Monthly Archives: June 2016

India Post: A Story of Missed Opportunities [Part IV: Causal Factors Rooted in Structural Issues]

In the first three parts of this blog story I discussed three major opportunities that could have rejuvenated India Post and given a big boost to rural Indian economy while improving economic wellbeing of a large section of Indian people. India Post could not exploit those opportunities due to the structural issues that face the organization. Fourth and concluding part of this blog story focuses on some such relatively important structural issues.

Dynamics of policymaking within India Post

My own experience of working with India Post at various positions and the interviews with the higher officials suggest that much of the policy decisions within India Post are taken by the bureaucratic arm of the organisation contrary to the general theme of politics administration dichotomy in the literature on public administration. The dichotomy is premised on the idea that policymaking is the role of the elected politicians while the bureaucrats’ job is to implement the policies, and both the institutions should restrict themselves to their prescribed areas of activity. However as Bohte (2007: 811) points out that ‘a true dichotomy between politics and administration has always been and will most certainly continue to exist only as an idealised fictional construct’, and the bureaucrats are often required to take policy decisions. Bureaucrats have been observed to be having much bigger role in policymaking than the legislature in countries like Germany, Japan, and Russia (Moloney 2007). In India too, the bureaucrats at the topmost levels have been actively involved in policymaking (Maheshwari 2005). N. C. Saxena, a former top Indian bureaucrat, points out that ‘[in India] the civil servants have been given the task of initiating the policy and taking it through, whereas most politicians are totally indifferent to what the policy is’ (discussion quoted in Taylor 2005: 753).

Mosher, a much respected scholar on public administration, argues that a majority of policy decisions are initiated and influenced by the appointed officials and not by the elected politicians. He further argues that such decisions are shaped by ‘their capabilities, their orientations, and their values,… [and] these attributes depend heavily upon their backgrounds, their training and education, and their current association’ (Mosher 1982: 1). Maheshwari (2005) points out that the top bureaucracy in India is mostly drawn from urban middle and upper middle classes and from a certain number of universities, and is influenced by its own value system while designing policies. The feeder cadre for the top bureaucrats in India Post, Indian Postal Service (IPS) officers, is no exception to this observation. The IPS officers are also extensively trained with induction as well as in-service trainings. An analysis of the training modules (India Post undated) reveals that the training contents are largely technical with an overt emphasis on operational issues. The trainings appear to be more suited for India Post as a business organization rather than an important public institution. The training does not provide the officers with the information and tools to analyze the larger socio-economic issues facing the poorer segments of the population, and the contribution India Post as a public institution can make towards addressing some of these issues, especially in rural areas where it has an extensive presence.

Continued colonial traditions within the management of organization further ensure that the higher management never has an opportunity to learn actual operations that take place in a post office. Indian Postal Service officers are always positioned at an arm’s length from day-to-day operations. They are trained to ‘inspect’ and ‘visit’ actual postal operations but not to participate in managing their actual delivery. This results in their not entirely understanding the potential of this great institution and failing it whenever opportunity arrives to bring it to development mainstream of the country.

 Neo-liberal discourse, NPM and Post-NPM

Predominance of neo-liberal discourse in the government after the 1991 reforms in Indian economy is also a contributory factor for excessive focus on the profit-making and treating India Post more of a business entity rather than a State institution. When organisations such as the World Bank advocate larger role of the post-office and make suggestions for India Post to come out of the red, it invariably involves strengthening India Post’s capabilities to provide infrastructural support to other sectors of the economy (World Bank 2005; 2002). Such prescriptions do not consist of measures aiming to engage it towards the pro-poor development of rural areas and promote the government agenda for the rural areas, for which it is one of the most suitably located organisations among all the State agencies.

