35927 Transformation of n I D = India Post f or Vision 2020 Volume 1 [xect tive St- u mma wnry and Presenititaioni Synopsis THE WORLD BANK l l l | | | | R | Seminar on Transformation of India Post for Vision 2020 Ielivwerlng. Ffticient, Postal Financial and In/orniation T. . Serices v the Context oj a C~ ''. p I 'iable Postal Instituition June 15-16, 2005 New Delhi Organized by the Department of Posts, Ministry of Communication and Information Technology, in collaboration with the World Bank with the support of the Swiss Agency for Development and Cooperation Volume 1 Executive Summary and Presentation Synopsis October 2005 DIA POST N UP ( 2006 The International Bank for Reconstruction and Development/The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org E-mail: feedback@worldbank.org All rights reserved. First published, 2006 Published for the World Bank by MIacmillan India Ltd., this book is not for sale through its commercial channels. MACMILLAN INDIA LTD. Delhi Chennai Jaipur Mumbai Patna Bangalore Bhopal Chandigarh Coimbatore Cuttack Guwahati Hubli Hyderabad Lucknow MIadurai Nagpur Pune Raipur Thiruvananthapuram Visakhapatnam ISBN 1403 92873 8 Published by Rajiv Ben for NIacmillan India Ltd. 2/10 Ansari Road, Daryaganj, New Delhi 110 002 Printed at Sanat Printers 312 EPIP, Kundli 131 028 The findings, interpretations, and conclusions expressed herein are those of the author(s) and do not necessarily reflect the views of the Executive Directors of the International Bank for Reconstruction and Development/The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. 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Contents Foreword v Acronyms and Abbreviations vi EXECUTIVE SUMMARY 1 Goals and Structure of the Seminar I Sector Policy 2 Universal Service Obligation 2 Market Liberalization and Regulation 3 Restructuring of India Post to Deliver Efficient Services 3 Kev Operational Issues 4 Next Steps 7 PRESENTATION SYNOPSIS 9 Opening and Overview of India Post Welcome Address 9 Output from the Last Seminar and Objectives of this Seminar 9 Overview of India Post and Perspective on Challenges Ahead 9 Opening Address 10 Keynote Address: Vision 2020 and India Post 10 Restructuring and Modernization Experiences The Changing World of Postal Services: Current Trends in the Postal Industry, Changing Customer Requirements, Liberalization, International Relationships, Regulation 11 Deutsche Post: Modernization-New Business Opportunities, Liberalization, Strategy and Structure, Competition 12 Role of Technology for Postal Systems and Challenges for India 13 Transformation of Indian Bank Into a Profit-Making, Customer-Focused Business 13 Discussion on International Examples and Restructuring Experiences Relevant for India Post 14 Mlodernizing Postal Communications Services and Logistics: The Operations of Deutsche Post 14 Experiences from La Poste 15 Discussion on Challenges and Problems of India Post 16 Delivery of Services and Key Enablers Postal Financial Services for Anywhere, Anytime Banking 16 Financial Services for Postal Operators: International Experiences and their Relevance to India 17 Financial and Retail Network Solutions 17 Discussion on Financial Solutions for India Post 18 Opportunities for India Post in Providing E-Government Services to Rural Populations 19 Using the Indian Post Office Network for Microfinance Services 19 Action Plan and Closing Breakout Session 1: India Post, Technology and Financial Services 20 Breakout Session 2: Postal Sector Restructuring and New Business Opportunities 20 Discussion on New Perspectives for India Post 21 Applying Lessons from International and Domestic Experiences 21 Closing Addresses 22 Mr. Adarsh Kishore, Secretary Expenditure, Ministry of Finance, Government of India 22 Mr. B.K. Chaturvedi, Cabinet Secretary, Government of India 22 Foreword India Post has a value well beyond that of a postal and savings outlet for India's more than one billion people. But with its core business activity of postal services in decline and with recurring operating losses (partiv on account of non-definition of its universal service obligation and lack of reimbursement for this), India Post faces great pressure to reduce costs, increase revenue and operate on a far more commercial basis. Part of the answer will lie in improving its postal services and adapting them to the needs of a rapidly evolving and increasingly technology-driven world. India Post will also need to focus on non-core activities-financial, non-financial, and information technology-based services, provided mainlv through partnerships with foreign and domestic private firms. Indeed, these services, especially financial services, already account for an increasingly important part of the revenue stream for India Post, as thev do for manv other post offices around the world. With an extensive network of post offices supported by an immense human infrastructure, India Post has great potential power. Supported by an electronic network, its capacity to "deblver development the last mile" would be unsurpassed almost anywhere in the world. Post offices could continue to sell postal services while also offering a wider range of financial services (savings, pensions, insurance, microfinance, ATNI access, prepaid cards), non-financial services (information, data mining, property registration), and information technology-based services (e-business, e-government, electronic information). Indeed, through such services India Post has immense potential to bring development into virtuallv every Indian village and to touch the life of even, Indian citizen. Beginning to address the challenge of realizing that potential for the benefit of the citizens of India was the purpose of this seminar. This report, prepared with inputs from PriceWaterhouseCoopers, who were engaged to document the seminar, provides a record of our understanding of the seminar discussions and presentations. Acronyms and Abbreviations ARCEP Autorit6 de regulation des communications electroniques et des postes (telecommunications and posts regulator, France) ART Autorit6 de r6gulation des t6lecommunications (telecommunications regulatory authority, France) ATMI Automated teller machine CEO Chief executive officer CII Confederation of Indian Industry DPAG Deutsche Post AG EMS Express mail service EPNI Electronic postmark EU European Union FICCI Federation of Indian Chambers of Commerce and Industry HR Human resource ICRA Investment Information & Credit Rating Agency ICT Information and communications technology IINI Indian Institute of Mlanagement IP India Post IT Information technology MFIs Microfinance institutions NABARD National Bank for Agriculture and Rural Development PCO Public calling office RRBs Regional rural banks SHG Self-help group SAIS Short message service STD State trunk dialing UPU Universal Postal Union USO Universal service obligation USPS LT.S. Postal Service V-SAT Very Small Aperture Terminal XMIL Extensible Markup Language Executive Summary With 155,000 post offices India Post is the largest and users of the postal service. It brought the postal network in the world. It is also an increasingly participants together to debate the issues faced by important player in financial services, channeled India Post and to develop a road map of reform through its vast branch network. In addition to that could take it toward a more viable future while providing money orders, India Post is the country's still enabling it to fulfill its social obligation and largest savings bank, with deposits of more than maintain its reach. The move toward more viable Rs260,000 crore (US$60 billion, 16 percent of the operations needs to be supported at least in part by banking sector's total deposits). In recent years India more efficient delivery of postal, financial, and Post has developed new areas of business to information technology-based services, and that compete with the private sector and meet the needs formed an important theme for the seminar. It also of business customers, often through partnerships helps explain the variety of participants in the with private entities. It has a fast-growing seminar-not only key stakeholders from the partnership with Western Union for money government and the Department of Posts but also transfers, links with mutual fund and asset representatives from customers, suppliers, banks, management companies (IDBI-Principal, UTI), and the private sector, and other interested parties. The partnerships with other financial institutions for seminar also brought together a range of speakers warrant payments (ICICI Bank, Citibank). from postal administrations in China, France, and Despite these new business developments and the Germany and experts from the financial services growing thevenewubessfromfina l serve mens (now te sector, including ING Bank. The seminar built on gown reeusfo iacilsrie nw4 the foundations laid at an earlier one, in November percent of the total), India Post continues to make . f substantial losses. Revenues grew by 6 percent in 2002, on harnessing the outreach of India's postal 2003/04, to Rs 4,260 crore (US$980 million). But network. expenditures rose by 5 percent, to Rs 5,630 crore The seminar was split into seven sessions: (US$1.3 billion), leading to a net loss of Rs 1,370 * Openin crore (US$320 million). Contributing to the losses, i Indiato i r iew the hlene facdb mail volumes have dropped by around 25 percent India Post. since 1999/2000.IniPot * Reengineering and Restructuing Experiences-to India Post faces great challenges. For some it is a discus posal reforms being underta symbol of government authority, with more throughoutt r reform an > ~~~throughout the world and reform and extensive links to rural networks than any other restructurng beig undertaken i Indian banks. government department. For others it is a commercial organization that must pay its own * Operational Experiences-to share best practices way. Recent signals from the highest levels of in the transformation of postal operations in government suggest that the subsidy that India Post Germany and France. receives to maintain its vast network must be * Technology and PinancialService Solutions-to assess reduced and that it must increasingly rely on its own the opportunities for and importance of revenues to fund the network. providing financial services through postal networks and the technology required to GoALs AND STRUCTURE OF THE support such activities. SEMINAR * Breakoutt Grouips-to discuss the role of technology and financial services in India Post These circumstances set the context for the seminar, and review postal sector restructuting and new organized jointly by the Department of Posts and business opportunities. the World Bank with the support of the Swiss * Reinvention of India Post-to review a strategy, Agency for Development and Cooperation. The based on discussions in earlier sessions, for seminar was aimed at highlighting the benefits of taking India Post forward in the medium reform to India Post, the Government of India, term. 2 Transformation of India Post for Vision 2020 r * Closinrg Session-to hear closing remarks by the place in the past few years, more work needs to be Secretary Posts, the Member Operations, the done to determine whether the price subsidies are Sector Manager, World Bank, and the reaching those who need them. Subsidies for Expenditure Secretary of the Ministry of postage on newspapers and printed books, for Finance as well as a formal closing address by example, are most likely to benefit those who can the Cabinet Secretary. afford to pay market price for the service-the This report on the seminar is in two volumes. The literate, the well educated, and the economically first summarizes the seminar, providing a brief well-off. synopsis of the sessions and the key messages from Liberalization policy in the sector needs to be each presentation and identifying the steps required defined. India Post already faces competition in in the next stage of the transformation of India business mail (its most lucrative sector), as Post. The second serves as a detailed reference businesses seek alternative service providers that document, reproducing each presentation in detail can meet their ever increasing demands more and covering the ensuing question-and-answer efficiently and effectively. India Post has introduced sessions. some new services to compete with these The following sections report on the key issues operators, but its institutional framework is not designed to allow it to compete effectively in the discussed in the seminar, highltghting areas that opnmre.Tenanccrnfrstrpov require more focus