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Post Offices in 'New Avatar'

Conference Paper · June 2019

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 Post Offices in ‘New Avatar’

Submitted By: Prof Mrs Shubhada Mohan Kulkarni

In-Charge Director
KCE’s Institute of Management and Research,
Behind DIC, NH No 6,
Jalgaon, Maharashtra.
425001
M 9423973141
smkulkarni2006@gmail.com

Introduction

Services

The most comprehensive definition of a service has been given by Philip Kotler, who defines a service as an
act or performance that one party can offer to another that is essentially intangible and does not result in the
ownership of anything. Its production may or may not be tied up to a physical product.

Services are economic activities that bring about a desired change in, or on behalf of the service recipient,
thereby creating value and providing benefits for the customer. Thus , the focus remains on customer
satisfaction, just as in goods, but in services, emphasis is on the personal reception of these benefits.

From the predominantly agricultural economy in the earlier times, the country has come a long way in its
development since its independence in 1947. In advanced economies such as USA, France or Germany, services
is the largest sector in the economy. In these countries, almost three quarters of the GDP is accounted for by the
tertiary sector. In third world countries such as China and India, the tertiary sector is not yet so important. China
seems to have made strong gains in manufacturing sector and is a very low-cost producer for many
industrialised countries. India and China both are moving towards dominance of services. If we consider global
economic trends, it is clear that national economic advancement is led by services sector.

Marketing

Marketing is about identifying and meeting human and social needs. One of the shortest good definition of
marketing is “meeting needs profitably.” The American Marketing Association : Marketing is an organisational
function and a set of processes for creating, communicating and delivering value to customers and for managing
customer relationships in ways that benefit the organisation and its stakeholders.

Financial success often depend on marketing ability. Finance, operations, accounting, and other business
functions will not really matter if there isn’t sufficient demand for products and services so the company can
make a profit. There must be a top line for there to be a bottom line. One survey of the top 10 challenges CEO’s
face around the world in 2006 revealed that among the top 5 were both ‘sustained and steady top line growth’
and ‘customer loyalty/retention’, challenges whose achievement depends heavily on marketing. CEO’s also
recognize the importance of marketing to building brands and loyal customer base, intangible assets that make
up a large percentage of the value of a firm.

Marketing is tricky. Even market leaders such as Intel, Microsoft and Wal-Mart recognise that they cannot
afford to relax as their leadership is challenged. Jack Welch, GE’s former CEO, repeatedly warned his company:
“Change or die.” Making the right decisions about change isn’t always easy. Marketing managers must decide
what features to design into a new product, what prices to offer customers, where to sell products, and how
much to spend on advertising, sales or the Internet. They must also decide on details such as the exact wording
or colour for new packaging. The companies at greatest risk are those that fail to carefully monitor their
customers and competitors and to continuously improve their value offerings. They take a short term, sales-
driven view of their business and ultimately they fail to satisfy their stockholders, employees, suppliers, and
channel partners. Skilful marketing is a never-ending pursuit.

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Change with Changing times

For sustainable development of any business proposition you need to change with the changing times.
Expectations will continuously ask for more from the customer’s side as well as from community side. Pleasing
everybody is not an easy task. Marketer will choose priorities. The choice gets restricted by the perceptions of
key groups as far as marketing practices are concerned.

The survival and growth are linked to the uniqueness and distinctiveness of what you offer. The USP lies in
the mind of the prospective buyer. It is imperative that marketing people understand the changing expectations
well and provide better solutions than that are already available.

Generally it is believed that government organizations are static and do not change, It is the private
enterprise with entrepreneurial abilities who respond quickly to get the best out of any situation. But postal
department is proving an exception to the standard belief. The 154 year old Department of Posts is emerging as
new and modern look. With over 1.6 lakh post offices covering the urban and rural populace, the Indian postal
network is the largest in the world. India Post has been repositioned with a focus on customers, technology and
business.