The neo-liberal discourses are also accompanied by the efforts to reform public administration across much of the democratic world, collectively referred to as the New Public Management (NPM) and its successor post- NPM. Such reforms seek ‘managerial and economic solutions to complex problems’ within public administration (Jun 2009: 161). However as Denhardt and Denhardt (2003) point out that such solutions are inadequate to address the larger issues involving the people such as public good, social justice and ethical considerations. These solutions are also found wanting while dealing with ‘[s]ocial factors, such as delivery and access hurdles as a result of caste-based discrimination’ in Indian context (Jayaram 2009: 784). Argyriades (2007: 18) is severely critical of ‘one size fits all’ approach of NPM, among other things, and argues that the NPM has failed to adequately deliver on its promise. The NPM however largely informs policymaking within India Post as is evident by the response of India Post to the changing realities around it.

 Urban bias and the bias towards business and corporate sector

Mainstreaming of neo-liberal discourses explains another bias towards the business and corporate sector while developing premium products and value additions on the existing products, ignoring the competitive disadvantage facing the organization while serving such a set of clients. This is perhaps based on the assumption that the additional revenues to reduce the recurrent losses can be generated through the business community only. This approach tends to ignore the business opportunities requiring the utilization of about 89% of its network available in rural areas. Such business opportunities may not only generate additional revenues for India Post, but may also help reduce rural-urban and rich-poor divide in Indian society as is testified by various social enterprises across the world. Although it is important to tap the business potential in urban areas where a large part of India Post’s capital investment is concentrated, there needs to be a balance between the urban and rural-centric efforts within its business strategy. Such a need is particularly acute in view of the fact that India Post does not enjoy a competitive advantage in urban sectors.

Aforementioned dynamics of policymaking within India Post also explains the overt urban bias in decision-making within India Post. In addition, the recruitment procedures do not provide an opportunity to the IPS (and Indian Civil Service, in general) aspirants to be tested on subjects such as social work, development studies, international development, rural management and rural development, study of which could have given them an understanding and the sensitivity to explore and engage their organization towards serving the poorer population in rural areas.

The urban-bias is further explained by the fact that due to their work conditions, the top bureaucrats have very little functional exposure to rural areas, rural economy, social and business networks, and power structures in rural areas. A sizeable portion of top bureaucrats has never had any opportunity to work beyond metropolitan cities.

 Leveraging rural and semi-urban networks

Due to a pronounced urban bias in the policymaking within India Post, a majority of new and premium services introduced by India Post in financial as well as non-financial sector can have their clientele in urban areas only. They cannot be introduced in rural areas, as they do not have rural market. The semi-urban and rural networks cannot support new sophisticated products or value additions on existing mail products due to the fact that such needs do not exist in the rural and semi-urban areas. It can however support appropriate products in retail and financial sectors where there are vast amounts of unmet needs and demands. Due to this reason, new products and services that have been relatively successful in generating revenues for India Post have been the ones that have leveraged the rural and semi-urban networks (Priyadarshee, 2015).

Such outcomes naturally follow from the structure of the postal network particularly in rural areas. The postal personnel for rural post offices are largely drawn from the local communities and therefore enjoy trust of the people. Post offices are suitably located to deliver financial services and social protection measures due to their proximity to the rural people, and their personnel being known to the local people. Additionally, India Post, being a government department, is in a better position than similarly placed agencies such as banks and telecom companies to coordinate with other government departments offering social protection. By involving post offices, state governments and the government of India may also be in a position to avoid extra expenditure on creating new financial service channels or new delivery mechanisms for social protection programmes.

This will however need post offices to reach out to the deprived households, which will be far easier for them than any other network due to their geographical proximity with such households. This will, in turn, require postal management to be trained in the methodology of community engagement, and understand the necessity to  do the same. Significant public resources have already been invested in creating and sustaining such mammoth organizational capital and it will not be in the interest of Indian people to let India Post remain under-utilized.