if India Post is to be successfully open market. The main concern for sect lic transformed into a more efficient and viable should not be the existence of competition but the operation. lack of suitable regulation to ensure that all providers are meeting specified standards of service. So, in tandem with defining liberalization SECTOR POLICY policy, the government needs to define how the sector will be regulated in the future. International India Post is so much a part of the social and practice is to move toward independent regulation, economic fabric of India that talk of restructuring either by stand-alone regulators or by part of a it can take place onlv within a broader discussion of mult-sector regulatory authority. the policy for the sector as a whole as well as for other sectors. The structure of the postal market is The purpose of India Post also needs to be defined. changing around the world, as are customer habits Is India Post simply a post office with an obligaton and needs-and these changes are being driven by, to provide universal postal service and broaden its technology This transformation has broad policy range of services to make efficient use of its implications for the definition of universal service, extensive network? Or is it a vehicle for providing for market liberalization, and for sector regulation. government and private services to the vast rural And because the postal sector touches on other populaion? If the governmentsettes onwthe second sectors, postal sector policy needs to be consistent opton, it will need to identfy what services it with policies in such sectors as finance, information wishes India Post to provide throughout rural India. technology, and government services (including e- And even that mandate does not preclude India government). Post from acting as a commercial organization. It simply means that India Post must be compensated The traditional universal service obligation in the in a transparent way for providing the services, postal sector calls for dailv delivery throughout a which could include financial and information territory at an affordable price. For India Post that technology-based services as well as postal services. raises several issues. Daily delivery is costly, requiring postmen to pass every address point six days a UNIVERSAL SERVICE OBLIGATION week. Given the volumes posted in India-eight pieces per capita a year-this represents a substantial Universal provision of postal service in India rates investment, one ultimately subsidized by Indian among the best in the world. With the number of taxpayers. The emphasis on affordability of tariffs post offices having grown from 23,344 after has led to postage being priced substantially below independence in 1947 to 155,000 in 2005, there is cost on a range of products, notably postcards, a post office for every 6,500 people in India. letter cards, newspapers, and printed books. Moreover, 89 percent of these post offices are in Although some rebalancing of tariffs has taken rural areas, opened with the tacit knowledge that Executive Summary 3 they would be loss making. This situation is not subsidizing competitive products and services being unique to India-rural post offices around the provided by India Post. world lack sufficient transactions to make them viable. In France 20 percent of all post offices are MARKET LIBERALIZATION AND active for less than an hour a day, and in the United REGULATION Kingdom 90 percent of rural post offices are loss making. The U.K. government has recognized the A clear message from the seminar is that market community value of rural post offices and provides liberalization needs to be approached cautiously. Royal NMail an explicit subsidy to maintain them. Yet market liberalization is already taking place. In India the issue is whether the current method of India Post faces competition in some of its most providing rural post offices is the most cost- important markets. Courier companies are already effective way of achieving universal service goals. well established in India, and these companies could India Post needs to explore whether franchising or grow to provide additional services to the business using agents, or simply selling basic products community, further eroding India Post's revenues. through other outlets, would be a more efficient The European Union has tackled liberalization by way to increase access. And it is critical to slowly reducing the reserved area for postal services. understand how to increase revenues by channeling On January 1, 2006, all mail over 50 grams will be financial and information technology-based open to competition. But in most EU member services through the vast rural branch network- countries around 95 percent of the market will and even more important to implement this. probably still be reserved for the incumbent postal A second key aspect of the universal service administration. Thus Indian policymakers and India obligation is mail delivery. The vast changes in Post should not be too cautious in their approach communications in recent years raise the question to market liberalization. At the very least of whether all postal users still need mail delivery liberalization will mean that the operators now six days a week. The expansion of mobile phones providing valuable services outside the law will be and electronic communications has greatdy altered working within the requirements of the law. the profile of mail in manv countries and is gradually Liberalization brings with it a need to establish an doing so in India. Thus policymakers should look independent regulatory body that can provide at the needs of the market to help reshape the knowledgeable and impartial arbitration in the universal service obligation. In the European Union sector. The present situation, with the Department the commitment to daily delivery is written into law, of Posts acting as both operator and regulator, but manv question, whether this is really a market- benefits neither India Post nor the competitors the based need. Business customers will demand daily department is supposed to regulate. delivery and their volume of mail will warrant that service, but whether residential customers require RESTRUCTURING OF INDIA POST TO the same frequencv of service is unclear. The EFFICIENT SERVICES feasibility of segregating business and domestic mail for delivery is also an issue. These issues merit Seminar participants largely agreed that it was time greater investigaton, to establish the implications to reconsider the status of India Post as a of any changes for customers, service and cost. government department. Changing market Who benefits from affordable tariffs is another requirements demand a more commercial focus quesnon that needs consideration. There appears to that would enable India Post to respond to an be little merit in setting tariffs for core services that increasing array of competitors and rapid changes clearly do not cover the cost of providing the in technology. Despite facing growing competition services and that potentially benefit the better-off in its core areas of competence, India Post should and in some cases business customers. The tariff be able to diversify its products over the medium structure of services such as Speed Post, introduced term to increase revenue, providing a wider array to compete with courier operators, also needs of business mail and financial services. review. According to India Post's 2004/05 annual Participants also agreed that India Post has report, revenues from Speed Post do not cover remarkable outreach and so is well placed to costs. That means that the government is effectively provide pension, insurance, and a full range of 4 Transformation of India Post for Vision 2020 .; S 2_ banking services, particularly to underserved poor actio/i and izpkementation, emphasized by both the and rural clients. Yet there was little consensus on Secretary Posts and Mlember Operations along with how best to do this. Some felt that India Post could many others at the seminar. Seminar participants provide financial services directly and assume the widely agreed that greater - . and a greater range financial and business risks in its own name.' Mlany of postal financial and inform ation ..' , a 1 others felt strongly that India Post should serve products antd serices would be the drivers in creating merely as a conduit or service provider, acting on a more viable India Post-an agile, market- behalf of an existing financial institution or the responsive, and efficient organization capable of government. making the best possible use of its considerable While no resolution was reached, perhaps the next assets of trust and goodw'i, its human resources ' . ~~~~and its branch infrastructure. Still, translating the steps for India Post in either scenario should center on piloting financial products and services, vith the ideas for new postal, financial and information '. . ~technologv-based services, and for new results of these initiatives forming the basis for its t partnerships, 1nto activity on the ground remains a future strategy. The emphasis should continue to be partne io acti on the ground reaionsa on broadening the range of financial services chalene. offered through the postal network and piloting outline. new products. In addition, while there have been some initial successes with Western Union and some KEY OPERATIONAL ISSUES of the mutual fund companies, much untapped potential remains in this area. Depending on The sheer size and vast outreach of India Post give progress on this front and the successes and failures it great potential. If India Post can harness its in any new products or partnerships pursued by strengths and address its weaknesses, it could India Post, the longer-term strategy could then be become a viable, customer-focused organization developed. (Table 1). Regardless of what this strategy is, there is a clear consensus on the need to fully realize India Post's AlanageNenlt Autonoiqy potential to leverage its network and strengths to Under India Post's current structure, its deliver a greater range, depth, and quality of management lacks the autonomy to make financial services, especially in rural areas. That commercial decisions. Several other factors also would not merelv improve operational efficienc u * ~~~~~~~~undermine the capacity of India Post to act as a and boost revenues but it would also conttibute commercial organization-a policy of internal significantIN, ~~~comerla toalato- thes deelpmn ofternalacia significanily to the development of the financial recruitment, a promotion policv based on seniority sector in India. rather than metit, and a lack of incentives in the Another consensus of the seminar was on the need salary structure. Without a change in the status of for technology to be a key enabler for whatever India Post, management is unlikely to gain significant strategy India Post pursues. Better technology autonomy. Still, some short-term measures could would bring manv benefits-greater efficiency in be taken to improve the situation, including giving operations, better financial management and managers, greater budgetary control to empower accountability, and increased revenue from the sale them to make decisions, encouraging efficiency by of information technology-based serviccs (such as measuring results and comparing the performance e-government and logistics services) through the of circles (bcnchmarking), and decentralizing postal network. decision making to the circle level to the greatest extent feasible. More broadly, the seminar reached strong consensus on the need for change to enable India In addition, India Post needs to take a more Post to increase its efficiencv. That would require commercially focused approach to business reinventing the organization through a move to planning so that it can react more quickly to the Implicit in such a vision for India Post is the conccption of a corporatc entity, \vhich could be either the entire postal department or just a part of the current department structured as a corporate entity (bank) to provide financial services. Executive Summary 5 Table 1. Strengths and Weaknesses of India Post Strengths Weaknesses * Network of 155,000 branches * Recurring deficit and budget subsidies * Rural coverage serving all sections of societ) * Limited capital expenditure (1 percent of total * Largest savings bank in India + Non-economic pricing * Second largest life insurance provider * Lack of adequate compensation for agency functions * Largest pension distributor * Slow grox,vth in traditional products and cream skimming by competitors * Dedicated and trusted workforce * Slow growth in core products + Largest retail network, carrying multiple products and * Lack of management autonomy services market. The five-ylear planning cycles designed for critical input into the development and launch of government administrations are clearly inadequate new products. This is particularly true for high-end for organizations working toward commercial postal, financial, and information technology-based objectives. services, all relatively new product areas for India Post. AIarketing Strategy antd Buisiness Developmient Operational Eerm.n d t n As a tgovTernment department, India Post lags The seminar focused on many areas in which India behind its more commercial competitors in behin itsmorecommrcialcomptitos in Post can improve its opera'tional efficiencvr and marketing. But with all the strengths it possesses, a -learls define markeing srategs shoud reapquick better use its infrastructure. For example, improving clearly defined marketing strategy should reap quick dividends. The marketing strategy should focus on operational processes could enhance the quality of developing, marketing, and selling current products postal services. And increasing the use of mobile and services as well as developing new products to post offices could improve India Post's outreach. benefit from economies of scope. Key priotites A critical effort is better leveraging the vast rural are diversifying services (including development of network of branches, especiallv in providing databases to promote direct mail services and financial services. Some steps in this direction have providing logistics services), focusing on core been taken, but the untapped potential remains competencies, and introducing value added immense. The possibilities include enhancing the products. Another critical area of focus is outreach and service quality of the finance marts improving product design, such as providing one- and scaling up partnerships, such as the partnership stop mailing solutions for business customers. And on the self-help group program with the National for kev business customers India Post needs to Bank for Agriculture and Rural Development consider moving toward a system providing trained (NABARD). In addition, a greater range of sales staff dedicated to meeting customer needs. partnerships with banks, insurance companies, and Key to success for all the new products and services microfinance institutions-if structured and that India Post seeks to offer is developing media implemented well-could provide an excellent knoxv-how, improving its corporate brand channel for delivering financial services while also know-how, improving its corporate brand providing a sound revenue source for India Post. OtT 2 [-and honing its advertising strategy. These initiatives will need to go hand-in-hand with Other efforts to sharpen operational efficiency the upgrading of retail outlets and be supported by could focus on computerizing operations and high-quality internal and external communication reviewing the rules of rural post office provision to campaigns. Also requiring urgent attention is the extend access without increasing operational costs. creation of a better sales culture for all empl()yees, In addition, India Post could plan a large-scale but especially for those who deal directly with communication exercise to build a commitment to clients, particularly in value added services. Indeed, increasing efficiency among a large number of technical and marketing training for staff will be a employees. And it could create and implement a 6 Transformation of India Post for Vision 2020 .:. !, quality standard to achieve Six Sigma results in all achieved in partnerships with such companies as operations. Western Union should be replicated with other Yet another critical element of reform is shifting banks, microfinance organizations, insurance het acconotin systelem nto af c eost-base approac. providers, and other rural service providers. The the accounting , Indiast annot provision of financial and information services, Without cost-based accounting, India Post cannot ofesteedu.cp o eeoigsc achieve~~~~~~ opia reut.n iaca offers tremendous scope for developing such pchieverformac formulatsin assessing financial partnerships, which could make a big contribution performance,.formulating business strategies, to India Post's revenues. The unparalleled trust that pricing products and services, analyzing thle pricing producs ad sIndia Post commands and its vast human resources performance of product lines, or negotiating and branch network also offer a strong base for partnerships. partnerships, and as many seminar participants Idenfi pointed out, these attributes need to be leveraged fIin@ng and Implement6n,g Enablers muhmr'ffciey much more effectively. Seminar participants identified three key enablers of change for India Post: technology, partnerships, Interest in such partnerships from both public and and human resources and capacity building. private sector entities appears to be immense. The challenge is to form as many of these partnerships Technology. Technology is the key enabler for as make business sense. That means structuring transforming physical networks into electronic them in a way that maximizes their value to India networks, creating connectivity that could bring Post while also satisfying the business objectives of significant benefits in strengthening banking and the partner. Agencies like the World Bank could logistics operations and the rural network. help India Post move ahead on such initiatives by Introducing new technology could also enable post bringing in international best practice and expertise offices to provide new products and services, such where needed, particularly through pilot projects as e-services, data mining, computerization of land and studies, and by helping to formulate business records, and registration of property. To yield full strategies and providing transactional advice for benefits, technology adopted by India Post would partnerships. In addition, industry associations such need to be integrated, to reflect best practice, and as the Confederation of Indian Industry and the to permit upgrading and the addition of new Federation of Indian Chambers of Commerce components down the line. and Industry could provide an excellent platform A computerization and automation program would for regular interaction between India Post and the entail substantial capital expenditure for India Post. private sector-to exchange ideas and feedback on Thus technology should be rolled out sequentially operational experiences. This sharing of ideas and through the network based on return-on-investment experience could help put these partnerships into analysis, with prioritv given to the most strategic operation faster than would otherwise be possible. revenue-generating services and operational centers. Human resources and capacity building In introducing new technology, India Post needs to Initiaves centered on human resources need to be partner with appropriate organizations in sharing an integral part of the efforts to improve efficiency and developing skills and knowledge and bringing and increase the range and quality of products. investments into the sector. In addition, if India Capaciy buildinginitiatives need to include training Post is to develop as a logistics hub, it needs to build tenance skils servies ty and pro ivity capacity through proper training of emploees to enhance sktls, servce quaity, and producvty. handle newhrnesouh p erv tralmng of employees to They should also include use of performance- based contracts for managers and outsourcing Partnerships. The initial successes India Post has partners. Executive Summary 7 NEXT STEPS Reform of the Postal Sector Reform of the postal sector should hinge on five There was a clear consensus among seminar key areas: developing a postal policy, defining the participants that the entire postal sector-not just universal service obligation, enacting a new law, India Post-needed reform. While India Post is the establishing an independent regulatory authority, dominant player in the sector today, there are clear and moving gradually toward corporatization of goals that need to be pursued in developing the India Post. Box 1 outlines a detailed set of actions sector as well as India Post. in each of these areas. Developing a postal policy Postal policy should drive the direction of reform in the postal sector. The policy should cover such issues as: * Definition of universal service. * Market liberalization. * Regulation. * Postal employees. Postal policy should take into account the views of all stakeholders, including customers, employees, and competitors. And it should be consistent with policy for other cross-cutting sectors, such as finance, government services, and information and communications technology. Defining universal service The work to define universal service should involve several steps: * Redefine and clearly understand the role of the universal service obligation. * Define dehvery targets based on market need. * Determine the density of post offices based on market and social need. * Reassess the role of subsidies with respect to individual products, delivery points, and the provision of retail outlets. + Assess alternative models for providing universal service and determine the cost of each. * Determine a suitable method for financing universal service. Enacting a new law India Post is governed by a law enacted in 1889 by the British colonial government. Whether this outdated laxv can provide the flexibility to adjust to a fast-changing sector is questionable. Changes to the law are needed to update the legal environment in which India Post operates. Establishing an independent regulatory authority Establishing an independent regulator is essential in the current climate. Independent regulation should be developed to carry out the following functions: * Setting tariffs for the universal service operator. * Awarding licenses to postal operators and collecting hcense fees. * Ensuring the provision of universal service. * Monitoring the market and collecting statistics from all competitors. * Policing the market to ensure a level playing field. * Ensuring that reserved areas are protected for the benefit of the universal service provider. * Ensuring access to the universal service provider network. * Ensuring that the universal service provider does not cross-subsidize competitive products and services. Gradually corporatizing India Post In line with the international experiences presented at the seminar, many participants felt that the status of India Post needed to be changed to allow management greater commercial flexibility to build on the strengths of the organization and compete on a level playing field. Participants pointed to the examples of Deutsche Post, La Poste, and China Post as demonstrating the benefits of moving toward a more commercial environment through corporatization. While Deutsche Post has since been privatized as part of a three-stage plan extending over a long period, the first stage was its turnaround. Corporatization of India Post could facilitate its turnaround by enabling: + Greater transparency and accountability. * Creation of a management information system for post office operations and development of a web-enabled platform for the department. + Restructuring of human resources to facilitate knowledge transfer and empowerment of employees to make business decisions. * A more market-focused approach to advertising, new product development, private sector partnerships, and sales of products and services. * Better management of costs that are cascaded through the organization. 