TASK FORCE REPORT ON POSTAL

BLUE PRINT FOR CORPORATISATION AND PRIVATISATION

- WE SHOULD OPPOSE AND DEFEAT IT -

M. KRISHNAN

Ex-Secretary General, NFPE & Secretary General, Confederation of Central Government Employees & Workers 

1. Finally our apprehension has come true. The report submitted to Government by the “Task Force on Leveraging the Post office Network” is nothing but a blue print for corporatization and eventual privatization of different services given to public by the Century old Department of Posts, strictly in tune with the reforms agenda of the NDA Government. Within three months of its coming to power, the NDA Government has appointed the high-level Task force headed by Shri T. S. R. Subramanian, Retired Cabinet Secretary to Government of India as Chairman. Government acted in a clandestine manner by creating an impression among the general public and employees, through media, that it is committed to improve the efficiency and productivity of the services given by the Postal Department by expanding its points of presence and customer base in rural areas and small towns and also by improving role of Post offices in financial inclusion. Actually it was an act in disguise and Government’s hidden agenda was to corporatize the main functions of the Postal Department.
2. When the Task Force was appointed with much fanfare, under the direction of Hon’ble Prime Minister, many of our well-wishers have asked us that when the Government is attacking other Government sectors like Railways, Defence, Public Sector Banks, BSNL & LIC etc. by privatization offensives, why it is keen to do good to the Postal Department alone. Some of the high level officers of the Postal Department also predicted bright future for India Post through Task Force. Swayed by the propaganda, many of the Postal employees also believed that good days are going to come. We have categorically told them that when other Government departments and public sectors are reeling under the policy-offensives of the Government, we do not expect that the Postal Department alone will get “good days”.
3. In 2006 while framing the policy matters relating to the formulation of the Eleventh Five year Plan for communications & Information Sector, the UPA Government and Planning Commission was straight forward. It constituted a working Group of 22 members to make recommendations on Postal Sectors (Planning Commission No. M-13040/4/2006-C & I dated 30.05.2006). The Important Terms of reference of the Working Group was as follows:

(i) To make suitable recommendations on restructuring the organisation (Department of Posts) and corporatizing certain business units and possibility of segregating its banking and insurance functions.

(ii) To make recommendations on formulation of corporate plan and strategy for formulation of National Postal Policy.

4. In 2014, the NDA Government constituted the High level Task Force on leveraging the Post office Network, under the directions of Hon’ble Prime Minister (Office Memorandum No. 84- 04/2014-Coord/O&M dated 21.08.2014 of Government of India, Ministry of Communications & IT, Department of Posts). Unlike the terms of reference of Working Group constituted in 2006, nowhere in the terms of reference of the present Task Force it is mentioned about the reorganization and corporatisation of the services given by the Postal Department, But, in a pre-meditated manner, the Task Force submitted following sweeping recommendations for corporatization and eventual privatization of services presently given to the public by the Postal Department.
5. Gist of recommendations:

5.1 Whole functions (services) of the Department of Posts will be divided into following six units.

1. (i)  Banking and Financial Services (Savings Bank)
2. (ii)  Insurance (PLI, RPLI)
3. (iii)  Distribution of third party products (services on behalf of the private sector/private parties
   on payment basis)
4. (iv)  Management of Government Services (all services requiring registration, certification or
   Government over-sight including Aadhar Card and Ration Cards, bill collections and
   payment on behalf of Government department)
5. (v)  Parcel and Packets (delivery of Parcels and packets, tie-ups and agreements with E-
   commerce players for delivery, return, bill collections and payments for E-commerce
   articles and handling of e-commerce delivery operations of India Post deal)
6. (vi)  Communications delivery (Delivering of subsidized letter mails etc.)

2. 5.2  First five units are designated as “Strategic Business Units (SBUs)” which are conceptualized and will be expected to act as profit centres. Sixth Unit designated as “Communications delivery Unit” is not expected to make profits and its primary functions is to delivery mails at subsidized rates as a public good to service the need of the common man.
3. 5.3  Under the Department of Postal Services a Holding Company called “India Post (Financial and other services) Corporation” will be formed. The Corporation shall consist of such members of persons (not exceeding sixteen) as Director Board Members. One of the Director Board members will be appointed as Chairman by the Government.
4. 5.4  In the course of time, the Government of India (Department of Postal Services) may disinvest part of its holding (share) and allow the new entity (Corporation) to raise resources through IPO (initial public offer-sale of share) in the share market.
5. 5.5  Five separate subsidiary companies under the main Holding company (Corporation) will be constituted, converting the five strategic business units (SBLIs) as subsidiary companies.