References

  1. Argyriades, D., 2007. ‘Resisting change’: Some critical remarks on contemporary narratives about reform. In: D. Argyriades, O. P Dwivedi, and J. G. Jabbra, eds. Public administration in transition: Essays in honor of Gerald E. Caiden. London: Vallentine Mitchell, 1-23.
  2. Bohte, J., 2007. Governmental efficiency in our time: Is the “What” really more important than the “How”? Public Administration Review, 67 (5), 811-816.
  3. Denhardt, J. and Denhardt, R.B., 2003. The new public service: Serving, not steering.E. Sharpe: Armonk.
  4. Jayaram, S., 2009. Postreform India. Public Administration Review, 69 (4),783-785.
  5. Jun, J. S., 2009. The limits of post-New Public Management and beyond. Public Administration Review. 69 (1), 161-165.
  6. Maheshwari, S. R., 2005. Public Administration in India: The higher civil service. Delhi: Oxford University Press.
  7. Moloney, K., 2007. Challenges in growth and development: Lessons from comparative bureaucracy: Today as yesterday. Public Administration Review, 67 (6), 1083-1086.
  8. Mosher, F. C., 1982. Democracy and the Public Service. 2nd edition. New York: Oxford University Press.
  9. Priyadarshee, A., 2015. Towards reducing poverty in India: A case for mutually leveraged and reinforced delivery of microfinance and social protection. Saarbrucken, Germany: Lambert Academic Publishing.
  10. Taylor, M., 2005. Bridging research and policy: A UK perspective. Journal of International Development, 17 (6), 747-757.
  11. World Bank, 2005. Report on seminar, transformation of India Post for Vision 2020, June 15-16 [online]. Available at: http://www.worldbank.org.in/WBSITE/EXTERNAL/COUNTRIES/SOUTHASIAEXT/INDIAEXTN/0,,contentMDK:20568412~menuPK:295589~pagePK:141137~piPK:141127~theSitePK:295584,00.html [Accessed 28 December 2009].
  12. World Bank, 2002. India Post 2010. Conference on harnessing the outreach infrastructure of India’s postal network [online]. Available at: http://www.iief.com/Consulting/13march.pdf [Accessed 12 July 2009].
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India Post: A story of missed opportunities [Part III: Direct Benefit Transfers (DBT)]

India Post is a unique institution in many ways. The most important aspect of it is however its extensive network that has capability to deliver tangible as well as intangible goods to almost anybody residing anywhere in the country. Various social groups, particularly those difficult to be reached, can be included in the process of development while leveraging this infrastructure. Few low-income countries can boast of possessing such rich physical network capital.

An organization as old and as deeply entrenched in traditions as India Post needs to keep reinventing itself if it aspires to remain relevant in a rapidly changing political-social-economic landscape. India Post has however been exhibiting massive inertia to change at fundamental levels even in the face of some very potent opportunities during the recent years. India Post story may be one of the most remarkable post-Independence stories of missing almost all possible opportunities to become a far more effective partner in the growth and development process of India than it currently is.

In the first part of this blog story I discussed how (and why) India Post missed out on an extremely important opportunity of delivering microfinance to the financially excluded households of India despite the fact that it was almost ideally placed to do so. In the second part of the story I discussed how a historic opportunity was let go by India Post to become a hugely important public institution in rural India while facilitating transformation of rural lives and livelihoods through common service centres (CSCs). In the third part of the story I will discuss how despite having capabilities to deliver various social protection programmes India Post did not put forward its case strongly, which resulted in the concerned government agencies looking towards other entities and spend money towards creating parallel networks. It could have been avoided if India Post had offered its network for delivering such programmes. India Post’s involvement could have also avoided exclusion and inclusion errors in the programme delivery as is borne by the evidence presented below.

In view of its capabilities it is not surprising to note that the first ever experiment in India to deliver social security benefits directly to the beneficiaries through bank accounts was initiated by India Post back in the year 2003. Not many people within even India Post are aware of this fact, let alone being proud of it!

Widows living below poverty line (BPL) are entitled to monthly pension in all states of India. Contribution by state governments towards the pension varies from state to state but a major chunk of funds for the programme is provided by the central government. When I was director postal services (headquarter) for Gujarat circle, secretary, women and child development department, government of Gujarat, and I collaborated to experiment with delivering the BPL widow pension through the bank accounts in their own names. The collaboration entailed the post offices to identify and open savings accounts of all the widow beneficiaries. Before opening the accounts I offered to the state government to verify credentials of all the beneficiaries to remove inclusion errors. The verification revealed that out of 130,187 widows drawing the pension in the state as many as 10,353 did not fulfill the eligibility criteria for receiving such pensions.