8 Transformation of India Post for Vision 2020 & Reform of India Post to programs already providing telecenters). Much will depend on how well India Post is able to Regardless of the organizational form that India iiatean on tho el g nd-includin pleo Post ultimately takes, it will need considerable intaecio onhegud-cligplt Post ateltakes, it wil need considearal studies and pilot projects (such as the finance marts refrm nd estuctrin. he efom wll lealy and the self-help group program)-and how well depend on the policy goals of the government. If ind tlenselfrheese pi initiative s cold the government chooses to maintain India Post's .. . status as governmet departmet, it wif leave it play a cntical part in designing products and services statusaag oment department, itxwil its that can thrive in a marketplace that is ever changing, management with less commercial flexibility to hgl opttv,addie ytcnlg n introduce reform. Still, clear priorities for reform sice .q lity can be identified. The first step in reform for India Post hinges on As noted, reforming the accounting system; is critical. identifying its core competencies and formulating an Creating a robust, cost-based accounting system appropriate business strategy-identifying its core not only would enable India Post to assess the true products and services, its key customers, and the costs and revenues associated with each of its areas most under threat from competition and products and services, it also would aid decision developing a strategy to defend the position of making and provide critical information on the each. Special attention needs to be given to organization's financial performance. Equally identifying key customers and analvzing the important is undertaking human resource reforms, products, costs, and revenues associated with each. centered on service-oriented training for staff that India Post also needs to develop an understanding differentiates between the requirements of of its competitors and their products and identify corporate Customers and those of other customer which of its own products are losing market share. groups India Post aiso needs to focus on implementing Based on its findings, India Post can then develop technology initiatives and computerigation. India Post existing products as well as new value added intends to have computers in all its departmental products to compete against new market entrants. post offices by, the end of the Eleventh Five-Year In addition, India Post needs to measure the qualit Pan, and maximizing the benefits of connectvity at of its service and undertake diagnostics to this level will require integrated, best practice of ts ervce nd ndetak dignotic t soft-ware and hardware solutions. But while identiuf any underlying problems. Where service is failing, it will need to take action to correct the computerization is the enabler for all other problems. initiatives, the costs and benefits of computerizing all branches must be carefully considered. Another important step is identifying non-core competencies. India Post should review areas where it The theme of the seminar was reinventing India can develop new products and services, particularly Post through more efficient delivery of a wide those that would use its network. Given the great range of postal, financial, logistics, and information scope for providing financial services, it is especially technology-based services. In line with that theme, important that India Post review the options for implementing neu produzcts and services and new these activities, including partnerships with banks initiatives that help India Post realize its full potential and insurance companies and the creation of a will do much to support its reform. Its success at postal bank, and carefully evaluate the implications reinventing itself will depend on how well the of each. It also needs to prepare and implement an organization is able to move from ideas to action strategy for providing government services, action while also steadily reforming and restruc- logistics services, and telecenters (and creating links turing. PRESENTATION SYNOPSIS WELCOME ADDRESS public-private arrangements, the need to define the universal service obligation in the postal sector, and Mr. Michael Carter, Countrp Director, the need to increase the provision of information World Bank technology-based services (particularly financial services) in rural areas. Participants discussed many Mr. Carter delitered the welcome address to seminar new prospects for public-private partnerships with participants. India Post, including microfinance, e-government activities, distribution of pension products, and The Indian postal system offers unique outreach accessing and linking rural markets. Presentations throughout the country: with 155,000 branches, no citizen fives mrthnwere made on the successful corporatization of citizen lives more than three to five miles from a Deutsche Post, Dutch Post, New Zealand Post, and post office. This network allows access not only to Mail. And th semiNar easizd th nd traditional mail services but to manv financial and to develop both core (postal) and non-core services other services-including deposits, money orders, to achieve optimum efficiency, economies of scale, pension schemes, life insurance, and e-services-all andieveloptim pact, e needed for the broader economic development of India. India Post has taken many initiatives since that seminar, particularly on partnerships in financial India Post, while diversifying its products and service provision. At this seminar there is a need to services, would need to emphasize its core emphasize a more concerted and integrated effort competencies and the provision of high-quality at reinventing India Post by leveraging its strengths services to citizens. And while the potential to of branch network and trust. leverage its resources is enormous, the challenges it faces are significant too. Cutting operational losses The objective of this seminar is to define an action and improving sustainability, broadening its range plan and a road map for its implementation-not just of products, improving efficiency and quality, and for India Post but for the sector as a whole. training and developing post office staff are all Elaborating such a plan requires developing a postal important issues that need to be addressed. sector policy; defining the roles of owner, operator, and regulator; preparing restructuring and business At this stage it is critical for India Post to define a plans for India Post; pursuing business opportunities long-term vision for transformation, learning from in postal, financial, and information technology- international experiences and taking advantage of based services; and initiating pilot projects in such enablers as information technology and partnership with private entrepreneurs. Only strategic partnerships. Indeed, the World Bank, through action can India Post achieve a revolution which has long experience in postal reform, is keen similar to that achieved by telecommunications to provide support for such reform to the reform in the 1990s, to the overall benefit of India. government of India. OVERVIEW OF INDIA POST AND OUTPUT FROM THE LAST SEMINAR PERSPECTIVE ON CHALLENGES AHEAD AND OBJECTIVES OF THIS SEMINAR Dr. U; Srinivasa Raghavan, Member AIIr. Simon Bell, Sector Manager, South Asia Operations, Department of Posts, Finance and Private Sector, World Bank Government of India Mr. Bell set the context for the seminar bp linking back to Dr. Raghaban protided a stuccinct summary of the potential the 2002 India Post-WForld Bank seminar and of India Post and the challenges it faces. summarising its lessons. India Post, with its 155,000 branches, provides an The seminar in 2002 stressed the importance of unparalleled network for meeting universal service 10 Transformation of India Post for Vision 2020 obligations and reaching all members of society. It restructuring process needs to be strengthened by is the country's largest savings bank, largest pension consulting with stakeholders to assess their distributor, and second largest life insurance objectives and expectations and by drawing on provider. And its trusted and dedicated workforce successful international experiences. delivers in even the most difficult terrain. All these factors provide a strong foundation for more A basic priority is to concentrate on core compe- efficient delivery of a broader range of services by tencies and fulfill the universal service obligation India Post. cost-effectively. At the same time, however, it is important to introduce premium services- But India Post also confronts big challenges- customized for different categories of customers- recurring deficits, limited capital expenditure (at that will be important revenue earners for India only 1 percent of total expenditure), the Post. Enablers for moving in this direction include preponderance of staff costs (salaries, wages, adopting market-savvy practices, introducing new pensions), an adverse net operating ratio technology, forming strategic partnerships, and (expenditure coverage ratio), lagging circles, implementing "out of the box" solutions to address unsuitable costing methods, non-economic pricing, specific market needs. and lack of commercial orientation. Some steps have already been taken in restructuring India Post also needs to deal with the emergence of India Post. The ministry has appointed two electronic alternatives to mail, improve the quality committees, one for granting heads of circles of its products and services to satisfy ever more greater financial and administrative powers and the demanding customers, and respond proactively to other for restructuring India Post by designing an market competition. It is critical that India Post administrative structure in line with the strategic reinvent itself and respond to the challenges posed vision while doing away with bureaucratic by globalization, corporatization, liberalization, approaches. Other measures include appointing the technology, changing markets and environments, School of Planning and Architecture to design a and ever more demanding customers. new look for post offices consistent with a changed brand image and awarding a consulting contract Investing in information technology systems and for development of a blueprint for India Post. The building staff capacity will be important enabling blueprint will outline policy, structure, practices, factors. Upgrading technology is critical to attain internal operations, a diversified product portfolio, operational efficiency, and the Department has and an appropriate market mix. So the process of committed itself to computerizing all departmental change has already been initiated at India Post, with post offices by the end of the Eleventh Plan period, studies aimed at making it a more viable organization. The seminar discussions and follow- OPENING ADDRESS up will contribute to this process. Mr. K Ganesan, Secretary Posts, Department of KEYNOTE ADDRESS: VISION 2020 AND Posts, Government of India INDIA POST Air. Ganesan strongly emphasiged the need to reform India Post and thanked the World Bank on . of India Post Mr D.p. . AIaran, Minister of forfacilitating the seminar Communication and In]brmation Technology, GovJernment of India One important outcome of the seminar is expected to be the translation of the brainstorming In the keynote address (delivered by Secretary Posts)) Air. discussions into an action plan for the government Aiaran thanked the World Bank and the Department of and India Post. A blueprint for implementing Posts for organiring the semninar and wished India Post reforms would help ensure that India Post moves success in its endeaors. He emphasized that drawing on in the right direction. lessons from the past is very important in charting the future India Post is keen to change and has already taken for India Post steps to survive in a market driven by competition. India Post has been an important agent in the While it has initiated several internal changes, the country's development, helping to develop Presentation Synopsis 11 communications as well as mobilize savings. But to competitive, and capable of providing high-quality be a viable organization in 2020, India Post needs service to its customers. to build momentum for growth. That will require adopting key enablers such as technology, THE CHANGING WORLD OF POSTAL diversifying services, and drawing on and implementing key lessons from international best practice. POSTAL INDUSTRY, CHANGING India Post has initiated some steps in this direction. CUSTOMER REQUIREMENTS, It has brought computerization and V-SAT LIBERALIZATION, INTERNATIONAL technology to the traditional bastion of the post RELATIONSHIPS, REGULATION office, is moving toward the networking of post offices, and has started to automate its sorting Mr. Graeme Paul Lee, Senior Postal Policy centers. All these efforts will help capture larger Speaialist, Global Information and Communication parts of the business mail market. In addition, Technology Department, World Bank starting in the 1990s India Post moved beyond its traditional mold and developed such services as Mr. Lee presented an overview on the status of postal business mail and Speed Post for higher-end services throughout the world and the status of reforms in a customers with an aim of increasing revenues. In number of countries. the midst of these efforts it is extremely important India Post has one of the densest postal networks that the