Privatisation will benefit India Post and also uplift the rural economy
Well, before presenting the proposal in detail, let’s take a look at the journey of privatising state-run postal systems in developed countries. Japan realised the need to privatize its state run postal service in 2005. Post office in Japan plays a far more crucial role for the country than just mail handling. It is one of the biggest banks and life insurance companies of Japan. Almost eighty percent households use post office for their banking transactions and two-thirds of Japanese are insured by Japan Post insurance. The state run Japan Post was also in losses like India Post, but after privatisation and inclusion of key financial services, it witnessed growth and profits. Similarly, Deutsche Post and Netherlands Post (more known as TNT) started excelling after bringing corporatisation and professionalism in organisations. They sold a portion of their share in public to raise funds and increase public & private participations but government remained the majority shareholder. Many private delivery companies have bought shares in these erstwhile government owned service providers. It is notable that Deutsche Post and TNT are currently among the biggest postal service providers in the world. Many European countries including Britain, Norway, Belgium, Denmark, Italy, Sweden and Finland have either initiated privatisation or taken the issue into serious consideration.
Coming to India, the vast reach of India Post, especially in rural India, shows plenty of promises for itself as well as for the economy. Indian Post service has also undertaken banking services and insurance but has not been very successful. Through reforms, it can raise funds and through public & private participation, sell a portion of its share to public or any private courier service providers. It needs to be given complete autonomy and should be corporatised completely. It can run its banking and insurance services in a full fledged manner, while keeping its primary operations intact. It’s Postal Savings bank is an example. Unsurprisingly, it has opened and is maintaining over 11 crore accounts with an outstanding balance of Rs.1.55 trillion, almost half of the State Bank of India’s (SBI) turnover.
Well, before presenting the proposal in detail, let’s take a look at the journey of privatising state-run postal systems in developed countries. Japan realised the need to privatize its state run postal service in 2005. Post office in Japan plays a far more crucial role for the country than just mail handling. It is one of the biggest banks and life insurance companies of Japan. Almost eighty percent households use post office for their banking transactions and two-thirds of Japanese are insured by Japan Post insurance. The state run Japan Post was also in losses like India Post, but after privatisation and inclusion of key financial services, it witnessed growth and profits. Similarly, Deutsche Post and Netherlands Post (more known as TNT) started excelling after bringing corporatisation and professionalism in organisations. They sold a portion of their share in public to raise funds and increase public & private participations but government remained the majority shareholder. Many private delivery companies have bought shares in these erstwhile government owned service providers. It is notable that Deutsche Post and TNT are currently among the biggest postal service providers in the world. Many European countries including Britain, Norway, Belgium, Denmark, Italy, Sweden and Finland have either initiated privatisation or taken the issue into serious consideration.
Coming to India, the vast reach of India Post, especially in rural India, shows plenty of promises for itself as well as for the economy. Indian Post service has also undertaken banking services and insurance but has not been very successful. Through reforms, it can raise funds and through public & private participation, sell a portion of its share to public or any private courier service providers. It needs to be given complete autonomy and should be corporatised completely. It can run its banking and insurance services in a full fledged manner, while keeping its primary operations intact. It’s Postal Savings bank is an example. Unsurprisingly, it has opened and is maintaining over 11 crore accounts with an outstanding balance of Rs.1.55 trillion, almost half of the State Bank of India’s (SBI) turnover.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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