Why India Post Loses Money

Why India Post's expenses exceed its revenue, how salaries, pensions and cheap services contribute, and ideas for improving its finances.

India Post runs large deficits.

The gap

India Post’s expenditure has exceeded its revenue by thousands of crores of rupees a year in recent years.

Why

Salaries and pensions make up most expenses.
Universal service: remote areas and cheap postcards lose money.
Declining letters, historically a revenue source.
Agency services: India Post is paid a commission for handling small savings, which may not cover costs fully.

Revenue sources

Speed Post and parcels.
Commission from small savings.
Postal life insurance.
Government services.

Ideas for improvement

Expand profitable parcel and logistics businesses.
Use the network for more government and private services.
Revise prices for some services.
Monetise real estate: many post offices sit on valuable land.

Is a deficit bad?

Since India Post provides public services, some deficit may be acceptable, similar to public transport. The question is whether services justify the cost.

The postcard loss

Every 50-paise postcard costs India Post several rupees to deliver. Millions of postcards add up to large losses.

Thinking a public service's deficit means failure

Some deficits fund valuable public services, though efficiency matters.

Key takeaways

India Post's expenses exceed revenue by thousands of crores.
Salaries, pensions and universal service drive costs.
Parcels, savings commissions and services earn revenue.
Some deficit may be acceptable for public service.