quality of service be excellent to ensure that in the world, with a density comparable to that in the customer base remains loyal to India Post. Western Europe and greater than that in the United While fulfilling its universal service obligation, India States. But in India as well as abroad, rural postal Post must also concentrate on commercial aspects networks are costly to maintain and are usually of its business with a view to reducing subsidies. underutilized and loss making. Some countries are Distinguishing between universal service and other seeking to lower network costs and increase services is important, as the government would be commercial orientation through franchising required to financially compensate India Post for schemes-partnering with private businesses to meeting the universal service obligation. Thus while extend postal services to underserved remote and it is critical that India Post rapidly roll out a rural areas. In the United Kingdom the government commercial accounting system enabling it to gives Royal Mail an explicit subsidy for the provision improve management, in parallel it will also need to of loss-making rural post offices. develop a cost accounting system allowing it to In the United States a key issue identified by the U.S. assess the costs associated with the universal service Postal Service is the changing profile of mail, obligation. leading to lower revenues for each delivery point. In drawing up the plan for 2020, India Post needs The volume of first-class mail is falling, while the to understand both the multiple opportunities and volume of less-time-critical direct mail is rising. the complex threats that the future holds. And it One issue that the government of India might needs to recognize the competition from courier consider is what this changing profile means for the services and electronic alternatives to mail. Though definition of the universal service obligation. India Post is keen to change and is making headway towad reorms it ustgradallyoverome To increase revenues, public postal operators are towad r , it mincreasingly diversifying the range of services bureaucratic obstacles and persevere. Training is an distributed through post offices. In the Republic of important part of restructuring as well as an Korea all post g p p . . Koea al postoffices with sufficient space provide important tool for India Post. But the training free access to telecenters, thereby meeting a social needs to be reoriented to ensure that post office staff can move up the value and quality chain and and develop eo a of the servces, government. Brazil has developed a post bank in help improve efficiency in the delivery of services. partnership with a private bank, which targets If India Post can respond adequately to the mainly communities that previously lacked access challenges, it has the potential and resilience to to banks. They have also introduced an easy export transform itself into an organization that is viable, product that simplifies overseas trade for small and self-sustainable, technology driven, commercially medium-size enterprises. 12 Transformation of India Post for Vision 2020 To counter growing competition, postal operators The first phase (1990-97) focused on reducing must be given greater autonomy from government costs, creating efficient processes, and improving control so that they can operate on a more the quality of service in the domestic market. The commercial basis. In the 25 EU member countries second (1998-2000) focused on expanding the only 1 postal operator is a public administration, product range and offering new services along the while 12 are state-owned public companies, 9 are value chain. Value added services include direct statutory corporations, and 3 are private. In marketing centers (providing knowledge, Trinidad and Tobago introducing commercial information, and solutions to communication management practices improved service and problems for direct mailers), Deutsche Post Print increased volumes, revenues, and productivity. India Com (providing high-volume print production for Post too needs to introduce commercial practices mass mailers), and pack stations (offering high-tech if it is to compete in its markets. It also needs to lockers where parcels are delivered and customers consider the implications of market liberalization. can pick them up after receiving notification The trend worldwide is to liberalize the market to through Short Message Service, or SMS). The third allow customers greater choice in service providers, phase (2001-06) consists of consolidating cross- Independent regulation may be introduced to selling potential, taking advantage of all possible protect consumer interests and ensure a level playing synergies and developing integrated products and field. solutions. To develop a viable and sustainable business model, Learning from the German experience, the Indian India Post needs to build on the strengths of its government and India Post could aim in the short network and staff. There are many lessons that have term for reducing the costs of operation, defining been applied around the world from which India the scope of the universal service obligation, can learn. From targeted subsidies to franchising, accelerating the reform process by setting up a from diversification of services to provision of regulatory authority (separating the functions of social services, the opportunities for India Post are owner, operator, and regulator), and providing extensive. But they must be pursued in a high-quality, customer-driven services with greater coordinated way. revenue and profit potential. India Post would then need to diversify its product base and strive to DEUTSCHE POST: MODERNIZATION- invent products to compete with courier service NEW BUSINESS OPPORTUNITIES, providers. LIBERALIZATION, STRATEGY AND The German experience shows that a postal service, STRUCTURE, COMPETITION to compete effectively, needs an efficient organization and dynamic leadership to develop Mr. Amin Saidoun, Director, UPU Affairs, and implement high-quality, customer-oriented Deutsche Post products. It also suggests that in the long run India Post could both compete with and cooperate with Mr. Saidoun described the reform of the German post office, other service providers. For example, Deutsche Deutsche Post. Post cooperates with postal organizations Postal reform in Germany was carried out in three throughout the world through the Universal Postal phases in 1990-2006-to respond to the challenges Union and competes directlv with them though its of globalization, liberalization, and digitization. ownership of DHL. Similar "coopetition" exists Before 1989 Deutsche Post suffered huge deficits, with other service providers, where post offices lacked political consensusonreform,andfa provide services on behalf of suppliers such as lacked polltical consensus on reform, and faced bnsadisrnecmais . . . ' ~~~~~banks and insurance companies. strong competition and tough unions opposed to radical change. But once initiated, the reform of A final message from the transformation of Deutsche Post was backed by government Deutsche Post: the reform took much time, and it legislation that prevented interference in the was underpinned by strong, consistent support process. from the government. - W Presentation Synopsis 13 RoLE OF TECHNOLOGY FOR POSTAL examples show, information technology would SYSTEMS AND CHALLENGES FOR INDIA allow online feedback from customers and participation by employees in the management AIr. Sanjaay Mirchandani, Regional Vice process. President, Microsoft Asia India Post understands the importance of computerization and has already taken steps in this Mr. Mlirchandani described mays to manage the postal sector direction, setting a target of connecting all business if .- by using information technology as a key departmental post offices by the end of the enabler. Eleventh Plan period. But maximizing the returns There are four pillars of strategic change and on technology investments requires sustained efforts development for a postal system: empower the in implementation and integrated, best practice customers, employees, and partners through great technology solutions. services and solutions; broaden the use of the post office and transform it into a gateway for value TRANSFORMATION OF INDIAN BANK added services; measure operational costs, productivity, and customer value; and improve the INTO A PROFIT-MAKING, CUSTOMER- productivity of service delivery and employees. FOCUSED BUSINESS Information technology supports all four of these pillars. Ms. Ranjana Kumar, Chairperson, National Bank for Agricu-ltu1re and Rural Development; and Both the United States and New Zealand have successfullv used information technology platforms former Chairperson and Managing Director, Indian to integrate their postal networks. The U.S. Postal Bank Service built a strong information technology Ms. Kumar presented a case study on the restructuring of infrastructure to support electronic postmarks and Indian Bank, apublic sector organiwaton. cost-effective delivery of services. And New Zealand Post introduced an e-government platform Unlike India Post, Indian Bank needed immediate for delivering customized services. restructuring because of a serious financial crisis. This crisis resulted from two structural issues: weak India Post could integrate its vast network through bsns efrac n lwdhmnrsuc a platform such as XMIL (Extensible Mlarkup busiess performance and a flawed human resource Language). That would help in implementing } different applications in different post offices and A first attempt at reenergizing the bank failed in the support scaling up in the future. Information late 1990s, costing the government significant technology would enable India Post to increase its resources to recapitalize the bank. In a second phvsical outreach and efficiency bv improving the attempt a management advisory group was created. tracking and sorting of mail and strengthening the This group identified several critical problems: customer interface at each stage of the value chain mismanagement, neglect of market opportunities, (collection, sorting, transport, delivery). Because all and a total lack of accountability. Indian Bank postal transactions would be computerized, focused on completely reforming its top technology would also help reduce corruption at management and brought in a dynamic team of the grassroots level and enable management to professionals. That introduced great flexibility in the keep a check on employees-while also leading to bank's decision making. The management advisory cost savings. And information technology would group prepared a restructuring plan for 2000-03 help improve human resource management by that was so successful that after a decade of losses supporting better employee records and online the bank earned a net profit in just two years. training and capacity building. Business performance and human resource Mlore generally, information technology could management were the two important areas of improve the core operations of India Post, increase improvement for Indian Bank. The government credibility and transparency, reduce costs, and allowed a two-tranche recapitalization, and more increase profitability in the longer run. It would also than 3,000 staff left under the voluntary retirement help in staff development. And as international scheme. The bank improved human resources by 14 Transformation of India Post for Vision 2020 upgrading skills through training, improving defining the universal service obligation and promotion and transfer policies, and giving separating the functions of owner, operator, and managers the freedom to make important decisions. regulator are crucial. Also critical is to consider It also defined key indicators for regularly measuring outsourcing non-core functions (catering, cleaning, performance. building and vehicle maintenance) while focusing on making functions that generate revenue more This example demonstrates that strategic reform is gomaking an s tablerate rtant ste competitive and profitable. Other important steps possible in the public sector-and that it can toward building a viable post include diversifying transform organizations with complex financial and the product portfolio and improving the marketing operational issues into vibrant institutions. For India strategy. And developing partnerships with private Post the case study offers critical lessons on the firms interested in accessing the unparalleled post importance of addressing employee motivation, office distribution network could increase