Strengthening India Post and the Indian Postal Bank

A Proposal for National Integration and Financial Inclusion India Post stands tall as one of the nation’s most respected institutions — an organisation of national reckoning that touches every citizen from birth to death. It continues to be a trusted carrier of information and a symbol of integration across the country. This proposal seeks to strengthen both India Post and the Indian Postal Bank, transforming them into the backbone of communication, savings, and financial access for every citizen. Summary of the Proposal All postal services should operate on a true cost basis with a 15% surplus, ensuring efficiency and sustainability. The India Postal Bank must serve every citizen, ensuring universal access to banking. India Post can further national integration by offering authentic translation services of laws, rules, and gazettes in all official languages. Every government and official building should provide currency deposit and withdrawal facilities, for both Indian and international currencies. Railway Stations should become hubs for Postal Bank and Postal Services, reviving the spirit of the Railway Mail Service through a modern hub-and-spoke model. The Reserve Bank of India (RBI) may handle all coins and currency from mints and presses, while Postal Banks at railway stations act as currency chests and distribution hubs. India Post may lease BSNL and other government properties for approved official services. The Postal Bank must be compensated for services provided to government agencies. The Postal Services Board can expand into “India Communication Services”, creating new cadres and employment opportunities. Collaboration with the RBI and international postal systems can strengthen communication and currency exchange infrastructure. Postal Services Board Proposal The RBI should be the sole handler of coins and currency, managing chests for all banking entities on a correspondent basis. Every financial institution should open a current account with the Postal Bank solely for cash supply and absorption. The Indian Postal Bank should function as India’s largest narrow bank — collecting savings, offering 0% current accounts and nominal-interest savings accounts, without lending to individuals or institutions. It invests exclusively in central government securities. The Postal Bank can sustain 1.75 lakh employees by collecting savings, disbursing cash, and operating under transparent, fee-based regulations. Expansion of Functions India Post may lease BSNL and government properties to handle approved activities of institutions such as the Election Commission, Parliament Secretariat, Judiciary, and others. The Postal Board can engage UPSC applicants, apprentices, and trainees, especially those preparing for public administration, in structured programs. Within the Parliament Complex, the Postal Board can act as an official communication channel for the Lok Sabha Secretariat, Rajya Sabha Secretariat, Election Commission, Finance Commission, and all constitutional bodies. The Postal Bank should be compensated for all services rendered to government agencies operating on its premises. Development of New Cadres The Postal Services Board can evolve into India Communication Services, creating new cadres through UPSC or direct recruitment. This Cabinet-approved personnel reform can generate large-scale employment while integrating communication and administrative functions across institutions. A multilingual national communication backbone can emerge — using all 23 constitutional languages — positioning India Post as the nation’s authentic communication channel. India Post can serve as the official translator for courts, ensuring accessibility and accuracy in every language. Every government office should host a Post Office counter as a familiar citizen interface, reinforcing India Post’s role as the bridge between people and the State. Collaboration with RBI and International Linkages The Postal Services Board can manage RBI’s backend infrastructure, ensuring citizens’ easy access to the Postal Savings Bank. It can facilitate currency exchange for foreign visitors and during emergencies such as hospital needs or national disasters. Through the Universal Postal Union, India Post can represent India globally — training staff abroad and managing embassy-level communication systems. Personnel Management The Indian Postal Bank, under the Indian Postal Service, should become a channel of national integration and trust. Every railway station should host a secure, well-built postal counter that accepts cash and checks from anyone within its jurisdiction. Each station should have three service counters – outside, inside but before the platform, and within the platform area. Cash deposit machines and ATMs will be installed near parking areas, ensuring convenience for local merchants. This will mean around 24,000 Postal Bank counters across India and 100,000 deposit machines serving railway and transport hubs. Post offices will also handle bus ticket counters, integrating postal and transport functions. The idea is “banking on the go”, enabling merchants to deposit daily collections easily. Postal Banks should operate from 6 AM to 10 PM, with employees working efficient four-hour counter shifts. The RBI should ensure two ATMs per station, distributing new notes and coins in eco-friendly packaging. Around 1.75 lakh employees will manage currency operations, with full access to social security and benefits, ensuring dignity of labour. Employment and Recruitment Anyone aged 21–70 years can opt for part-time or full-time work if they reside within 1–2 km of their assigned post. The proposed workforce includes 1.75 lakh Junior and Senior Officers, recruited through UPSC or direct entry. Work shifts will be organised into four rotations, each lasting four hours. With over 40,000 bus and railway stations, total employment could reach 8 lakh individuals. Students and young people above 18 years can join under an “Earn While You Learn” scheme. A two-year apprenticeship will prepare workers for wider government roles, contributing to a national skills registry. Operations and Expansion The Indian Postal Bank can operate in airports in partnership with the Airport Authority of India. The RBI can authorise it as the sole evacuator of currency from mints and presses to stations and cities. Commercial banks would no longer need to maintain currency chests, as Postal Banks will handle cash logistics securely. With protection from Railway and State Police, every major station can house Postal Bank ATMs and deposit machines.New ₹300 and ₹400 notes may be introduced — ₹300 for farmers and ₹400 as a symbolic wage for security personnel. Express trains could carry Postal Bank compartments for the safe and quick transfer of currency. Integration with state transport cooperatives will strengthen cash movement and public convenience. Conclusion The Indian Postal Bank will maintain strong daily cash flows, mobilising savings automatically from all sectors. With railway stations, bus depots, and airports serving as active financial hubs, this network will create new growth pathways for India. Together, India Post and the Indian Postal Bank can unite communication, finance, and service — generating jobs, ensuring inclusion, and securing the nation’s currency system, all while reaffirming India Post’s role as a true symbol of trust and integration.