After the savings accounts of the remaining beneficiaries were opened, all the state government needed to do was to provide a single cheque to the general post office at Ahmedabad for the entire amount to be disbursed along with a list containing details of all the widow beneficiaries. Money being directly credited to the widows’ accounts had obvious benefits of the women receiving full amount of their pension and having total ownership over their money. As BPL widows constituted arguably the most vulnerable social group in the state, almost none of them ever had a savings account. This exercise resulted in all of them having savings accounts in their own names. I negotiated with the state government to pay 5% of the total disbursed amount at par with the commission charged by India Post for its cash remittance services. After deleting the names of ineligible persons and thus removing inclusion errors and the resultant leakage of funds. In all, accounts for 115,000 women were opened across the state. By December 2009, the post-offices had earned revenue of INR 182.7 million through this activity, in addition to the commission earned on each of 115,000 accounts every year from the Ministry of Finance.

That Gujarat experiment of direct benefit transfers (DBT) through post office savings accounts was successful without any assistance of digital technology, which was only possible for such an extensive network as India Post. One can easily imagine the enormity of the potential of this network if it is effectively digitized.

When national rural employment guarantee programme (NREGP) was initiated, the then Andhra Pradesh (AP) postal circle offered to the AP government to replicate Gujarat widow pension DBT model to pay wages of laborers under NREGP through post office savings accounts. Postal administration in other circles also entered into agreements with their respective state governments. Banks then realized the significance of such transfers and started offering their services to various state governments. Meanwhile it was becoming difficult for managing large scale transfers for post offices without the aid of technology as NREGP was expanding rapidly. Banks in such a situation offered better services, particularly in areas where they had reasonably good presence, riding on their already existing technology platforms. Banks also made efforts to develop their business correspondent networks equipped with appropriate technology in unbanked areas. Situation is still quite fluid but the post offices are increasingly losing their ground in DBT space as they have still not been able to digitize their network.

The first step in this regard could have been to partner with one or more banks with footprints across the country. This could have been on the existing business correspondent model or some even better customized model leveraging divergent strengths of the banks and post offices. However, nothing of this sort happened despite advocacy by several external experts and a part of Postal Management, including myself, as the topmost manager-policymakers were living in their own make-believe worlds, and were driven by some irrelevant and unfounded organizational egos. They argued that they were much bigger than any bank in the country and it would be demeaning for India Post to work as their business correspondents.

The next obvious step was to ensure digitization of the entire postal network as fast as possible. As I discussed in the Part II of this blog story, India Post had an opportunity to digitize its rural network way back in 2006 when Government of India had allotted adequate funds to establish 100,000 common service centres (CSCs) under National e-Governance Plan. Another opportunity arose after the Government of India constituted Unique Identification Authority of India (UIDAI) in the year 2009. India Post could have approached the authority to become its partner and have offered its extensive network for issuing unique identity (Aadhaar) to citizens of India. The UIDAI resources could then have been used to computerize the entire rural network, and non-computerized urban network, of post offices. Post offices could then have been integral part of all the initiatives to be linked with Aadhaar including direct benefit transfers. Not only India Post did not approach UIDAI for such partnership it also scuttled all suo moto offers from UIDAI to provide digital technology to rural post offices free of cost. Postal top management based their argument to reject the offers from UIDAI on such flimsy grounds as in the situation of accepting UIDAI’s offer the ownership of technology project initiated for digitizing post office network would be appropriated by the Ministry of Finance. It is pertinent to mention here that even at the time of writing this blog India Post has still not been able to digitize its rural network under its own technology project. It has already wasted precious time and has irretrievably lost the space for DBT to other players.

In addition to losing great opportunity to make itself once again greatly relevant to the people of India and significantly improving their account books, India Post is also doing great disservice to the deprived Indian population by denying them an efficient, convenient, and cost-effective way of accessing social protection programmes.