India Post’s new logo is red and yellow in colours.. At a first glance, it appears to be an envelope but at a
closer look, the bold strokes give impression of a flying bird. The modernization of post offices is a part of
Project Arrow, which included not only changing the way post offices function in the country but also the way
they are perceived. In addition to the logo, various signage, post boxes, sign boards, letterheads, vans and even
the postman’s uniform were a part of the branding exercise.

Indian Postal Service

Indian Postal service is the government operated postal service in India. The general public refers to the
Indian Postal Service as ‘ the post office.’ The Indian postal service is the largest postal network in world with
155,000 post offices spread across all over the country. With post offices in almost every corner of the country,
it helps people stay in touch irrespective of the length and breadth of the country. Indian postal service provide
many facilities like- general or registered mail, parcel post, speed post, greeting post, express post, media post,
e-post and special courier service known as EMS-speed post. It also provides us with various financial services
like; International Money transfer, Instant money order service, money order, mutual funds. Various post office
savings schemes like National Savings Certificates, Kisan Vikas Patra, Recurring Deposits are also available.

The letter boxes in India are colour coded like – green coloured boxes are meant for local letters, and for
metropolitan and other cities as well as international mails can be dropped in red coloured boxes. Quick Mail
Service (QMS) has yellow colour boxes.

Post offices are open 6 days a week, Monday to Friday: 10 A.M. to 5 P. M. and on Saturday until noon.
Parcels sent overseas cannot exceed 20 kgs. Book-post is a cheaper option for books, documents and printed
materials and in this maximum weight allowed is 5 kgs.

Governance and Organization

The postal service comes under the Department of Posts which is a part of the Ministry of Communications
and Information Technology under the government of India. The Apex body of the department is the Postal
service Board. The board consists of a chairman and three members. The three members hold the portfolio’s of
Operations & Marketing, Infrastructure & Financial Services, and Personnel. The Joint Secretary and Financial
Advisor to the board is also a permanent invitee to the board.

India has been divided into 22 postal circles. Each circle is headed by a Chief Postmaster General. Each
circle is further divided into Regions comprising field units, called Divisions, headed by a Postmaster General.

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Other functional units like Circle Stamp Depots, Postal Stores Depots and Mail Motor Service may exist in the
Circles and Regions.

Besides the 22 circles, there is a special circle called the Base Circle to cater to the postal services of the
Armed Forces of India. The Base Circle is headed by an Additional Director General, Army Postal Service
holding the rank of a Major General.

Postal Services

Speed Post

The very high speed express service for letters and documents. Speed Post links more
than 1200 towns in India, with 290 Speed Post Centres in the national network and around 1000 Speed Post
Centres in the state network. For regular users, Speed Post provides delivery ‘anywhere in India’ under
contractual service. Speed Post offers a money-back guarantee, under which the Speed Post fee will be refunded
if the consignment is not delivered within the published delivery norms.

ePayment

The most convenient way to pay your bills under one roof. With its tremendous reach and expertise India
Post specialises in acceptance of payments across the couter and their consolidation. ePayment is a ‘Many to
One’ service through which bills (telephones, electricity, etc.) paid by customers in post offices are
electronically consolidated.

Logistics Post

A brand new service from India Post, great for sending parcels and large consignments across the nation and
around the world. Logistics post manages the entire distribution side of the logistics infrastructure from
collection to distribution, from storage to carriage, from order preparation to order fulfilment. Logistics Post is
an ideal service for sending large consignments including multi-parcels, just-in time parcels, bulk-break
consignments and goods of any weight. While Parcel Post offers weight up to 35kg, Logistics Post has no
weight limit. Logistics Post offers not only physical logistics services but also provides comprehensive supply
chain management services, leading to improvement in the service level efficiency.

e-Post

Documents and greetings sent online but delivered by mail.

Business Post

Total pre-mailing solutions including collection/printing, inserting, and addressing.

Media Post

Reach millions through advertisements on Post cards, Letters, Walls of post offices, Letter boxes, and
stationary.

Direct Post

Distributing advertising materials directly to prospective customers.

