation of Automated Mail Processing Systems with one Letter Sorting Machine (LSM) and one Mixed Mail Sorter (MMS) each at Delhi and Kolkata during 2009-2010, he said. In Maharashtra and Tamil Nadu replacement of existing Automated Mail Processing Systems with Letter Sorting Machine (LSM) and Mixed Mail Sorter (MMS) at Mumbai and Chennai is proposed. In Andhra Pradesh and Karnataka it is proposed to have medium configuration machines at Hyderabad and Bangalore. Kamat said the installation of machines is being done only in the Metros and bigger cities where there is heavy volume of mail.