The Hindu Business Line : Dept of Post wants its `commercial' tag removed

New Delhi May 6 In a bid to address concerns of its rising revenue deficit, the Department of Post (DoP) has approached the Government to take away its `commercial' status.

The change in status will enable the department to pass on its pension burden, which is among the largest contributors to its revenue deficit, to the common head of account rather than having to fund it from its own accruals.

Most of the Government departments and ministries pass on their pension costs to the common head of accounts except for revenue-generating ministries like Railways and Telecom.

While the postal department also generates revenues from the sale of postal material and by offering various services, it also has a large universal social obligation responsibility.

"While the DoP was given the commercial status because it generates sales, the social obligation does not allow it to charge commercial rates from consumers. Most of its products are subsidised and therefore it adds to the deficit rather than adding to the revenue. We are looking forward to the Ministry of Finance and the Planning Commission to help us change the status so that pensionary costs can be charged to the common head of accounts just like other departments and ministries are being allowed," said a DoP source.

Revenue shortage

The revenue deficit of the DoP was Rs 1,381 crore in 2004-05, Rs 1,209 crore in 2005-06 Rs 1,317 crore in 2006-07 and the projected deficit for the year 2007-08 is Rs 1,482 crore. Despite introducing a number of new services and products, DoP has not been able to recover its expenses owing to heavy load of pension payouts apart from increase in pay and allowances, dearness allowance and other establishment costs.

Out of the total expenditure of Rs 7,228 crore projected for 2007-08, Rs 1,563 crore has been earmarked for pension payouts.

If the Government agrees to consider the postal department a non-commercial entity, then it will mean a complete wipe-out of the deficit.

The Parliamentary Standing Committee for IT has also supported the DoP's proposal and has urged the Government to make the change, as it was unfair to treat an entity with social obligations as a commercial entity.

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