Postal Life Insurance

Postal life insurance was started in 1884 as a welfare measure for the employees of Posts & Telegraphs
Department under Government of India dispatch no. 299 Dt 18/10/1882 to the secretary of State. Due to
popularity of its schemes, various departments of Central and State Governments were extended its benefits.
Now postal Life Insurance is open for employees of all central and state government departments, nationalised

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banks, public sector undertakings, financial institutions, local municipalities and Zilha Parishads and
Educational Institutions aided by Government.

Instant Money Order Service (iMO)

The instant domestic money is available in 717 post offices. However, no International Money Order facility
is available.

International Money Transfer

As a result of the collaboration of the Department of Posts with the Western Union Financial Services, state
of the art international money transfer service is now available through post offices in India. This enables
instantaneous remittance of money from 185 countries to India. The recipients can in fact collect the money in
minutes after the sender has made the remittances. The service is targeted to particularly fulfil the needs of NRI
dependent families in India, visiting International tourists and foreign students studying in India.

Non-postal services
The post office has also traditionally served as a financial institution for millions of people in rural India.
They connect these areas with the rest of the country and also provide banking facilities in the absence of banks
in the rural areas. 89% of post offices are in rural areas. Currently these are some of the activities being
supported:

Post Office Saving Account

Post office saving account is similar to a savings account in a bank. It is a safe instrument to park those
funds, which you might need to liquidate fully or partially at very short notice. Post office savings accounts are
especially suited for those living in rural and semi-rural areas where the reach of banks is very limited. The
account can be opened at any post office with a minimum balance of Rs. 20. Maximum of Rs. One lakh for
single account holder and Rs. Two lakhs for joint account holders can be deposited. There is no lock-in or
maturity period. The amount can be withdrawn anytime subject to keeping a minimum balance of Rs 50 in
simple account and Rs. 500 for cheque facility accounts. Rate of interest is decided by the Central Government
from time to time. Interest is calculated on monthly balances and credited annually. Income Tax relief is
available on the amount of interest under the provisions of section 80L of Income Tax Act.

Post Office Recurring Deposit Account

Recurring deposit account is a systematic way of saving money. The scheme is meant for those investors
who want to deposit a fixed amount regularly on monthly basis in order to get a tidy sum after 5 years on the
maturity of the account. The recurring deposit account can be opened at any post office. Period of maturity of
account is 5 years. Sixty equal monthly deposits shall be made in an account in multiples of Rs. 5 subject to a
minimum of 10 Rs. Premature closure of accounts is permissible after expiry of 3 years. In case of premature
closure of account, the interest at the rate applicable to post office savings account shall be payable.

Post Office Monthly Income Account

Post Office Monthly Income Account is meant for those investors who want to invest a lump sum and earn
interest on monthly basis for their livelihood. The scheme is, therefore, a boon for retired persons. The account
can be opened by a single adult or 2-3 adults jointly. Period of maturity of account is 6 years. Only one deposit
can be made in an account. Minimum deposit limit is 1,00 Rs. Maximum deposit limit is Rs. 3 lakhs in case of
single account and Rs 6 lakhs in case of joint account. Interest @ 8% P. A. is payable monthly. In addition,
bonus equal to 10% of the deposited amount is payable at the time of repayment on maturity. Premature closure
facility is available after one year subject to condition. Income tax relief is available on the interest earned as per
limits fixed vide section 80 L of Income Tax, as amended from time to time.

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Post Office Time Deposit Account

Post office time deposit account is just like the bank fixed deposit account. These time deposits are meant for
those investors who want to deposit a lump sum for a fixed period. Time deposit account can be opened at any
post office with a minimum deposit of Rs 200. There is no maximum limit for the account. The amount can be
deposited for 1year, 2 years, 3 years or 5 years. Interest is calculated on quarterly compounding basis, and is
payable annually. Rate of interest varies according to the period of the deposit and is decided by the Central
Government from time to time. Income tax relief is available on the amount of interest under the provisions of
section 80 L of Income Tax Act. Premature withdrawals from all types of post office time deposit accounts are
permissible after expiry of 6 months with certain conditions.

