Post tense over Rs 1,450 cr bill

ECONOMIC SURVEY 2005-06\ POSTAL SUBSIDY

Post offices must be made one-stop shops for multiple financial services.

With the subsidy given to the Indian postal network projected to touch Rs 1,450 crore during 2005-06, the Economic Survey has asked the government to explain the rationale behind continuing the heavy expenditure.

"Clarifying the rationale, the mechanism and the size of the subsidy constitutes an important policy question at this juncture," the Survey said, pointing that the subsidy is expected to rise from Rs 1,364 crore in 2002-03.

To meet the rising expectations, the Survey has recommended that the ambiance of the Postal Finance Services be improved and brought under one roof of a financial super market.

There is also a need for making post offices one-stop shops for multiple financial services, including small services, called postal finance marts. The department of posts, which had receipts of Rs 4,432 crore during 2004-05, had a deficit of Rs 1,382 crore.

The Survey, however, goes on to say the deficit, projected at Rs 1,450 crore for the current fiscal, is justified due to the public-good nature of the postal services and its wide reach.