For the FY 2018-19 , State run India post losses reaches to Rs 15000 Crore . Which has now become reason to worry for the Government . Revenue deficit of India Post has increased 150% in last 3yrs.
What leads to the losses?
The revenue from postal services are falling , while operational cost and employee cost is increasing. For FY 19 – 20 , as against the projected revenue of Rs. 19,203 crore, company will have employee benefits ( Pay and allowances) cost of around Rs.27000 crore. Department of post ( India Post) is having large workforce of around 4.3 Lakh employees , which makes its employees’ cost to around 90% of its total annual revenue.
The Other Reason
Improper Product/service costing and pricing leads to under recovery of costs. For example, India post charges 50 paise for post card , while it spends Rs.12.15 on each post card. Similarly parcel service charge is also half of its cost. Increase in revenue is not sufficient to meet increase in cost.
Revenue from speed post services has more than doubled in last 5 yrs and reached to Rs.1682 crore.