Transformation of India Post for Vision 2020: Developing Efficient Service Delivery (Postal, Financial, ICT) within the Context of a Commercially Viable Postal Institution Simon Bell, World Bank, June 15, 2005 New Delhi, INDIA

These next couple of days are designed to result in a very concrete ACTION PLAN. We are NOT here just to “talk” – but to move towards an operational agenda. The potential developmental impact of India Post is HUGE. Its outreach is impressive. Its capacity to “touch the lives” of over a billion people is unsurpassed. The time for TALKING is past – the time for DOING is NOW!

VISION. In November 2002 a conference on India Post provided a VISION. A vision of what India Post could become. That vision was an exciting one with India Post, in public-private arrangements, providing a wide range of important goods and services to the Indian public – particularly to RURAL INDIA – in a winwin scenario for all. However, realizing that vision was recognized as being the difficult part …… how was it possible to “operationalize that vision”?

REALIZING THE VISION. As several commentators said – back in 2002 – “strategizing is easy but implementing is hard”. The main message that I took away from the 2002 proceedings was that the three most important things for India Post are, “Implementation, implementation, implementation”.

PROGRESS MADE TO 2002. Steps had been taken prior to 2002 – and continue to be taken – by India Post. At that time, we were informed about exciting new business arrangements with MasterCard, Western Union and IDBI/Principal, for electronic money transfers and the sale of mutual fund instruments, among other things. Further new developments have taken place since then.

THE NEED FOR A NEW BUSINESS MODEL. A lot was also said about the need for India Post to change its business model. It was determined that the existing system of the Post Office working as a department of the Ministry of Communications WILL NOT WORK in achieving the exciting partnerships that we had been discussing. There was a need to consider different business models: corporatization, privatization, restructuring, re-engineering, etc. However, one thing was clear. The Status Quo was No Longer Acceptable.

EMERGING NEW BUSINESS DEALS. In addition, many new prospective deals – public-private partnerships with India Post – were discussed as new business possibilities over the course of that conference. They included: 1. Employees Provident Fund for distribution of provident fund benefits; 2. PRIME – Praxis Consulting for Data Mining possibilities; 3. Smart Card pilots with the Ministry of IT; 4. E-Government – Supporting rural connectivity in Andra Pradesh for e-government (and now – support for NEGAP?); 5. Ogilvy Outreach for outreach to rural markets; 6. Basix from Hyderabad for micro finance applications. Many others are possible.

During that conference – as will happen during this conference – we were provided with excellent examples of corporatization by New Zealand Post/Transend. We were provided with successful examples of privatization by Deutch Post/Postbank. The examples of the United Kingdom and the Netherlands were also explained. They all provided alterative business models for India Post’s consideration.

DISTINCT TYPES OF BUSINESS ACTIVITY. Another point which came out of the 2002 conference was that most post offices have at least two very distinct types of business activity. 2.

1. The first is their core postal activities. The second is their non-core activities – generally built, although not exclusively, around financial services. In addition, the Post Office network could provide:

3.

e-government, e-business, micro finance, data mining, etc – built upon ICT capabilities.

While that conference indicated that the non-core activities tend to assume increasingly greater prominence over time – the main message was that all types of activities must be developed in tandem.

For example, the Post Office Savings Bank is a very important bank in India – it is the largest holder of non-public sector savings deposits in the country (over $45 billion). Financial Services now contribute around 1/3rd of the revenue stream of India Post. This week’s Economist has an article on Japan Post which characterizes it as the “biggest financial institution in the world” ($3.6 trillion in assets). The Indian Post Office Savings Bank ranks “up there” with the most important financial institutions …. certainly within India.

SOME MAIN THEMES EMERGING FROM THE 2002 CONFERENCE. Several quotes from the 2002 conference were continually repeated. The ones that struck me most were: 1.

“India Post is a great vehicle for public-private partnerships”.

2.

“India Post can help deliver development that last mile”

3.

“Don’t devalue the Brand Trust of India Post by selling products poorly”

4.

“Do what you do do well. Don’t become a second rate pension company. Don’t become a third rate IT company”.

5.

“India Post can become the ultimate touch point for the India Public”

6.

“The Owner, Operator, Regulator functions of India Post must be debundled”.

THE INCREDIBLE MARKET AVAILABLE IN RURAL INDIA. Another important theme that came through during the conference was that the rural economy in India is a very important market for goods, services and financial products.

This is a market which doesn’t want subsidies – but it DOES want access. Could India Post provide the appropriate interface for this potentially hugely profitable (and developmentally important) market?

REALIZING THE VISION. However, something more must be done if this vision is to become more than a mere dream. Perhaps the only problem with the 2002 conference – and one that we must rectify in this current conference – was that we did not explicitly plan a way forward. A concrete ACTION PLAN. We cannot afford to leave this conference without a plan for going forward. As this would make it a hollow conference – the “feel-good”, “post-conference afterglow” would soon dissipate. In 2002 I suggested that a plan had emerged from those proceedings – and I tried to lay out what I thought I had heard was the best way forward.

A FOUR POINT PLAN OF ACTION. In 2002 we concluded the conference by suggesting the following Four Point Plan of Action: 1. Immediately commence a Business Plan which, among other things, provides guidance on Alternative Business/Restructuring Plans for India Post; 2. Commence the process of separating the Owner, Operator, and Regulator functions of India Post; 3. Actively pursue the various business opportunities which emerged within the context of that conference; 4. Initiate Pilots in Five different regions – in Five Post Office circles – which provide a wide range of new products (both postal and non-postal – both financial and non-financial) in conjunction with private sector partners.

In the 2002 conference, India Post was described as having “many suitors” – many companies and government agencies which would like to combine with India Post to take advantage of its huge distributional network. However, it was further indicated that these “marriages” required India Post to be efficient, effective and cost competitive. We further offered the World Bank’s helping hand in supporting India Post achieve these lofty goals. That offer remains valid TODAY.

In conclusion –I would like to leave you with two quotes from Sam Pitroda – a principal architect of the telecommunications revolution in India in the 1990s:

“The policies of development agencies ….. too often limit ‘appropriate technology’ to the two dimensional, two penny solutions that bring the poor to the doorway of the modern world but not actually across the threshold” “In short, high technology can put unequal human beings on an equal footing, and that makes it the most potent democratizing tool ever devised”. Together, in the postal system of the 2000’s, India Post can achieve a similar revolution to what telecoms reform provided India in the 1990s ….. to the overall benefit of this nation. Let us cross that threshold together!