Posted by G Giridhar Prabhu

Proposal for a Planned Exit from the Urea Subsidy

Introduction India’s fertiliser subsidy system, especially for urea, has ensured affordable access for farmers for decades. However, this subsidy now poses structural, fiscal, and environmental challenges. Urea remains disproportionately cheap compared to other fertilisers, encouraging overuse and soil nutrient imbalance. A gradual, well-structured exit from the subsidy is essential to ensure fiscal prudence, environmental sustainability, and agricultural productivity, without hurting farmers’ income or food security. Background India consumes about 35 million tonnes of urea annually, with more than 70% under price control. The current subsidy regime distorts the fertiliser market, discourages balanced nutrient use, and drains public finances. Moreover, excessive urea use leads to soil degradation and environmental stress, while the subsidy discourages innovation and efficiency in fertiliser production. The government has made progress in direct benefit transfer (DBT) for fertiliser payments and promoting alternative nutrients like nano-urea, but the system remains heavily dependent on large-scale subsidy disbursements. A planned withdrawal over several years—combined with technology, logistics, and communication reforms—can enable a smooth transition. Rationale for Exit The key reasons for a planned exit include: – Rationalising public expenditure and freeing fiscal space for infrastructure, irrigation, and rural livelihoods. – Encouraging farmers to use balanced fertiliser combinations, improving soil health and long-term productivity. – Enhancing transparency and reducing leakages through efficient delivery systems. – Aligning fertiliser pricing with actual production and transportation costs. – Promoting innovation, efficiency, and private participation in fertiliser production and distribution. Proposed Framework for a Gradual Exit The exit must be phased, ensuring minimal disruption and clear communication. The following framework combines administrative, financial, and technological measures for an orderly transition. Stage One – Foundation for Reform A baseline year should be established to identify regional fertiliser usage, soil health status, and crop requirements. The first step would be to strengthen data collection through soil health cards and integrate fertiliser distribution with digital systems. India Post, Indian Railways, and the Common Service Centre (CSC) network can form the backbone of this logistics and monitoring system. Existing DBT mechanisms should be redesigned so that farmers receive targeted support directly in their accounts, instead of the subsidy going to fertiliser companies. This allows gradual correction of urea prices without immediately burdening farmers. Communication will play a vital role. The Ministry of Chemicals and Fertilisers, along with the Ministry of Agriculture and Department of Posts, should jointly handle information campaigns to explain the rationale, benefits, and stages of change. Messaging should be farmer-friendly, multilingual, and supported by extension officers and Krishi Vigyan Kendras. Stage Two – Controlled Price Correction and Nutrient Balancing Once DBT to farmers is in place, urea prices can be increased modestly in a predictable manner—perhaps 5–10% annually. Simultaneously, farmers should receive a compensatory cash transfer for two to three years, gradually tapered off as the market stabilises. At this stage, promotion of balanced fertiliser use becomes essential. Excessive urea usage can be corrected through incentives for complex fertilisers (NPK) and organic alternatives. Public campaigns can highlight that balanced nutrients improve yields, reduce input costs, and enhance soil fertility. This phase must also encourage increased production and distribution of nano-urea and other efficient formulations. These are lighter, easier to transport, and reduce nitrogen losses. Scaling up nano-urea production and its integration into the distribution system through Railways and India Post will improve access across regions. Stage Three – Liberalisation and Market Reform As subsidies taper down, the fertiliser market can be gradually liberalised. Domestic manufacturers and importers should compete under transparent pricing. Government oversight will remain for quality control, safety, and environmental standards. Railways can play a crucial role in ensuring efficient bulk movement of fertilisers, using a hub-and-spoke model where central warehouses supply district-level depots. India Post can handle last-mile logistics, ensuring supply even in remote areas, while also tracking sales and usage through digital receipts. To prevent sudden price shocks, buffer stocks and regional reserves can be maintained. Farmers’ cooperatives