Like all other state-run entities, India Post is also plagued by high operating costs and compensation to employees.
The growing gap between state-run India Post's revenues and expenditure touched Rs 15,000 crore in FY19, making it the biggest financial burden for the government, even more than BSNL and Air India, as per a report in Financial Express.
PSUs BSNL and Air India reported losses of Rs 8,000 crore and Rs 5,340 crore, respectively, in FY18.
Like all other state-run entities, India Post is also plagued by high operating costs and compensation to employees. Salaries of the employees have been rising due to implementation of many central pay panel awards. However, revenue from postal services kept falling.
In FY19, the allowance and pay costs for the entity stood at Rs 16,620 crore, against a revenue of Rs 18,000 crore. The PSU has estimated that its expenditure on salaries and pensions will be close to Rs 17,451 crore and Rs 10,271 crore respectively in FY20 against projected revenue of Rs 19,203 crore.
The company has been trying to get out of this financial distress but has failed due to a mismatch between product costs and cheaper alternates available to traditional mailing services. Sources said India Post may be asked to delve into e-commerce and other value-added services to put its 4.33 lakh workforce and 1.56 lakh post office network to use.
"For a universal service like postal service, losses will be there as there are more post offices in the country than bank branches of all commercial banks put together," an official said. The body spends Rs 12.15 on each of its Postcard but only gets back 50 paise or 4 percent of the cost. Same goes for its parcel service, book post, speed post and registration.
The PSU forayed into other services like financial product selling, wherein it sells sovereign gold bonds, mutual fund and insurance, passport service delivery, railway tickets and other similar services. But they did not help out much and only accounted for Rs 844 crore in revenues in 2018.India Post is dependent on National Savings Schemes and Saving Certificates for most of its revenues. They made up 60 percent of its revenue of Rs 11,511 crore in FY17. Experts say that it can be a fair Cash-On-Delivery channel for e-commerce companies due to its presence in the most obscure corners of the country. However, lack of warehouse facilities is hampering this avenue for India Post as well.