National Savings Certificate

National Savings Certificate, popularly known as NSC, is a time-tested tax saving instrument that combines
adequate returns with high safety.

National Savings Certificate can be purchased by the following:

- An adult in his own name or on behalf of a minor
- A minor
- A trust
- Two adults jointly
- Hindu Undivided Family

National Savings Certificates are available in denominations of Rs 100, Rs 500, Rs 1,000, Rs 5,000,and Rs
10,000.There is no maximum limit on the purchase of the certificates. Period of maturity of a certificate is 6
years. Presently, maturity value of a certificate of Rs 100 denomination is Rs 160.10. Maturity value of a
certificate of any other denomination is at proportionate rate. Premature encashment of the certificate is not
permissible except at a discount in the case of death of a holder(s), forfeiture by a pledge and when ordered by
court of law. Interest accrued on the certificate every year is liable to income tax but deemed to have been
reinvested. Income tax rebate is available on the amount invested interest accruing under section 88 of Income
Tax Act, as amended from time to time. Income tax relief is also available on the interest earned as per the limits
fixed vide section 80 L of Income Tax, as amended from time to time.

Public Provident Fund

Public Provident Fund, popularly known as PPF, is a saving cum tax saving instrument. It also serves as a
retirement planning tool for many of those who do not have any structured pension plan covering them. PPF
account can be opened at designated post offices throughout the country and at designated branches of Public
sector banks throughout the country. The account can be opened by an individual in his own name, on behalf of
a minor of whom he is a guardian, or by a Hindu Undivided Family. Minimum deposit required in a PPF
account is Rs 500 in a financial year. Maximum deposit limit is 70,000 Rs in a financial year. Maximum number
of deposits is 12 in a financial year. The account matures for closure after 15 years. Account can be continued
with or without subscription after maturity for block periods of 5 years. Premature withdrawal is permissible
every year after completion of 5 years from the end of the year of opening the account. Loans from the amount
at credit in PPF account can be taken after completion of one year from the end of the financial year of opening
the account and before completion of the 5th year. Interest at the rate notified by the Central Government from
time to time, is calculated and credited to the accounts at the end of each financial year. Presently, the rate of
interest is 8% per annum. Income Tax rebate is available ‘ on the deposits made’, under section 88 of Income
Tax Act, as amended from time to time. Interest credited every year is tax-free.

Kisan Vikas Patra

Kisan Vikas Patra (KVP) is a saving instrument that provides interest income similar to bonds. Amount
invested in Kisan Vikas Patra doubles on maturity after 8 years and 7 months. Kisan Vikas Patra can be
purchased by the following:

- An adult in his own name, or on behalf of a minor

- A minor
- A Trust
- Two adults jointly.

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 Kisan Vikas Patra are available in the denominations of Rs 100, Rs 500, RS 1,000, Rs 5,000, Rs 10,000 and
Rs 50,000. There is no maximum limit on purchase of Kisan Vikas Patra. Premature encashment of the
certificate is not permissible except at a discount in the case of death of the holder(s), forfeiture by a pledge and
when ordered by a court of law. No income tax benefit is available under the Kisan Vikas Patra scheme.
However, the deposits are exempt from Tax Deduction at Source (TDS) at the time of withdrawal.

Changing face of India Post

For over 150 years post offices have been the most visible and popular face of Indian Government
throughout the country. The concept of e-governance i. e. Government at your desktop being advocated and
promoted today can trace its genesis in services rendered by Post Offices, when the postman was the only
person delivering mail personally at the doorstep of the people.

Now India Post is gearing up to play more comprehensive role by reorienting itself to meet the expectations
of future generations. The Indian economy has scaled new height over the last few years and is still in
acceleration mode. Emergence of several significant trends such as : liberalization and globalisation;
demographic shift towards urbanisation leading to increasing internal and external migration requiring to be
serviced; monetisation of the economy especially the agricultural sector giving rise to a corresponding demand
for financial service by all sections of the population; and government policy to increase funding for weaker
section programs has necessitated changes in postal services framework.

