Financial Daily from THE HINDU group of publications
Friday, Jul 19, 2002
Supply Chain Management
Post going private... in letter and spirit
CHENNAI, July 18
THE formal process of throwing open the country's postal service to competition from the private sector is now well and truly launched. A Bill to amend the Indian Post Office Act, 1898 introduced in the Lok Sabha towards the end of the Budget session last, sows the seeds for this outcome.
Far from cementing the Government's monopoly privilege on postal services as the objects
clause contends that it does, the Bill actually provides a framework for the exact opposite.
True, the amendment proposed to Section 4 of the existing Act does say,
"... The Central Government shall have the exclusive privilege of conveying by post, from one place to another, all letters... and shall also have the exclusive privilege of performing all incidental services... "
But in the same breath, the Government through the insertion of a new Section 4A also says, "The Central Government may grant registration on such terms and conditions, as it thinks fit, to any person or body for carrying out any act or performing any service falling under Section 4... "
For added effect, the new clause goes on to say that anything done in accordance with the registration granted (by a person) should not constitute an infringement of the privilege conferred on the Central Government!
A senior official in the postal department that this writer spoke to, said on conditions of anonymity, that the proposed amendment goes far beyond the objective of merely regulating the conduct of those engaged in the so called `courier' business. He contends that the Government's claim that the new Bill preserves the exclusive privilege of providing a postal service is meaningless as such a privilege was already available to it under the existing Act and would always be construed to exist as long as the old Act is not amended.
On the contrary, the proposed Section 4A not only dilutes the privilege of exclusivity but also actually contemplates entry of new players and expansion in the scope of business of existing courier companies.
The courier companies have hitherto operated in the grey area of what is permissible under the existing law for postal services.
The exclusive privilege of the Government under the current law dealt with `letters'.
Since the Indian Post Office Act, 1898 did not define what is meant by the expression `letters', it was assumed that it would cover in its scope, only personal communication. The transmission of commercial documents was thus sought to be a field open for commercial exploitation by private players.
It is another matter that the scope has since then been expanded, informally though, to cover all manner of communications, both personal and commercial transactions to the point that the public no longer `post' letters but only `courier' it. But the proposition had never actually been tested.
These companies, however, need no longer entertain any fear that they might be treading the grey zone of legality under the Indian Post Office Act, 1898. The proposed amendment introduces a new clause in the Section dealing with `definitions'. This stipulates that the expression `letter' means `any written communication to and from any person to any specific address... '
In the event, a certificate of registration from the Government renders as legal, not just the services that a courier company currently offers but even those that it sets out to offer anew, in competition with the country's post offices. Not just that, but perhaps even those, that the latter may contemplate offering in the future.
A new Chapter on Postal Services (Chapter IXA) under the proposed Bill contemplates the Central Government throwing open new postal services. It envisages such new businesses as "Electronic Post' (E-mail service?) and Postal Monetary Services.
The Government has reserved for itself the right to makes rules and procedures of operation, for the news services. But as the proposed law makes it clear, the new services are within the broad ambit of postal services. Postal services, as it is understood now, provide for private participation under a registration cum licensing regime.
Private players should fancy their chances of a regulated entry into emerging new business opportunities.
With expanded private participation comes the question of foreign investment in basic postal services. The Government stand on that is not clear. The Indian Post Office Act will no longer be called that. The Bill seeks to drop the word `Indian' in the Act. Is there a pointer here?
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