Regulating Courier Services in India

Paper Summary:

This paper analyzes the postal market in India and the observed trends and analyzes the need to regulate them in order to ensure a certain level of universal service, as well as promote fair competition in the courier industry in the country. The paper also formulates a concrete proposal for the same, looking at the regulatory regime in OECD countries. Finally, the paper lays out a road map for a future courier industry in India based on sound principles of competition.

From the Paper:

"Established in 1854, the Postal Department is one of the oldest departmentally run public sector undertakings of GOI. Its legislative basis is the Indian Post Office Act, 1898. There are about 1.6 lakh Post Offices in the country out of which about 1.4 lakh are in rural areas. It handles more than 16 billion articles of mail per year. 2. Postal Service, which was a part of the undivided Post & Telegraph Department prior to 1.1.1985, was being cross subsidized from the surpluses of the Telegraph wing. After the separation of Telecom services, the subsidy is borne by the general budget of the Central Government. 3. The de jure legal monopoly of the Department, which still continues, has been eroded on the ground by a large number of private couriers who have taken away a good proportion of the high-revenue yielding traffic from the state owned monopoly operator, the India Post. 4. On the analogy of reforms in Telecom and Electricity sectors, determination of postal tariffs needs to be distanced from the Government (Tariff deciding power needs to be transferred from legislative control to executive control). Presently in the Department, there is no separation between the owner, the operator, and the regulator and hence there is no flexibility with the Department to take commercial decisions based on sound business principles. The couriers are operating only in the high revenue earning areas whereas India Post is providing the basic services at highly subsidized rates through out the country under its 'Universal Service Obligations'. Recognizing the de facto operation of a large number of couriers without rights and obligations imposed by law, need is being felt within and without Government Circles that the postal operations in India must be brought under a licensed regime for proper regulation of their activities. For the purpose of providing level playing field in Postal Services in the country, there is a case for corporatization of the Department. The inefficient and financially ailing postal services all over the world have demonstrated a significant turn around after corporatization including USA, UK, Canada, France, and Malaysia etc. Some of these developments are, firstly, the regulatory & the operative functions have been separated & the latter function entrusted to a corporative entity while simultaneously establishing a regulator independent of the Govt. domain as in Netherlands; and secondly the new postal corporate entities are expected to be financially self-supporting or to generate profits without sacrificing their universal network through various reforms and adopting best operating practices and technological induction. In my proposed paper, therefore, I would like to analyze in brief the salient features of the reforms that are required to be carried out in the transport sector (which includes message conveyance too) of Postal functions, i.e. the need for establishing a Regulatory Authority & defining its role and responsibilities."

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