South Asian Region: Posts to Push for Regional Business Cooperation

The academic world has seen a debate of sorts in recent times on the postal sector in developing countries. The debate, more specifically, has been economic in character, on the possible role of the Post Office as a driver of economic and social development. A Regional Postal Business Meet (RPBM)of the national postal operators of SAARC countries held at New Delhi in February 2011 has generated considerable optimism on the capability of the Posts to play such a facilitating role in the region.

           

The advent of new information and communication technologies, no doubt, has posed challenges to the Post. Yet, it exists, and serves a customer base that is virtually the entire population of the world. Examples have emerged in recent years from different parts of the world for ways to develop postal networks in sustainable ways, while they simultaneously contribute to the nations’ economic development. The thoughts and ideas at the RPBM focused on regional cooperation for such a sustainable development.

The participating Posts were those of Afghanistan, Bangladesh, Bhutan, Nepal, Maldives, Pakistan and Sri Lanka, apart from hosts India. Nepal Post could not make it to the Meet due to some domestic commitments.

The Meet discussed specific areas for cooperation in postal services, including :

• Introduction of logistic services.
• Development of Postal E-Commerce, particularly keeping the integration needs of individuals, micro enterprises and other small businesses in view.
• New Parcel and Express Products, tailored for trade facilitation in the region.
•  Constitution of a South Asian Postal Union and General Regulations of the South Asian Postal Union.
• Initiate money remittance services.
• Enhanced cooperation for business development in the region.
• Sharing best practices in postal business.

The need for bringing together the physical, electronic and financial dimensions of the postal networks of the seven countries of the South Asian Region was recognized, and the potential of such a cooperation for enhancing business cooperation among the countries and fostering economic growth was underlined.

The RPBM concluded with the signing of a joint statement by the Heads of the Delegations. It was agreed that this joint statement is a step in furthering postal cooperation in the South Asian region for facilitating sustainable development.

Poverty Reduction and Postal Network in India

 - Anurag Priyadarshee*

Poverty is a complex phenomenon and depends on various economic, social and environmental variables in a multi-dimensional space. It is an extremely significant issue for Indian society with some estimates suggesting that upto 75% of the Indian population may be poor and deprived of basic necessities to sustain a normally healthy life.

 

Literature investigating the causes of poverty in India can be categorized in three broad streams, while allowing for some overlaps. The structuralists attribute prevalence of poverty to unequal distribution of factors of production, mainly, land and capital. As the poor have a very limited supply of the factors of production, they are unable to participate in the process of economic growth. They are also unable to adequately access the health and educational infrastructure due to their assetlessness and thus most often fail to build up their capabilities. The situation is compounded due to continued social exclusion and discrimination. Others view the prevalence of poverty as a manifestation of inequitable economic growth across different geographic areas and various social groups. The situation, according to them, can be corrected by developing and nurturing institutions, and deepening and widening the markets so that they can effectively reach the marginalized. They believe that better outreach of institutions and markets, supported by appropriate technology would facilitate the economic growth to trickle down to the poor. Some others however believe that the absence of social protection measures and safety nets for the poor and vulnerable perpetuates poverty among them. According to them, the availability of social protection measures may help in correcting the poverty situation to a large extent.

It may not be feasible to address the inequality of distribution of factors of production in the prevailing politico-economic conditions in India. The efforts to reduce the poverty may therefore need to be focused on creating and developing appropriate institutions, and widening and deepening the markets. Microfinance can play a major role in developing such instruments to fight against poverty. At another level, strategy to combat poverty may involve initiating and expanding various social protection measures. These considerations explain the current emphasis on social protection and financial inclusion instruments to fight poverty not only in India but also in several other low-income countries. Both strategies however suffer from significant service delivery constraints causing exclusion of a large majority of poor households from access to microfinance, and inclusion and exclusion errors and elite capture of social protection programmes in almost all low-income countries. Such constraints are caused by the fact that such countries lack infrastructure capable of efficient delivery of microfinance and social protection.