1. (i)  Company for Banking & Financial Services (Post Bank of India)
2. (ii)  Company for Insurance (India Insurance)
3. (iii)  Company for Distribution of third party products.
4. (iv)  Company for Management of Government Services.
5. (v)  Company for Parcel and Packets (India Parcel)

6. 5.6  Five Subsidiary companies under the main Holding company (Corporation) will have separate Board of Directors to manage their business. Chairman of each subsidiary company will be a member of the Main Holding Company’s Board.
7. 5.7  The net profit generated by the subsidiary companies will belong to the Main Holding company as it will be their sole and 100% owner. In future the subsidiary companies can be listed in the stock Exchanges to raise capitals as and when this is required.
8. 5.8  Five subsidiary companies will be expected to make profits and contribute towards meeting the loss of communications Delivery unit (Sixth Unit) and also to delivery substantial revenue surpluses to the main Holding company.
9. 5.9  India Post would continue to retain its fundamental character of a Departmental organisation. The physical infrastructure including (1) Post Office Network (2) Operative and supervisory staff including Gramin Dak Sewaks, and (3) Informations Technology (delivered by CBS etc) will remain with Department of Posts. These service will be managed at the apex level by three Board Members of the Department of Posts (Member Infrastructure, Member Human Resources and Member Technology). All Five subsidiary companies will be required to pay appropriately for the use of these services to the Department of Posts. The user charges will be rationally calculated and will be met from the revenue generated by the subsidiary companies.
   10. 5.10  Each subsidiary company would be authorized to create new infrastructure or have new staff as it deem necessary. Banking professional will man the Branches of Post Bank of India (PBI) and not the Post offices staff (para 13.02.12). Post office staff working in Head/Sub/Branch Post offices will act as Agents or Banking Correspondence of Post Bank of India (PBI).
   11. 5.11  Sixth Unit designated as “Communications Delivery Unit” dealing with Written Communications Transmission (WCT) will not be corporatized for the time being and will continue to be handled by the Department of Postal Services within the Departmental frame work. India Post would continue to retain its fundamental (basic) character as an organisation delivering public mails (letters mails) with a social service, but it will henceforth be organised and run on commercial basis on its own, without depending on the consolidated fund of India for financial support, i.e. Department of Posts should run the above service without depending on the subsidy from Government.

12. 5.12  In the proposed new Post office Act Amendment Bill, Department of Posts proposes to gradually open up the Postal Sector, to private couriers in a phased manners, by removal of its monopoly over letter mail segment by incorporating 15 years sunset clause, The Task force recommends that the process of formulating and obtaining cabinet approval for the bills should be expedited and that a new post office Act should be enacted to replace the existing Post office Act (6 of 1898).
13. 5.13  The Task force recommended another Postal Act “India Post (Financial and other services). Corporation Act” for reorganisation of the total work of the Department by creation of new corporate structure. A Holding company under the purview of Department of Posts to supervise the new corporate structure is recommended.
14. 5.14  Task Force emphasizes the importance of categorical and unambiguous assurance that existing salaries and Allowances of the employees will not be affected adversely and that there will be no retrenchment during or as a result of the restructuring of the Department of Posts.

6. The following questions will naturally arise

1. 6.1  Why the Sixth unit designated as “Communications Delivery Unit” is not converted into a subsidiary company?
   The answer is very simple. This unit will always remain as loss-making unit due to subsidized rates of letter mail articles and printed New papers etc. No government will make a loss making unit into a company. Main hurdle for corporatization of entire Department of Posts as a corporation was that it is always running on loss. Now the Task force found out a short-cut method to overcome this hurdle i.e; profit making units of the department may be converted as subsidiary companies under a separate corporation under the Department of Posts, which inturn will be privatized later. Loss making unit will remain in the Department of Posts. Department of Posts will remain as a skeleton with flesh and blood removed from it. Thus the Government will be fulfilling its long-awaited agenda of Corporatisation of India Post and there by implementing the “reforms agenda” as per WTO and GATS conditionalities (General Agreement in Trade in Services) which states that in no service sector there should be complete monopoly of the Government. It should be opened up for private sector.
2. 6.2  The Task Force states that by forming five separate companies profit of each company will increase and it will inturn help the Department of Posts to wipe out its loss and make profit. For increasing the business and profit the existing Departmental set-up is enough. All the recommendations of the Task Force for increasing business can be implemented by the Department of Posts, even without converting it into subsidiary companies. While corporatising of Telecom as BSNL, VSNL and MTNL, the Government has advanced the same argument. Now those companies are loss-making companies and government wants to privatise or close down BSNL.

