Department of Posts Reviews Post Office Income & Cost Norms Under IT 2.0 (APT2.0)
Department of Posts(DOP) Reviews Post Office Income & Cost Norms in IT 2.0 Era
The Indiapost has initiated a major review of the income and cost formula used for evaluating Post Offices across the country in light of the implementation of IT 2.0. Through a detailed committee report running over 80 pages, the Department has examined the changing nature of postal operations, declining traditional mail traffic, growing retail and banking services, and the need to modernize the financial assessment of Post Offices.
The Directorate has now sought comments from all Circles on the recommendations submitted by the Committee before further action is taken.
Why the Review Was Needed
The Committee was constituted to review the existing norms for:
- Opening of BOs, SOs, and HOs
- Income and cost calculation formulas
- Workload norms for Branch Post Offices
- Impact of IT 2.0 implementation on postal functioning
- Revenue and expenditure linkage of Departmental operations
The report highlights that the traditional formula prescribed under Rule 547 of the Postal Accounts Manual was developed decades ago when postal traffic patterns were very different.
Major Concern: Mail Traffic Has Declined
One of the most significant observations of the Committee is that mail traffic has drastically declined over the years while delivery costs continue to rise. The report states that:
- Mail delivery has become a major cost component
- Delivery network costs are increasing sharply
- Traditional mail is no longer the primary income source for rural post offices
The Committee noted that nearly 60% of mail operational costs are related to delivery activities, especially in sparsely populated rural areas.
Retailing and Financial Services Becoming More Important
The report emphasizes that modern post offices now spend most of their working time on retail and financial services rather than mail handling. According to the study:
- Around 76% of time in departmental post offices is spent on retailing and related functions
- Savings Bank, insurance, DBT payments, and agency services have become major activities
- Rural post offices are increasingly functioning as financial inclusion centers
The Committee observed that post offices today play a critical role in:
- Savings and banking services
- PLI/RPLI insurance
- DBT and pension payments
- E-commerce logistics
- Rural connectivity and government service delivery
Committee Recommends New Approach
The Committee strongly recommended that the old formula should no longer rely heavily on mail delivery statistics because such figures are often unreliable and no longer represent actual revenue generation.
Key recommendations include:
- No separate income credit for inward mail delivery in Branch Post Offices
- Greater focus on outward mail and retail services
- More importance to agency and banking transactions
- Separate accounting of delivery costs
- Profit-center concept for departmental post offices
The report also suggested that the cost and income formula should now primarily apply to Branch Post Offices rather than all categories of post offices.
IT 2.0 Has Changed Postal Operations
The Committee repeatedly emphasized that the rollout of IT 2.0 has fundamentally changed the way post offices operate. Digital systems now provide more accurate transaction tracking, customer service integration, and financial reporting, making older manual assumptions outdated.
The report also examined earlier committees, historical amendments to Rule 547, and previous studies conducted over decades regarding postal cost and revenue calculations.
Rural Postal Network Still Socially Important
Despite concerns over financial viability, the report acknowledged the enormous social importance of rural post offices. It noted that rural postal infrastructure supports inclusive development and acts as a trusted interface between the government and rural citizens.
The Committee recognized that many rural offices may not be commercially profitable but remain essential for:
- Financial inclusion
- Social welfare delivery
- Pension distribution
- Rural communication access
- Government outreach
Circles Asked to Submit Comments
The Department has directed all Circles to carefully study the report and submit their comments to the Planning Section for further consideration. The matter is also linked with Establishment Review and important HMOC dashboard agenda items.
The recommendations, if implemented, could significantly reshape how India Post evaluates the viability, workload, and performance of post offices in the IT 2.0 environment.