India is differently placed in this regard as it has an extensive postal network that has the potential to efficiently deliver microfinancial services as well as social protection particularly in rural areas. In fact, India Post is the only agency suitably located to deliver such services due to its close proximity to the rural population, and its personnel being known to and trusted by the local communities. India Post network also has a long and rich experience of delivering financial services. It is the largest financial service delivery network in the country and has already contributed significantly towards financial inclusion in the country. Currently it has more than 250 million deposit accounts and more than 14 million clients of its life insurance business in addition to covering a sizeable population of the country through its remittance services and pension payments. It may however be important for India Post and the poor households of this country that it ventures into full-fledged microfinance and expand its outreach to also cover the very poor segment of the society.

 

Being a government department, India Post is in a better position than similarly placed agencies such as banks and NGOs, to coordinate with other government departments offering social protection. Moreover, it possesses valuable information-capital on the households that can be leveraged to efficiently identify the prospective recipients of the social protection programmes. India Post is currently disbursing about 50% of the wages under MGNREGS through its 47 million wage accounts. Additionally, it is also making pension payments to widows, disabled and old people located below the poverty line under various social protection schemes. Here again much still needs to be done to fully exploit the potential of India Post towards delivery of social protection.

India Post, being a part of the government of India, carries responsibility to further the mandate of the government and thus needs to more deeply engage with the government policies towards poverty reduction. This engagement is also likely to enhance India Post’s revenues while simultaneously serving the unserved, and thus reducing their economic isolation and improving their social and economic conditions.

This will, however, require India Post to rework its priorities and refocus on its strengths. It will need to engage more deeply with the state governments to design and offer more comprehensive financial service packages built around delivery of social protection programmes. Rural postal personnel will need to be adequately trained to enable them to manage relatively more complex financial transactions. India Post will need to review and overhaul the financing arrangements of rural post offices and institutionalize incentive structures for the staff for generating and carrying out additional work.

* Director (Rural Business), India Post.

The views expressed are personal.



The 'Why' of The India Post Blog

Ever since India Post established a presence in blogosphere earlier this week, there has been curiosity all around. Why are they here?  What do they have to say?  Who are they talking to?


India Post is indeed a first timer to the world of blogs.  But we are no strangers to social media.  The Post Office was one of the first Departments of the Government of India to establish a presence on the social media, through its Twitter page.


We have been communicating with our customers and friends through Twitter since October, 2009. This has been a fascinating experience for the organization.  While we discovered that there is tremendous goodwill for India Post, we also realized that there are many areas where we fall below the expectations for customers.  We have received bouquets, brickbats, feedback, suggestions, good wishes and advice from hundreds of friends through Twitter.  We have taken the feedback seriously, and adopted many of them into practice. This fascinating journey continues.

While the Twitter experience has been rewarding, it has also made India Post realize that two-way communication with customers need to be strengthened.  The blog that has been set up is meant to be an informal space where customers, users, friends and anyone interested in the post office can engage India Post in longer and more meaningful discussions.

We invite our customers and friends to The India Post Blog, and to touch base with us here.  Do keep sending in your feedback. Your comments and observations will be of value to us in providing better service and in constantly keeping up with your expectations. 

Post Office's Pioneering Role in Financial Inclusion

The Post Office has been providing affordable banking services to all sections of the society since 1882, making it the pioneer in facilitating financial inclusion in the country. India Post was a banker to small savers much before financial inclusion became a buzzword, or had even been coined as a phrase.

The financial services offered through the Post Office include micro and retail savings, remittances (both domestic and cross border), insurance, social security payments such as MGNREGA wages and Pension disbursements.  Many third party financial products such as mutual funds and pension funds have also become accessible to the public thanks to the neighbourhood post office starting to retail them. 