both establishing a dynamic management team, and efficiency and revenues. pursuing a more aggressive marketing strategy in order to thrive in the market. Information technology is a key enabler, and here India Post is moving in the right direction. An information technology system is like a plug-and- DISCUSSION ON INTERNATIONAL socket arrangement: if the socket (integrated ExAMPLES AND RESTRUCTURING platforms like XML) is installed at the appropriate EXPERIENCES RELEVANT FOR places, post offices can be plugged in as they INDIA POST become ready. Indeed, information technology offers immense benefits through the potential to Mr. M V. Rajasekharan, Ex Offcio Member of improve service delivery, reduce corruption, the Planning Commission and Minister of State for diversify into related lines of service, and build Plann'ng, Government of India capacity within the organization through online Planning, Government of India training and customer feedback. Information Mr. Graeme Paul Lee, Senior Postal Policy technology would also support the provision of Specialist, Global Information and Communication greater financial services through the postal Technology Department, World Bank network. The Indian Bank case study provides thoughtful Mr. A4min Saidoun, Director, UPU Affairs, insight into a successful strategic reform process in Deutsche Post India's public sector. It shows that it is indeed Mr. Sanjay Mirchandani, Regional Vice President feasible to build strong public sector institutions through restructuring plans directed at improving Microsoft Asia business and human resource strategies. Mr. Simon Bell, Sector Manager, South Asia Finance and Private Sector, World Bank MODERNIZING POSTAL COMMUNICATIONS SERVICES AND Mr. Amrit Pandurangi, Executive Dzrector, LOGISTICS THE OERAIONS OF PricewaterhouseCoopers Private Limited LOGISTICS: THE OPERATIONS OF DEUTSCHE POST Mr. RR Rao, Joint Managing Director, ICRA Mr. Amnin Saidoun, Director, UPU Affairs, This discussion captured keg messages for India Post from M Deutsche Post international experiences and suggested strategi es fo r restructuring the organiZation. Mr. Saidoun focused on two primarg aspects of The international examples-and especially the moderniZation: moderniZing retail distribution and The~ ~ ~ ~ ~ ~~~~ ~~~~~~mdriZn operafionsa (transport,d sorclllvth restructuring of Deutsche Post-demonstrate that moderniging operations (transport, sorting centers, delivery, postal sector reform is a long-term process. They and qualfi_). also show that reforms, to have a chance of The modernization of Deutsche Post took place success, must be based on clear consensus and on two fronts: reducing the number of operating support from the government. For India Post centers and improving quality. - ~.Presentation Synopsis 15 The reform reduced Deutsche Post's sorting centers The reform of the French public postal operator from 368 to 116, its delivery bases from 11,000 to began in 1991 with the separation of policy and 3,700, and its retail outlets from 30,000 to 13,000. regulation from the operation. La Poste was In addition, automation was introduced, processes transformed into a state-owned enterprise and since were standardized, and retail outlets were then has produced breakeven results or slight franchised to maintain outreach throughout the profits. Only recently has the government taken country. action to split the policy and regulatory functions. Qua.ty improvement effortsfocusonendtoend The new joint posts and telecommunications qualityThis indimpro eteortmeasufocu on end-tendent regulator (ARCEP) is expected to be operational in quality. This indicator, measured by an independent Novebe 2005. It a formd fro the institute, improved from 89.1 percent next day delivery in 1995 to 95.3 percent in 2004. Districts telecommunications regulator (ART). are ranked to encourage quality improvement, with Before 1991 La Poste was a government the winning district awarded a prize by the chief administration with strong labor unions, and it was executive officer. Automation is key in enhancing social tensions and strikes in the late 1980s that quality, enabling automated redirection of mail as motivated the government to undertake reforms. well as faster and more accurate sorting. In addition La Poste now has 320,000 employees (mainly civil to next-day delivery, Deutsche Post sets a number servants) and 17,000 branches throughout the of other quality targets relating to such issues as country. It also has a majority or minority stake in redirections, documentation of parcels, and 200 subsidiaries focusing on specific segments of damage to postal items. In international mail the postal market. These subsidiaries, targeted to Deutsche Post must meet strict quality standards in generate profits within two years, provide La Poste delivering to other European countries or face with greater flexibility in employment. penalties. La Poste's main objectives are to increase revenues, Deutsche Post has also made other improvements. reduce costs, improve service quality, and take These include address management, evaluation of advantage of new opportunities. La Poste has customer satisfaction through online surveys and tackled the issue of unprofitable rural post offices telephone interviews, and introduction of the "one- by partnering with supermarkets, general stores, stop shop" concept in retail outlets to enable and local governments to maintain reach while customers to obtain all Deutsche Post products in reducing infrastructure and staff costs. One location. In the past 10 years La Poste has significantly The Deutsche Post experience offers lots of best improved its postal financial services by practice that could benefit India Post. Rationalizing reengineering its operations and renewing its and standardizing processes in each operational strategic vision. With the agreement of the Ministry center has improved quality and made management of Finance, La Poste plans to set up a limited license easier. Using independent evaluation of quality and bank by January 2006. The process of establishing customer satisfaction has identified where quality is this bank has taken more than 10 years of policy failing and where improvements are needed. And negotiations with the Ministry of Finance, debates introducing automation and information with other stakeholders about cross-subsidies and technology has improved quality and led to new ensuring a level playing field, and capacity building opportunities for generating revenues. But perhaps within La Poste. The license will first allow the a key point for India Post is that the success in postal bank to provide housing loans without transforming Deutsche Post was based on involving preliminary savings, at a level playing field with employee organizations in the process. other commercial banks. To ensure a successful launch, La Poste has been working hard to increase EXPERIENCES FROM LA POSTE customer awareness of its new financial services. Mr. Daniel Le Goff,Depuy Director, International The La Poste model differs from the Deutsche Development, La Poste, France Post one but nevertheless provides learning opportunities for India Post. The franchising of Mr. Le Goff descrbed the reform of the French postal rural post offices by partnering with local businesses operator, La Poste. has led to greater reach and customer service while 16 Transformation of India Post for Vision 2020 reducing costs. The creation of subsidiaries has department are substantial, with 62 percent of the given La Poste the flexibility that a government funds allocated to the department in the Tenth administration lacks. The move to a limited license Five-Year Plan designated for modernization of bank focusing on designated sectors and products the postal department. may also be a model of interest to India Post. Explicit funding for the universal service obligation POSTAL FINANCIAL SERVICES FOR provides transparency in accounting. Finally, as with ANYWHERE, ANYTIME BANKING Deutsche Post, the reform of La Poste has taken considerable time. Mr. Johannes Petrus Boon, Postal Financial Services Specialist, ING PostBank DISCUSSION ON CHALLENGES AND A1Ir. Boon described the restructuring of the Dutch PostBank PROBLEMS OF INDIA POST and discussed the findings of a worldw)ide studj on the AMs. Asha Swaroop, Additional Secretary, devlopment of postalfinancial serices. Ministr of Commerce, Government of India The post office network in the Netherlands is jointly owned by TPG Post and Postbank (each Mr. Amitabh T7'erma, Joint Secretarg, Financial with a 50 percent stake). Dutch law requires that Sector, Ministry of Finance, Government of Izdia there be a minimum of 2,102 postal outlets in the countrv and that 95 percent of consumers be within Mr. Amin Saidoun, Director, UPU Affairs, 5 kilometers of a full-service outlet. Post offices in Deutsche Post the Netherlands provide a one-stop shop for postal, financial, and other services, including books r. DneeofDrtrItraol and leisure, entertainment, and stationerv products. Development, La Poste, France PostBank is one of the most advanced postal banking networks in the world in terms of market internal y and externally. coverage and financial performance. Its success is based on careful definition of its market and India Post needs to clearly analyze its market and commercial strategies and heavy investment in formulate a corporate strategy aimed at improving information technology. its performance in the face of growing A World Bank studv on postal financial servTices in competition. The government, for its part, owes 6 d i ,, . , . 1 . ~~~~~63 developingcountnles shows how extensive these India Post compensation for costs related to the s g universal service obligation as well as greater services are. In 73 percent of the countries post corporate autonomy and flexibility. That calls for ofic branches onumbero the ombied tlo f updating the legal, regulatory, and institutional bank branches and microfhnance outlets. Moreover, framewor fo h otlsco, whic coud,b post office branches are more evenly spread, with framework ior the postal sector, policy coad o e greater representation in rural areas. Postal financial bynouthed government, sector policy to be adopted services are used by more than 600 million people, by the government. hold more than US$90 billion in savings accounts, In moving forward, India Post can emulate and carry out more than 3.5 billion cash-based international models that have been used under money order transactions a year. In 54 percent of conditions similar to those in India. One important the countries financial services are the largest revenue direction is diversifying its product base to provide earner for the postal operator. financial and e-services, with a focus on rural areas. Postal financial services worldwide show common With its significant branch presence in rural areas, institutional patterns: they are either a business unit India Post can act as a channel for such servces or a subsidiar of the postal administraton and supporting the government's aims, under its , a . o supportoning mum g rovernment's under some have developed partnerships with private Common MiimmPrgrme,ofirms. Most offer a full range of financial services microcredit and reducing transaction costs for small (payments savings pensions, credit, insurance, bill borrowers in rural areas.I I payments). Basic postal financial services tend to be Two key areas for India Post are quality of service limited to payments and savings, however, with the and modernization of infrastructure. The other services provided through an agency infrastructure requirements of the postal agreement with a partner. Presentation Synopsis 17 While financial services are an extremely important provides fixed price basic banking services to less revenue generator for many postal operators, the profitable customers, with the government study shows that in many countries they also face financing the services. problems: limited investment, cost inefficiency, uncompetitive~~ ~ prdcs'niuae n or Postal operators in the European Union use diverse uncompetitive products antiquated and models for offering postal financial services, qualityT services, and lack of marketing, securi; and ranging from a fully or majority-owned bank to a customer focus. These findings suggest a four-step joint venture wirh an establshed bank, an integrated process for postal operators, to go from strategy model (where the postal operator distributes to action: services for multiple partners while controlling the + Undertake market analvsis and diagnosis. product offerings, the marketing, and