6.3 Why should the Federations/Unions oppose the corporatization, when the Task Force has given solemn assurance that – “existing salaries and Allowances of the employees will not be affected adversely and there will be no retrenchment during or as a result of the restructuring of the Department of Posts? further it is recommended that the Pension liability of 4000 crores is to be transferred to the consolidated fund of Government.

Telecom was a Government department, just like Postal. During the Telecom corportisation also government has given this type of “Categorical and unambiguous assurance” that corporatization will not affect adversely the salary and other benefits including pensin of the employees. Further Government has granted Rs. 1000 per month interim salary to all BSNL employees and also signed 5 years wage agreement with public sector wages. Higher Bonus was also granted. Assurance was given that pension will be paid from the consolidated Fund of India. Thus corporatization of Telecom was smoothly carried out. All of us know the present fate of the BSNL Employees. After completing its aim, the Government violated the assurances. Now for the last five years BSNL employees are not paid Bonus. LTC facility of the BSNL employees is also stopped for the last five years. Medical allowance stopped. Government appointed a committee called Sam Pitroda Committee and that Committee recommended retirement (VRS) of one lakh BSNL employees (voluntary retrenchment!!). Now NDA Government has declared that the Loss-making BSNL will be closed or privatized. This being the position, how can we believe the assurance of Task Force or Government?

6.4 Whatshouldwedonow?

Postal employees should unitedly oppose the dangerous and retrograde move of the Government to corporatize the main functions of the Postal Department and defeat it. Otherwise the future of India Post and the job security of the employees will be in danger. In Telecom, when corporatization took place, Government has succeeded in dividing the leadership of the Telecom Federations and employees by offering financial benefit and false assurances and hence the corporatization of Telecom took place without any resistance from the employees. By the time, employees realized the danger, it was too late. Now all the Federations and Unions in the BSNL including officers (Executives) are on continuous struggle for their existence. This should not happen in Postal. The experience of Telecom corporatisation should be lesson for the Postal employees.

Every Postal employee should understand that corporatization is a first step towards privatisation. For better understanding we are quoting below the observations made Fifth Central Pay Commission Chairman Justice SIR. Pandian in Cahpter 8 para 8.17 (a) of its report.

Para 8.17 (a) – Corporatisation

“No activity which involves manufacturing of goods or the provision of commercial services should be under taken by the Government. All such activities should be transferred to existing public sector undertakings (PSU) or new PSU be set up to look after them. Corporatization could also be a necessary half-way house on the road to privatization. There are certain

NB:

advantages of privatization which can be achieved through corporatization and corporatistaion is always less controversial than privatization”.

Nobody should be allowed to misguide the employees on false promises. The rosy picture portrayed by the Task Force about the future of India Post is to brain wash the employees and to make them to fall-in-line with the government’s corporatization agenda without any protest. They want the Postal employees to accept the recommendations of the Task Force without any protest. For achieving their goal they will say anything and offer everything. It is the agenda by the corporate for the corporate. And once the corporatization is over, the real face of the Government will come out. By that time it will be too late. We should also learn lesson from the experience of Postal employees of other developed and developing countries also where this policy is implemented. In all those countries where corporatisation of Postal functions has taken place, employees are now fighting against privatisation and for job-security and against retrenchment.

Entire employees of the Department of Posts – Postal, RMS, MMS, Administrative, Postal Accounts, SBCO, Civil wing, Gramin Dak Sewaks and casual, Part-time contingent employees shall unite together, irrespective of their union affiliation and shall come under one banner of JCA and unitedly oppose the corporatization of Postal. Officers shall also join this struggle as they will be the worst sufferers of corporatisation. We should raise the slogan “Save Postal & Save India Post” and unleash intensive campaign against the corporatization move of the Government and also educate the rank and file employees about the dangers of corporatisation and call upon them to be ready for a prolonged and uncompromising struggle.

The decision of the Postal Joint Council of Action (NFPE, FNPO, AIPEU-GDS (NFPE) and NUGDS) to go on indefinite strike from 6th May 2015 should be further strengthened by adding the demand – “No corporatisation of Postal Services” also as an important item of the Charter of Demands.

If we allow the NDA Government to corporatize the functions of the Department of Posts, it will be the beginning of the end of Government run Postal services in India. Multinational corporations will take over the corporation in the near future and the job security of the employees will face serious threat.

Let us be ready for a do or die battle