India Post: A story of missed opportunities [Part II: Common Service Centres (CSCs)]

India Post is a unique institution in many ways. The most important aspect of it is however its extensive network that has capability to deliver tangible as well as intangible goods to almost anybody residing anywhere in the country. Various social groups, particularly those difficult to be reached, can be included in the process of development while leveraging this infrastructure. Few low-income countries can boast of possessing such rich physical network capital.

An organization as old and as deeply entrenched in traditions as India Post needs to keep reinventing itself if it aspires to remain relevant in a rapidly changing political-social-economic landscape. India Post has however been exhibiting massive inertia to change at fundamental levels even in the face of some very potent opportunities during the recent years. India Post story may be one of the most remarkable post-Independence stories of missing almost all possible opportunities to become a far more effective partner in the growth and development process of India than it currently is.

In the first part of this blog story I discussed how (and why) India Post missed out on an extremely important opportunity of delivering microfinance to the financially excluded households of India despite the fact that it was almost ideally placed to do so. In the second part of the story I will discuss another important missed opportunity that could have transformed the rural areas of the country besides generating significant additional revenues for India Post. This opportunity related to delivering various services to Indian villages on internet platforms that are otherwise not available, and not possible to be cost-effectively delivered, in rural areas.

Advent of internet and information technology is associated with developing innumerable new services and products that improved human wellbeing substantially. It has also revolutionized the way existing products and services are delivered and accessed in terms of efficiency of delivery, quality and reach of the services. Internet is even more relevant in the rural areas of low-income countries such as India, where delivery infrastructure is poor, and economy of scales is not possible due to low population density and large physical distances. In fact, certain services that are taken for granted in urban areas can only be made available cost-effectively in rural areas on internet platform. However, we need a physical network in the villages that can make such an internet platform available to the villagers. With 130,000 post offices for about 600,000 villages in India such a physical network is already in place.

There was an effort to utilize this amazing physical reach of post offices that too at a time when nobody thought of leveraging internet to provide various desperately needed services in rural areas. When I was Director of Postal Services for Ahmedabad region in Gujarat in the year 2002 I found out that Banas dairy at Palanpur in North Gujarat had installed a huge dish antenna at its premises that could provide internet within a radius of 25 km if one installed a smaller antenna within that radius of the big antenna. Banas dairy had collaborated with Indian Institute of Technology, Chennai, for the purpose. Those were the times when only dial up internet was available in largely urban areas in India. I procured the small antenna and put up a computer system along with a printer and a web camera at a village named Kumbhasan in Palanpur district.

This was the first such common service centre (CSC) in a village in the entire country.

I sent a detailed report to the Postal Directorate in New Delhi and requested them to take up with the Department of Information Technology (DIT) for providing funds for the initiative. The top postal management in Delhi was so insulated from the changing realities around them that they could not see the potential of such an enterprise. This village post office CSC remained a solitary experiment and lost its importance in the scheme of things even in Gujarat after I moved out of India Post in 2004.

People and policymakers gradually woke up to the potential of such centres in the villages. On the recommendation of National Commission on Farmers, Government of India announced to set up rural knowledge centres at village level ‘using modern information and communications technology (ICT)’ in the Union budget for the year 2005-06. In the next Union Budget the Government announced launching of National e-Governance Plan (NeGP) and establishing 100,000 common service centres (CSCs) across the country. At that time, even when I was out of India Post I wrote to the policymakers of the India Post to take advantage of the situation, and the money available under the program, to computerize all rural post offices. They could then improve quality of their services, expand basket of their services, and improve their revenues, while significantly increasing participation of rural population in the larger economic space being created in the country. This could have triggered several processes that could have led to an unprecedented rural prosperity and substantial revenues for India Post. Most importantly, there were more than 100,000 rural post offices and India Post was not required to set up any additional physical post office for the purpose.

The Government of India for want of any other alternative asked the state governments to contact NGOs working in rural areas to identify the persons in the villages capable of running the CSCs and install the requisite hardware. The hardware was installed but the people running the CSCs were not supported to develop their business plans or to develop collaborations with service providers, including the government agencies, to deliver their services to villagers through CSCs. Most of the NGOs were also not competent to provide such handholding to CSC personnel. A large majority of the people selected to run CSCs did not know how to operate a computer at all; having lived in villages many of them had not even seen a computer beforehand. Needless to say, all such CSCs failed in accomplishing their mission miserably, and the money spent in procuring and installing the hardware was totally wasted.

