The Hindu Business Line : Picking the postal bill

Ostensibly, Indian Post Office (Amendment) Bill is to make the courier industry more rule-based, but the anxiety to protect and subsidise the Postal Department is all too apparent.

The proposed draft legislation on postal industry is yet another example of how the past casts a long shadow over policy-makers. The draft Indian Post Office (Amendment) Bill, 2006 ostensibly aims at creating a regulatory environment for the yet-unregulated courier industry that has grown enormously. The Rs 3,500-crore industry, largely in the private sector, has become a byword in speedy delivery though, like any nascent industry, it has had its share of laggards. The draft Bill is meant to take care of this problem and that is why one of the main provisions is the creation of an independent regulator on the lines of those in telecommunications and insurance not to mention a disputes settlement tribunal. All this seems warranted. What is not called for is the need to protect the more than 150-year-old official Postal Department from competition.

One of the proposals in the draft Bill is to have the post-office given back its monopoly over letters up to 300 grams; private courier companies in the same segment are doing a roaring business largely because of the collection from the doorsteps of consignors. The Postal Department has been feeling the pinch in the urban areas with high-value and large-volume businesses moving over to the courier services. Much as officials try to justify the proposed exclusivity as a temporary measure to get the Postal Department on track, the provision is still protection and an escape route for a department that has had enough time to cope with the new entrants. Unfortunately, the draft Bill does not stop at this. It also stipulates that every private courier company will have to pay an annual renewal fee of Rs 10,000 if it is in domestic operations and Rs 5 lakh for foreign business. Another significant reminder of how the past still rules the government is the proposal to make courier companies with revenues of over Rs 25 lakh cough up to 10 per cent of their annual revenues towards a grandiosely titled Universal Services Obligation (USO) fund the proceeds of which will be used to offer postal services in economically unviable areas.

The official stand is that the draft Bill is meant to make the industry more rule-based and transparent but the anxiety to protect and subsidise the Postal Department is all too apparent. India Post suffers a revenue deficit of about Rs 1,400 crore and the government wants to cease budgetary support. This is welcome; but to use the USO exclusively to subsidise India Post's services in the "unviable areas" is not. The fund must be accessible to any courier company that operates rural services. This would go a long way towards enhancing the quality of services that rural India badly needs, and correct the impression that the Bill is about protecting not consumers but an overstaffed India Post.

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