Opinion - Editorials   

Of mail regulation and monopoly

The Central Government has proposed the Draft Indian Post Office (Amendment) Bill, 2006, and announced its intent to give Indiapost the exclusive right to carry letters weighing up to 300 grams. The Bill envisages a Mail Regulatory and Development Authority and a Mail Disputes Settlement Tribunal. It also proposes to introduce a system of registration for private courier operators, at a fee. There will also be a statutory contribution to a Universal Service Obligation Fund. The creation of the Tribunals will doubtless contribute to better order and accountability in the field, and bring courier operators under a proper regulatory framework. The payments should constitute a share of the private operators' liability on the basis of the principle of USO with respect to a field that has a substantial public service element. But the desirability of a "weight-based exclusive privilege" to Indiapost with regard to carrying letters is debatable. The Government has clarified that under the Indian Post Office Act, 1898, the Centre alone is empowered to convey all letters, and that the present move actually amounts to extending it to private operators, although they now operate mostly in limited, profitable segments of the business. But by introducing the caveat regarding the weight, the Government is seeking to help itself to the largest single component of traffic. It is true that a very large area of the country is not served by the private operators, and that Indiapost bears the burden of covering the financially non-viable areas at rates affordable to the common people — thanks to governmental subsidy — and in a largely efficient and reliable manner. Still, the move raises issues of efficiency, fairness, and enforceability.

India has the largest postal network in the world. The growth of and access to the telephone system, and technological developments such as e-mail have, as has happened elsewhere in the world, reduced the dependence on the system. The entry of the private operators made a further dent. Indiapost still handles about nine billion pieces of mail a year. Total volumes, both domestic and international, of letters in physical form and parcels, have grown manifold. But a substantial share of the increase has gone to private operators. The market share of the post office has fallen significantly over the years. The real challenge is to make the best of the enviable network of 1.56 lakh post offices that has been built up over 151 years and utilise the 5.6 lakh personnel who know their turf well and who often have a special bond with the people they serve at the local level. If this valuable institution is to be fostered, the Government must address the two challenges of technological modernisation and diversification into other services, including possibly banking. Protecting the turf through the grant of a monopoly over any segment of operations is clearly not the answer.

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