Based on the reports from the field, the NeGP got the program reviewed through IL&FS which recommended to the Government to engage with private sector and resort to public private partnership (PPP) for the purpose. Interestingly, India Post remained totally oblivious to such happenings in a sister department (the then department of information technology) under the same ministry (of communications & IT).They could have leveraged the situation to use 100,000 of their post offices as common service centres, which could have made them an extremely important public institution at least for rural India.

According to the provisions of the proposed PPP the government agencies were required to provide revenue support for establishing the CSCs while the private sector partner (called service centre agency, SCA) was to identify the person to run the CSC (designated as village level entrepreneur, VLE), establish the CSC, develop the business plans for the CSC in such a way the SCA also earned reasonably in the process, and provide for and nurture all the required linkages with public and private service providers. The tenders were called for to select SCAs on the basis of their demand for the lowest amount of revenue support from the government. Some private sector companies recognizing the importance of CSCs, and business potential of the idea, quoted for negative revenue support implying that they were willing to even pay to the government for allowing them to establish CSCs. Unfortunately, top management within India Post did not have vision to see this.

This has however resulted in sinking a huge amount of money in creating a network in the villages from scratch on part of the governments of India and the states, while at least a part of such a network was always available at government disposal. The PPP model does not seem to be working optimally with both partners making several allegations against the other. Anecdotal evidence suggests that some SCAs charged exorbitant sums from the villagers before appointing them as VLEs on assurances that VLEs would be making good amount of money. This did not happen and the VLEs agitated at several places. SCAs are still struggling to convince various state government departments to route their services through CSCs. VLEs are still agitating, and CSC network is not able to deliver as expected in several states. All this could be at least partly avoided if India Post had offered its network for common service centres in the villages. In addition to ensuring provisioning of needed products and services to the rural areas seamlessly it could have generated significant revenues to India Post, which keeps struggling to reduce its operational losses. It would have been even more significant for India Post in the context of the emphasis of the current Indian Government on digitization of all aspects of economic transactions in the country.

India Post: A story of missed opportunities [Part I: Microfinance]

India Post is a unique institution in many ways. The most important aspect of it is however its extensive network that has capability to deliver tangible as well as intangible goods to almost anybody residing anywhere in the country. Various social groups, particularly those difficult to be reached, can be included in the process of development while leveraging this infrastructure. Few low-income countries can boast of possessing such rich physical network capital.

An organization as old and as deeply entrenched in traditions as India Post needs to keep reinventing itself if it aspires to remain relevant in a rapidly changing political-social-economic landscape. India Post has however been exhibiting massive inertia to change at fundamental levels even in the face of some very potent opportunities during the recent years. India Post story may be one of the most remarkable post-Independence stories of missing almost all possible opportunities to become a far more effective partner in the growth and development process of India than it currently is.

First of such opportunities may be traced to the decade of seventies and afterwards, when the world was slowly waking up to the potential of financial services to reduce poverty. This gave rise to the microfinance movement but India Post steadfastly remained oblivious to it. In India Post, India had an institution that was tailor-made for designing and delivering financial services to the excluded section of Indian society. They were already offering all the financial services relevant to low-income households excepting the credit products. Permitted transactions within their small savings services are in fact smaller than those normally associated with micro-savings. In addition, they offer remittance and life insurance products. They also have had collaborations with the general insurance companies to deliver non-life insurance. They have been delivering various social security pensions on behalf central as well as several state governments. Despite this, India Post network has been consistently failing to meet the needs for financial services for a large population of financially excluded who are otherwise well within its reach.

Post offices were and are still waiting for customers to walk in, and those, who need its financial services the most, never walked in, could not have walked in. India post management tends to believe that the entire population of India has an access to its services. In reality the bottom half of Indian population does not go to post office. They are intimidated by any formal institutions and avoid them unless they are themselves reached out to.

