Slash subsidy in postal services

Worried about the increasing subsidy in postal services, which is expected to be about Rs 1,450 crore (Rs 14.50 billion) this year, the Economic Survey has asked the government to clarify the rationale and mechanism for the ballooning subsidy.

"There is a significant subsidy element in postal services with user charges in the system roughly covering only 76 per cent of the cash costs. As per the latest indications, the deficit is likely to increase from Rs 1,364.40 crore (Rs 13.64 billion) in 2002-03 to Rs 1,449.64 crore (Rs 14.49 billion) in 2005-06 (Budget estimate).

"Clarifying the rationale, the mechanism and the size of the subsidy constitutes an important policy question at this juncture", the Survey, tabled in Parliament on Monday, pointed out.

In order to meet the rising expectations of the customers, the Survey called for improving the ambience of postal finance services, which includes small savings, by bringing them under one roof of a Financial Super Market.

Economic Survey 2005-06

The Post Office Savings Bank is already the largest savings bank in India in terms of network, accounts and annual deposits.

The exclusive retailing outlets - Postal Finance Marts - are to be manned by Association of Mutual Fund Institutions and insurance qualified staff.

These marts with networked and computerised facilities will provide postal financial products like Savings Bank and Savings Certificates, Postal Life Insurance and non-life insurance products, global money transfer, mutual funds and government securities.

The Senior Citizens Savings Scheme, a special high-yielding assured return scheme mobilised Rs 8,775 crore (Rs 87.75 billion) in 2004-05, and India Post provided options to senior citizens for payment of interest through various means like cash, payment into POSB accounts and money order.

"Payment of post-dated cheques and electronic clearing system is also under finalisation", the Survey noted. The postal department is enhancing usage of IT, with Automated Mail Processing Centres having already been set up at Mumbai and Chennai for faster processing of mails, mainly business mails.

Two more AMPCs are planned to be set up in Kolkata and Delhi. A national Data Centre will also be set up in Delhi to connect all computerised post offices by March 2007.

The Indian postal network, which is largest globally in terms of areas covered and population served, is also making efforts to provide low-priced services, which will provide electronic information in respect of delivery of letter, mail articles.