Out of the 155 000 post offices which provide retail financial services across India, 139 000 are in rural areas.  In comparison, the scheduled commercial banks and Regional Rural Banks of the country together have about 85 000 branches, of which only about 34 000 are in rural areas.  Another indicator of financial inclusion is the density of the banking network measured against population. The financial network is more inclusive when each branch of the bank has a lesser number of people to serve. In this regard, on an average, banks in India serve 14 000 persons per branch (16 000 in rural areas) whereas the average population served by each postal financial services outlet is only 7 175 (5 683 in rural areas).  Further, the average number of India Post financial outlets per lakh persons is 13.93 as compared to 6.33 in the case of banks.  It is also worth mentioning that our Post Office Savings Bank holds 24 crore accounts, more than entire populations of most countries.

The Post Office is now all set to enhance its role in financial inclusion thanks to a modernization project which it has taken up. A Core Banking platform is being set up for the financial services, and new services such as instant money orders have been introduced.  Further, services such as the prepaid cards are in the pipeline.  These measures will substantially augment India Post’s capabilities as a multi-faceted financial services provider.

One of the major issues of financial inclusion in India relates to the complexity of cash Management at the grass roots level.  Support infrastructure for financial services is inadequate in many parts of the country, particularly in the small towns and villages. It is against against this background that India Post’s network, with its transparent, accountable and centrally managed network assumes relevance. This is a ‘ready-made’ network, where cash management and infrastructure issues have already been taken care of.  Significantly, it is also a trusted and familiar network with roots in local communities where the village postmaster knows his customers personally.

India Post’s continuing stint as the banker to the common man over the last 130 years has been a fulfilling experience.  We are rediscovering ourselves through the modernization project, and looking forward to the Core Banking platform and other the modern systems and practices being introduced into the Post Office. The future will see the Post Office playing a more active role in facilitating financial inclusion in the country.

We are keen to hear from our customers and friends on the subject.  Do send in your comments, opinions and suggestions on the Post Office’s current and future role in financial inclusion.

Perceptions and the Post Office

A special feature on India Post (Department of Posts, Government of India) published in the Economic Times  dated 7 March 2011 has focussed the spotlight on the organisation.  It also left the staff and officers of the Department wondering about some of the figures and statements that appeared in the feature. The following few points may put the records straight :

Firstly, about the discussion on deficit.  It is true that during last two years, the expenditure has increased. But it is also well known that this increase is largely on account establishment cost going up consequent to implementation of  Pay Commission recommendations.  All Government departments whether in public service or otherwise, are in a similar situation.  India Post is also in an unusual situation of having to manage pensionary expenditure from its own budget. If this component of expenditure is overlooked, India Post's finances are not far from breaking even. With regard to revenue of the Department, the two main sources of revenue, tariff for mail and remuneration for savings bank are administered.

Secondly about technology.  It is true that post office computerization started nearly fifteen years back.  But the process was incremental and on stand alone basis.  A project to computerize and network all post offices by 2012-13 is now under implementation.   This will be a comprehensive and progressive solution, in tune with the customers' needs and expectations. It will create a platform for new services including extensive financial services, e-commerce and joint products from various corporate partners.

Thirdly about Post  Bank.  This Deprtment has got a report from consultant in this regard which is under processing.  It may be mentioned, till last year RBI did not show any inclination for issuing banking licenses.   Further to convert the Post Office into an effective banking outlet, the required networking and specialized banking package have to be put in place. These pre-requisites are under implementation now.

Fourthly about structure of the organization, leadership and continuity. There are as many  corporatized  Post Offices which have  failed as those which succeeded. In this regard continuity of vision and ability to transform are important.  But it is simplistic to assume that the entire vision and drive for change flows from one top person.  Leadership at all levels with a committed group for transformation is required.  That is what India Post is striving for at this juncture when it is going through a transformation excercise, for which concrete plans and definite timelines are in place. 

Today, the 150 thousand strong organisation stands mobilised as a single team in pursuit of this objective, and the goal is well within reach.