There is another important reason for the economically and socially disadvantaged people to avoid going to post offices particularly in rural areas even when the post office is located in their own village. I discovered this while doing my research in the rural areas of Uttar Pradesh, Gujarat and Andhra Pradesh states. In impoverished localities while discussing their needs for financial services I often encountered people’s need for saving a portion of whatever they earned on the days when they got gainfully employed. They could not do it as bank branches were located far away from their villages. Moreover, banks would in any case discourage them from saving such small amounts and would not allow them to withdraw even smaller amounts required by them frequently. Their almost desperate need to access suitable micro-savings services encourages unscrupulous elements to devise ways to cheat and defraud them of their savings, a phenomenon, which I have described elsewhere. Whenever I asked the people why they were not using small savings services offered by the post office located in their own village they invariably admitted to being totally unaware of such services. Very few of them, if any, had ever visited the post office even when it was very conveniently located in the same village.

When post office network was being expanded in the rural areas the colonial rulers devised an ingenious method to reduce establishment costs of rural post offices to create an extra-departmental cadre of employees to be paid according to the number of hours they were required to work. More importantly, the postmasters were required to provide a suitable office space on nominal rentals, and were required to own immovable properties in their own names in addition to possessing minimum educational qualifications. This resulted in the rural elite monopolizing the postmasters’ institution as they only fulfilled such recruitment criteria. Moreover, all of them located the post offices in a portion of their residences. This effectively ended any possibility of the deprived sections of village population ever entering the post office as they could not dare enter the houses of the elite on their own. The situation has improved slightly over the past few years after the courts intervened to strike down the requirements of owning immovable properties in the village for the postmasters deeming it to be discriminatory. However, a vast majority of postmasters appointed in the old system continue to work as they are not retired. Even in the case of postmasters appointed in the new system the people belonging to the deprived sections keep avoiding post offices as they are traditionally unaware of availability of financial services relevant for meeting their needs in post offices.

In such a situation, India Post could have made any significant contribution to promotion of microfinance only if it had made deliberate efforts to reach out to the potential microfinance clients. This would have required structural changes, and most importantly, shedding out the government-bureaucratic culture where customers are still considered to be beneficiaries who have to approach and request for services, and need to feel obliged and indebted after receiving services, however deficient they may be.

When I was working with International Fund for Agricultural Development (IFAD- a UN agency) I prepared a paper advocating for India Post to enter the microfinance by actively engaging with the people excluded from the ambit of financial services. Such an engagement would not only meet financial needs of the deprived people and thus would go a long way in reducing their poverty in its various dimensions but would also generate additional revenues for India Post. On the basis of the arguments contained in the paper the then head of Tamilnadu postal department (Chief Post Master General- CPMG) requested the then Communications Minister of Government of India to allow Tamilnadu postal department to collaborate with the National Bank for Agriculture and Rural Development (NABARD) to work with the self help groups and provide them with the credit through NABARD funds. The pilot for the collaboration was launched in two districts of Tamilnadu. On request of the CPMG I traveled to both the districts to impart training on microfinance to all the participating postmasters. The program was successful and NABARD wanted to expand it, but true to traditions and character of India Post as an organization, they did not go ahead with the program.

India Post could still have engaged with microfinance even without any collaboration with NABARD. Such engagements could be in the form of supporting self help groups/joint liability groups. If nationalized banks could do this, India Post could have done it much better due to their being located in close proximity with the local communities particularly in rural areas. They could have collected their savings and facilitated their internal lendings. They could have customized their remittance product to meet the needs of huge migratory communities. They could have participated in delivery of various micro-insurance schemes launched by other government agencies, such as Rashtriya Swasthya Bima Yojana and Aam Aadami Bima Yojana.

They could have also tied up with other entities for external lendings and other financial services. Microfinance organizations, non-bank finance companies and banks would be very happy to collaborate with India Post to reach financially excluded through microfinancial products. Brazil and Netherlands Post have already developed such a template. Answers to why this did not happen or is not happening lie within the larger structural issues facing India Post as an organization as discussed in Part IV of this blog story.