The four main areas of services offered by India Post are- Communication services: Delivering letters, post
cards etc.; Transportation services: transporting parcels, logistics etc.; Financial services: Facilitating saving
bank, money order insurance etc. and Value added services: providing speed post services, business post direct
post etc. Transmission and delivery of mail is India Post’s core business so far. Post office Savings Bank is the
oldest and largest banking institution in the country.

Transmission of funds by postal order/money order has been the traditional way of money transfer. Since
1884onwards Postal Life Insurance has been providing life insurance coverage, initially to employees of P&T
Department and subsequently to all Government employees. Since1995 PLI has been extended to the rural
population of the country under a new scheme Rural Postal Life Insurance (RPLI). Globalization and the
deepening of market mechanism in India have brought forward the concept of self sufficiency and social service
going hand in hand. India Post is committed to fulfil the Universal Service Obligation for providing basic postal
service throughout the country, irrespective of terrain, at an affordable price.

India Post fulfils this obligation through the largest postal network of 1,55,035 post offices (as on 31.3.2008)
in the world. Of these 1,25,489 Branch Post Offices cater exclusively to rural areas. Besides new responsibility
of facilitating applications under Right to Information is being shouldered by the Post Offices. New initiatives to
meet the challenges posed by ever changing communication technology especially mobile telephony and World
Wide Web, Department of Post is attempting to transform it, striking a balance between its objectives and
outcomes of transformation.

As the transformation is a multi-dimensional process, attempt is being made to change the department at
multiple levels. In order to provide better, faster and satisfactory services to its customers, India Post is focusing
on few key areas. Pick up mail facility, electronically enables services, a dedicated freighter services, the instant
money order, and many other similar initiatives have been undertaken to reorient the services for providing
greater satisfaction to its customer. At the same time for self sufficiency, India Post is exploring the role of
business facilitator for other organizations. In an effort to deliver mail, parcel, speed post and the logistic
consignments by the next day in major cities, India Post has added two more aircrafts bringing the total number
to three and the process to acquire the fourth is in pipeline. These three aircrafts dedicated to carry only postal
cargo touch nine cities every night making possible faster delivery in major cities and their peripheral areas.

Project Arrow

An initiative to transform India Post into a vibrant and responsive organisation is going on under the ‘Project
Arrow’. Under the project 50 Post Offices were modernised in the first phase and 450 in the second phase. Now
the third phase is under process for transforming 500 post offices. Selected post offices are undergoing complete
overhaul in their look and feel as well as in their core functions and operations. Systematic transformation of

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post offices in a phased manner will revitalise India Post. The new logo of India Post reflects this change. The
straight lines have been replaced by bold strokes retaining the ‘wings’ element. There is an element of
modernity as well effort to maintain an element of continuity. Red and yellow colours used in its logo convey
passion, power and commitment with a pinch of hope, joy, and happiness.

IT leads Initiatives Efforts are on to equip post offices with latest communication means. All the post offices
in the country will be computerised during the current five-year plan. Major 25,000 post offices have already
been computerised and the remaining branch post offices will be taken care during rest of the period. This will
make the delivery of information and money order faster.

Recognising nation wide reach of India Post has attracted many private partners. Be it Mutual Funds or
Money Transfer business. Since 2001, Dept of Post has been making select mutual fund product available
through post offices, Five years ago, UTI Mutual Fund and DOP joined hands to bring capital markets closer to
common man in semi-urban and rural areas. India Post provides penetration to the remotest corner of India,
making mutual fund popular. India Post was felicitated on 24th Sep. 2009 with UTI-CNBC special
commendation award in the form of “Financial Advisor Awards 08-08” trophy for effectively utilizing its
network to promote financial inclusion in smaller places.