the client + Develop a strategic concept. database), a distribution model (where the postal * Pursue short-term steps operator distributes services for one partner and - Optimize current postal financial services. does not control marketing), and a shared network. - Strengthen international payments. In both Germany and Italv the postal operator - Consolidate cash management. plays the role of a retail bank. - Build a business unit with a cost allocation anBuild mabusinagem unit win mationstem alocafion If India Post is to diversify and deliver high-quality and management informauion svstem. services, it will be important to develop new skills - Implaunch pit ptrojecs within the post office network, starting with - Iunrach wioth stakhojders. product differentiation and pricing. A kev step - Interact with stakeholders...C * - Build partnerships. toward providing customers with financial - Solve financing issues. instruments such as bonds mnight be to enter into - Strengthen regional and international strategic partnerships or joint ventures with commercial banks, as postal operators in some European countries have done. And important steps toward better service deliverv might include FINANCiAL SERVICES FOR POSTAL fostering a sales culture for all branch employees, OPERATORS: INTERNATIONAL enhancing the utilization of outlets, adopting the EXPERIENCES AND THEIR RELEVANCE service model used bNy Brazil's Banco Postal, and improving communications (such as through a TO INDIA down-to-earth advertising campaign like those in Mr. Joydeep Sengupta, Partner, McKinsey and Brazil and Germany). Com,pany existing FINANCIAL AND RETAIL NETWORK Alr. Senguipta discuissed ways to enhance India Posts SOLUTIONS and described rbb;ro. !t operating models for postal financial services in the Euri-opean Unzion as AIs. Li Shbuang, Program Aanager, Postal a eli as sonie success/itl business models -Pa o the Savings and Remittance Buireaut, China Post Gezwazz anld Italiazz inodels).for operatzng gsteassrtz isarket. AIs. Shuaang described new financial ser'ices introduced bj s Indiai's largest savings bank, with 1 60 million China Post, which, like India Post, maintains anz extensive ruJral nety ork. and serves a large customer base a ith 'aried customcrs and deposits of Rs 260,000 crore a . . . rl~~~~~~~~~~~emands o02er a diven'fe terrain. (TS$60 billion), India Post earns around 45 percent of its reenues from financial services. Tapping the China Post has 76,000 post offices (61 percent in mass retail market, particularly in rural areas, could rural areas), of which 33,230 offer savings services be a vcry profitable option for India Post-as such and 25,000 remittances. The institution manages initiatives havc been in Europe. Postal operators in 260 million savings accounts with deposits totaling many European countries provide a range of more than Rs 619,200 crore (LTS$143 billion, 9 financial services: in France, La Poste distributes percent of the market). A new law passed in August home mortgages linked to state savings schemes; in 2003 allows China Post to invest these postal savings Italb, Poste Italiane pays pensions and enables funds using its own strategy rather than channeling customers to pay utility bills; and in Sweden, Posten them to the Treasury,. China Post has done well in 18 Transformation of India Post for Vision 2020 managing the funds, investing them in bonds and This discussion, chaired by Dr. Mor, focused on the other financial instruments. presentations by Mr. Boon, Mr. Sengupta, and Ms. Shuang. China Post earns its biggest share of revenues from The important messages from the presentations by financial services (44 percent, with 80 percent of Mr. Boon, Mr. Sengupta, and Ms. Shuang center on this share coming from interest payments on emphasizing the present strengths of India Post, deposits at the Central Bank). The rest of its assessing its potential customer base, and tapping revenues come from public services (27 percent), that base effectively by providing customized philately (14 percent), express mail service (10 commercial services as well as universal service. percent), and logistics (5 percent). China Post offers Technology, capacity building, and strategic five main lines of products: retail, savings, domestic partnerships with such organizations as banks, rural remittances (some carried out electronically), credit organizations, and e-service providers could international money transfers (with Western Union), also be key factors for success. In addition, India and agency services (for pensions, insurance, Post will need to further strengthen its credibility lottery, Treasury bonds, utility bill payments, and the and brand image through better service delivery like). and better marketing of postal products. To build its retail financial business, China Post has India Post could take two possible directions for focused on improving its brand image and growth: tapping existing opportunities by introducing a range of postal financial services to improving the quality of existing services-or meet customer needs. In addition, it has entered diversifying services by targeting the mass market, into strategic relationships with commercial banks, which constitutes 57-60 percent of the total income rural credit organizations, and other financial pool. For the diversification route, one strategy that institutions. And it has worked to improve its India Post might consider is venturing into difficult performance by concentrating on several efficiency terrain such as the Northeast, where the regional indicators. rural banks and other financial institutions are unable In reform, China Post has followed a step-by-step to provide high-quality service. Partnering with such process. By the end of 2005 it aims to complete the organizations as Bhoomi and e-Seva would enable consolidaton of its electronic remittance system India Post to provide e-solutions in rural areas. and postal savings system. Its key enablers include introducing technology for connecting networks smart cards for e-transactions in rural areas and and for implementing the Green Card system create extensive retail databases. Providing a wide (online postal savings) partnering with strategic range of services effectively would require (online~ ~ pota saig) patern staei developing the necessary skills, however. stakeholders in providing a broad range of services d alongside the universal service, and constantly Among the current challenges facing India Post are upgrading quality to meet efficiency targets. the fall in volumes and revenues due to product substitution and private courier competition, the decline in credibility in some states because of DISCUSSION ON FINANCIAL SOLUTIONS corpnathegud corruption at the ground level, inefficiencies in FOR INDIA POST service delivery, and institutional and regulatory constraints. Participants suggested that many of these problems could be solved by implementing Bank technology at the grassroots levels and devising a Mr. Jobannes Petrus Boon, Postal Financial Services clear corporate strategy. In addition, internal policy Specialist, IN. PostBak ,changes could introduce greater flexibility and Spetalist, ING PostBank encourage innovative thinking. Other improvements Mr. Joydeep Sengupta, Partner, McKinsey and suggested include developing a new look for post Company offices, introducing customized services to increase viability, and implementing pilot projects at the Ms. Li Shuang, Program Manager, Postal Savings state level and replicating successful ones in other and Remittance Bureau, China Post areas. -lllE I t~ -Jl>'- 'Presentation Synopsis 19 OPPORTUNITIES FOR INDIA POST IN and introduce new lines of service-particularly in PROVIDING E-GOVERNMENT SERVICES rural India, where a large share of the population To RuRAL POPULATIONS remains underserved. Better technology skills would help post offices not only improve their connectivity and generate revenue but also fulfill the universal Prof. SuYbbasb BhatnagTar, Professor, Indian Insltutzte of Alanagement, hmedabad; Head of Centre for service obligation and deliver development the last of Mlanagement, hmedabad; Head of Centre for mile. E-Governance at Ahmedabad; and E-Government Adviser, W"orld Bank USING THE INDIAN POST OFFICE Prof Bhatnagar emphasiged the importance of e-government NETWORK FOR MICROFINANCE serzices particularly for rzural India. SERVICES Post offices could serve as important contact points between rural customers and the government in Mr. T,i-ay Mahajan, Managing Director, BASIX India. Of the 600,000 villages in the country, only Air Mahajan explained the savin 10,000 have access to some kind of computer gatween th dnd r facilities and only 5,000 are connected to the and posucservice as sav betcreen the dewnsnandfr anid szwply of suwch senmices as saziingcrdtpnzsad Internet. But with basic phone and state trunk insurance. dialing facilities, villages can be easily connected to znsurance. various networks. Niany countries, including India, In rural India people hold savings primarily in the have experimented successfully with telecenter form of assets. For low-income people the main projects. In rural India initiatives have been financial services needed include savings, credit, delivering a varietv of services, including ITC's pensions, insurance, and money transfer. Less than e-Choupal project (enabling farmers to obtain a third of the rural population now has access to information through Internet kiosks) and the credit from private banks, and only around 1 e-Seva project (providing kiosks in Andhra Pradesh percent to microcredit institutions and self-help that enable customers to pay utility bills, obtain groups. India Post could help these institutions passports, and the like). Fruitful partnerships in expand their outreach at lower transaction costs. rural areas for India Post could include linking with The first step in this direction for India Post is to Bhoomi centers (computerized kiosks providing understand the demand from all customers. The land titles), e-Seva centers, and agencies providing second is to initiate strategic partnerships at district railway reservations or property registration. Such services are revenue generators in rural India tat, sucess, theyo berreate o becase te pepleare ilhn topay or tem. that, if successful, they could be rephcated on a because the people are willing to pay for them. large scl. Ote.potntisfrbsns large scale. Other opportunites for business Key attributes of the rural operating model could development include remittances, debit cards, and include 24/7 facilities, convenient access points, the use of public caling offices as "manual ATMIs." online delivery of services, and self-use bv villagers Providing financial services in the Northeast offers assisted by trained and trusted staff. The staff another attractive option for India Post. Financial would need to be well trained in kev information .. services in the region are very limited as a result of technology skills and customer-otiented service, its difficult terrain and small, dispersed population. Organizations such as Bhoomi and intermediary The region has only 11 regional rural banks, 650 companies such as Drishti, which partner with rural branches, and Rs 15,456 million in savings deposits, entrepreneurs in setting up kiosks, provide training the least among all regions. But it has 6,857 post and management advice that could be helpful to offices, more than 10 times the number of bank India Post in building its skil base. branches. In accepting the challenge of providing To conclude, India Post should focus on financial services in the Northeast, the postal technology, the rural mass market, innovation, and network could have a significant development financing in order to improve the quality of service impact. 