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.

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