An efficient and reliable communication network is the lifeline of the nation and plays a crucial role in
socio-economic development and the integration of the country. For nearly a century and a half the postal
system has been the main component of the communication infrastructure for the country. Given the need for a
strong communication and financial infrastructure, India Post is preparing to meet both challenges and avail of
the opportunities presented by current market conditions. With its efforts India Post will make social,
commercial and industrial life possible in the remotest parts of India. Though, traditionally India Post have been
the courier of peoples’ emotions and trust but changing with times will make India Post even more attractive
and useful because of its reach and credibility.

Restructuring Under Project Arrow

In 2008, Indian Government had decided to restructure the entire postal department. The restructuring
exercise is called Project Arrow. The project aims to make India Post a logistics giant by leveraging the core
strengths of the institution. As a part of the restructuring exercise, the institution has redefined its business.
According to Prof. Theodore Levitt, every business should ask this fundamental question: What business are
You in? The answer to this question can throw up lot of opportunities for growth. Narrowly defining the
business can creat Marketing Myopia which may wipe out the business in the long run.

From just a postal institution, the department has reframed its business to be in the logistics service rather
than just a postal service. The move is a significant step in broadening the scope of services that can be handled
by this giant. It is important to reinvent the business definition since the postal service is facing competition
which could make its business irrelevant. The e-mail and the rise of affordable private courier services has
taken away a significant chunk of profitable business of this institution. Since it is a Government Department,
India Post couldn’t change fast to accommodate the changing environment.

According to the press reports, 50 post offices will be refurbished to make it a new-look hi-fi post offices in
the first phase of Project Arrow. The new post offices will be technologically enabled to provide faster service
to the customers. A lot of new products are created for meeting the new demands of the customer. It is not
enough to upgrade technology and improve products, the real crux in any service industry is the human
interface. Realising the important role that employees play in delivering services, special training is provided to
all the frontline staff in these post offices. The soft-skill training will bring necessary change in attitudes and
behaviours. The mindset has to be changed to get results and show positive difference.

Project Arrow:Phase III

The Project Arrow which is now in its third phase, entails a complete overhaul of the existing India Post
infrastructure at a reported investment of Rs 900 Crs. Union minister of state for communication and IT,
Jyotiraditya Scindia wanted the post offices to convert into retail centres. The idea is to use the existing real
estate that’s begun to wear a deserted look after the popularity of email services, to profitably sale other

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merchandise, such as off-the-counter medicines, education schemes, auto loans and healthcare services. A select
few are also selling text books, ayurvedic medicines, gold coins and railway tickets. The plan later, according to
ministry sources, is to look for joint ventures to turn post offices in remote villages into miniature shopping
malls. Talk of the India retail story now unfolding from the hinterland.

The ministry hired two big consultants- Ogilvy and Mather and McKinsey- to give India Post a complete
new corporate identity with a restructuring plan. The new logo, in bright red and yellow is the shape of a bird
about to take flight. The tagline reads ’Giving Wings to your Dreams’. The first two phases covered 500 for a
reported cost of Rs 86.56 Cr.

The brand is slowly waking up to the new realities. India post was loosing almost Rs 1300 Crs every year on
its operations. This is despite the fact that India post handles 10 Cr Money orders and 17 Cr savings accounts
with deposits over Rs 5,40,000 Crs. The government hopes that with this restructuring, India Post will be able to
make profits rather than bleed the exchequer.

Conclusion

The need for changing and changing for better is felt from time to time by all old institutions. The level of
direct and indirect competition determines the expediency of need to change. Survival of fittest is applicable in
the corporate jungle. Transition from monopoly to open competition means improved offers for the end user.
Customer is the King if and only if they have multiple choices. Standard of living goes up as a result of one-
upmanship amongst competitors. Visionary leadership anticipates the trend and takes steps to be ready to face
the challenges. Let us hope, India Post metamorphose into a better version to remain relevant in times to come.
They give us a feeling that yes, elephants can dance!

References

BNK24*7.worldpress.com
www.financialexpress.com
marketing practiceblogspot.com
www.indianexpress.com
en.wikipidia.org
www.indiapost.nic
www.indiapost.govt.in
Marketing Management, Philip Kotler, Prentice-Hall India
Services Marketing, Apte,Oxford

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