20 Transformation of India Post for Vision 2020 -s-' BREAKOUT SESSION 1: INDIA POST, BREAKOUT SESSION 2: POSTAL TECHNOLOGY AND FINANCIAL SECTOR RESTRUCTURING AND NEW SERVICES BUSINESS OPPORTUNITIES Ms. P. Gopinath, Depuy Director General, Ms. Isabelle Huynh-Segni, Postal Poligy Specialist, Financial Services, Department of Posts, GICT, World Bank Government of India Ms. Shobha Kosby, Deputy Director General, This breakout session explored kgy strengths and enablers of Corporate Planning, India Post India Post for expanding financial services and came to This breakout session focused on two sets of topics: at the broad conclusions about ways it could move forward in sector level, issues relatin secorlerl,zssesreltzg to the universal sertzce obli at on, developing such services. sector regulation, and market liberalization; and at the The core strengths of India Post include its large operator level, corporate strategy and institutional reform to retail network, its facilities for savings accounts and provide India Post uith greater management flexibiliy and money remittances, its ability to move letters and autonomy to deal with itsgrowing competition. Participants documents, and its strong credibility and trust as a were of the view that restructuring India Post would involve government department. The disbursal of post managing change, identi,fuing new business opportunities, and office savings is a well-run facility providing much enabling logistics as a keg tool needed services to the public and contributing to The universal service obligation and its implcations over 40 percent of the Department of Post's for India Post are of foremost importance. The revenues, and the default rate on money remittances government and India Post need to define this and money orders is only O.u1 percent. obligation, developing a clear mandate that would Several other key points emerged in the discussion: enable the operator to plan its reform. In addition, differentiating universal service from other services seMoney for deorstculd prdeliveryf can f ecel would help sort out the financing for operations spervc for dorstep deiver related to the universal service obligation. Issues that need to be addressed include, for example, the + To venture beyond core competencies, India distribution of registered newspapers through the Post will need to provide significant staff postal service and the use of postcards for training and broaden its skill base. commercial purposes. Also needing to be addressed * The savings bank facilities could be aggressively are procedures and budgetary allocations that are marketed to tap new customer bases. often in conflict with business requirements. * By using state of the art technology Another key step is setting up a regulatory authority infrastructure, the Post Office Savings Bank can and separating the functions of owner, operator, provide to the rural populace, a very convenient and regulator. The telecommunications sector in avenue for savings and money remittances. India provides an excellent model for this and also shows how both public and private sector * While India Post aims to computerize 26,000 soshwbt ulcadpiaesco departmeInial Post offices, to king c utherening 2operators are thriving in the market. As successful departmental post offices, linking the remaining international experiences like those in France and poystoffica oes throughanorn-wireion oothe aret Germany suggest, reform of India Post will happen physical mode of transmiSSion to the nearest graduallv. Reforms in the postal sector are time networed post office could add to the consuming and involve careful planning, with analysis of both short- and long-term benefits. * The Department of Posts could create a Restructuring India Post would demand a well- consortium of partners to put into place its computerization, networking, and technologv strategies. experiences with postal reform in other countries, strategies. public sector restructuring in India, and reforms in + Some post offices could be spun off to a post similar sectors such as telecommunications. To its bank, to gain experience with full banking advantage, India Post has an extensive network that, funcuons. used to its full potential, could help meet a range of Presentation Synopsis 21 objectives. In addition to a corporate strategy, India Rs 1,400 crore (around US$320 million) that the Post would need to develop dynamic marketing government is less and less keen to cover. Thus strategies, which it now lacks. These strategies there is an immediate need to define the universal would need to address not only advertising for service obligation and to differentiate between the postal products but also diversification of services losses due to universal service and those due to through focusing on core competencies and other services so that the government can provide introducing new value added products. Here, the an explicit subsidy to meet the cost of the India Post brand would be a key enabler. obligation. In addition, setting up an independent regulator is important for resolving tariff issues and DISCUSSION ON NEW PERSPECTIVES dealing with illegal competition. Consideration should also be given to corporatizing India Post, FOR INDIA POST giving it more management autonomy so that it can deal more effectively with increased competition. Dr. Ashok Lahiri, Chief Economic Adviser, Corporatization has been successful in many other Ministry of Finance, Government of India countries in the region. Mr. R Ganesan, Secretary Posts, Department of Participants reasserted some of the main ideas Posts, Government of India discussed earlier: the importance of India Post developing new logistics services to meet a growing demand, the critical need to improve pricing policy Bank (based on a better understanding of the costs of Mr. R.iiv Kumar, .bzef Economist, Confederalon universal service and commercial pricing for other Mr. Rjv Kuar, Chef Economist, Confederation services), and the importance of developing of Indian Industrjv strategic partnerships, improving staff motivation, Mr. Adil S. Zainulbhai, Managing Director-India, and having quality independently monitored. McKinsey and Company This panel discussion recapitulated earlier deliberations, APPLYING LESSONS FROM restating such key messages as the need for India Post to INTERNATIONAL AND DOMESTIC implement pilot projects at state and district levels, cater to EXPERIENCES nrral populations, expand the range and improve the qqaliy of its financial services, develop new value added services for Dr. U. Srinivasa Raghavan, Member Operations, business customers, and effectively integrate information Department of Posts, Government of India technology inito post office operations. Mr. Simon Bell, Setor Manager, South Asia Like postal operators worldwide, India Post faces Worl Bank declining mail volume and postal usage. It is also experiencing growing competition that is eroding Dr. Raghavan and Mr. Bell summariZed the messagesfrom volumes and revenues in core products and services. the presentations and discussions in the previous sessions. The need to reverse these trends puts growing India Post faces the same challenges as other postal pressure on the senior management of India Post operators throughout the world: liberalization, to become more innovative and customer focused. globalization, digitization, and rising customer One emphasis needs to be the commercial market: expectations. These challenges have led to postal in the United States, for example, commercial * ) ~~~~~reforms in one country after another. Some customers generate 85 percent of mail. While that countries have moved toward privatizing their share is not quite as high in India, India Post postal operator (Deutsche Post, for example). nevertheless needs to tap that market through better Others have chosen to maintain their postal marketing, customized products, and a sharper operator as a state-owned enterprise and undertake focus. Improving the efficiency of service delivery reforms that are less drastic though still focused on and broadening its range of financial and other improving qualty, customer offerings, and viability services would increase revenues and better utilize (such as with La Poste). If Deutsche Post is at one its resources. its resources. end of the reform spectrum, India Post is at the India Post incurs an annual deficit of around other-and the view of all participants was that this 22 Transformation of India Post for Vision 2020 needed to change if India Post is to thrive. Mr. Bell sector, an issue that would be of concern to the suggested that India Post needed to move away regulator. from its status as a government department, but The government is contradictory in demanding that did not advocate privatization as a solution. It was India Post deliver universal service yet reducing the felt that an initial corporatization of India Post . . . woud b betersuied o te plitcalenvronent subsidy that effectively funds it. Any rewriting of would be better suited to the political environment the postal act should therefore include a clear in which it operates. understanding of the universal service obligation The session identified the following as key and how it should be funded, whether from the actions: government or from the sector itself. Non-universal * As an urgent need, define the extent and the services and products must be viable and provided .' . . . ~~~on a commercial basis. funding of the universal service obligation. In any transformation of India Post, employees outaDr trawingio vinte ionald b lestapractc chrart will be critical to success. Its postmen have good out a strateg icyvision.and clear corporate interpersonal skills, and they have helped make strategy. India Post the trusted brand that it is. This trust in * Plan for the separation of the functions of India Post's employees should be used to its full owner, operator, and regulator. advantage. Among the senior management there is * Market savings bank accounts in rural areas to a need to become more dynamic and to adopt a more commercially oriented attitude. While entice those not yet using financial servicesinto corporatization is not necessarilv the answer, some the banking world. of the tenets of the corporate world do need to be + Improve the quality of service and introduce introduced into India Post. performance targets and independent performance measurement. Mr. B.K Chaturvedi, Cabinet Secretarg, * Introduce technology to facilitate growth. Government of India + Partner with suitable organizations to build Mr. Chaturvedi delivered aformlal closing address. economies of scope. With a network of postmen connecting all 600,000 + Introduce new services, including logistics of India's villages, the Department of Posts is a services. symbol of government authority. Neither the Police * Build human resource capacity. Department nor the Department of Health has the reach of the postal network. And the real advantage * Create customer databases to help develop the of the postal network is that the postman and postal sector. postmaster stay in the village and are very much part of the community. With one billion people, CLOSING ADDRESSES India has changing and growing needs, and India Post must adapt to those changing needs or lose Mr. Adarsh Kishote, Secretary Expenditure, market share to the competition. Ministgjv of Finance, Government of India India Post is at a crossroads, confronting a need to Mr. Kishoregave closing revarks. modernize, to reduce costs, and to develop innovative solutions. Maintaining its reach is India Post has existed for 150 years and for over a ensive anduthonmentamus c er ho cenurynowhasopeate uner heamelaw expensive, and the governmnent must consider how century no has operaed under te sameX l' much it is willi ng to pay for the continued presence which could be viewed as either a burden or a it istmen to post contInd Posence source of pride. The law allows unauthorized of postmen and post offices. India Post should operators to flourish without regulation, however, consider alternative methods of providing services and needs rewriting. While India Post should gear such as using mobile post offices or placing itself up for the chalenge of growing competition, post offices in schools or other facilities in rural the time is right for an impartial and knowledgeable regulator to referee the sector. But caution is While India Post has an obligation to serve the rural advisable in the approach to liberalization of the poor, it should not forget the growing middle class, -, Presentation Synopsis 23 which, with its greater savings capacity, will provide particular problems it confronts. The solution is to substantially more revenues. India Post should take the good things that other countries have done develop products to meet the needs of both these and adapt them to its own needs. For India Post it important segments of society-perhaps is important to cut costs and then invest the savings considering one from a social perspective, the other in ways that help it better compete. An important from a commercial perspective. caveat, however: no government can accept a India has much to learn about postal reform from Department of Posts that is profitable but serves other countries, but it needs to keep in mind the only a select client base. - l Transformation of India Post for Vision 2020 V0II1(,11 I ISBN 1403 92873 8 MACMILLAN ftRICEWT&BOUSE1E(RS Macmillan India Ltd.