and state agencies can handle temporary procurement if prices spike abnormally. This ensures food security and confidence during the transition. Institutional and Administrative Measures A Urea Transition Coordination Committee should be set up with representatives from key ministries—Chemicals and Fertilisers, Agriculture, Finance, Railways, and Communications. It will coordinate implementation, track impact, and ensure corrective action. The use of technology—GPS mapping, online fertiliser tracking, and e-market platforms—should be expanded to ensure transparency. Integration with the Aadhaar will allow direct monitoring of subsidy transfers and farmer reach. District-level agricultural officers should work with post offices and Panchayats to identify farmers, verify land holdings, and ensure correct cash transfers. Special outreach efforts should be made in areas heavily dependent on urea-based farming, such as paddy and sugarcane belts. Safeguards for Farmers Farmer incomes must remain protected. The transition should ensure that total production costs do not rise sharply. Compensation transfers during the initial years will prevent shocks. Additional support through MSP adjustments, crop insurance, and targeted irrigation subsidies can offset input cost increases. Encouraging adoption of bio-fertilisers, composting, and integrated nutrient management will reduce dependency on chemical fertilisers. These initiatives can be supported under existing government schemes, ensuring continuity of farm productivity. Small and marginal farmers should be given priority in cash transfers and technical training. Farmer Producer Organisations (FPOs) and cooperatives can act as intermediaries, helping farmers understand nutrient balancing and efficient input use. Financial and Economic Benefits A phased exit can save the government over ₹1 lakh crore annually in the long run. These savings can be redirected to rural infrastructure, agricultural R&D, and soil rejuvenation programs. Reducing urea overuse will also cut import dependency, conserve foreign exchange, and improve environmental sustainability. Moreover, transparent fertiliser pricing will attract private investment and competition, improving efficiency and reducing administrative burdens on the government. Use of Public Systems for Delivery The Indian Railways can act as the main carrier for bulk fertiliser movement, ensuring timely supply to regional depots. Railways’ data systems can track shipments, costs, and leakages. India Post, with its vast rural reach, can deliver fertilisers to small farmers and act as an information and distribution hub. Its digital infrastructure allows real-time updates, grievance redressal, and delivery authentication. This collaboration between Railways and India Post will modernise fertiliser logistics, strengthen public institutions, and build transparency in the entire supply chain. Communication and Farmer Outreach The success of this plan depends on how well it is communicated. Farmers must feel part of the process, not victims of reform. Messaging should highlight how direct transfers empower them to make independent choices. Radio, television, and local campaigns through Panchayats should explain how soil health, balanced fertilisation, and direct benefit transfer will strengthen agriculture. Training sessions and demonstration farms can help farmers witness the benefits of reduced urea dependency. Agricultural universities and Krishi Vigyan Kendras can lead these initiatives. Environmental and Soil Health Impact India’s heavy urea usage has caused nitrogen imbalance, declining soil organic content, and water contamination. A controlled reduction, combined with bio-fertilisers and composting, will restore soil structure and reduce pollution. Promotion of integrated nutrient management—combining organic and chemical sources—will ensure sustainable yields. These environmental benefits, combined with fiscal savings, make the reform both economically and ecologically essential. Conclusion India’s fertiliser subsidy system has served its historical purpose but now needs restructuring. A planned, phased exit from urea subsidy—supported by direct transfers, logistics reform, and farmer outreach—will create a more balanced, efficient, and sustainable agricultural economy. The proposed transition is not an abrupt withdrawal but a gradual reallocation of resources. Farmers remain central to this reform; their incomes and productivity must be safeguarded. By using India’s strong public networks—the Railways, Postal Service, and Digital India infrastructure—the transition can be executed smoothly. This initiative can become a model for rational, transparent reform in India’s subsidy architecture—combining fiscal responsibility, environmental care, and farmers’ empowerment.
Posted by G Giridhar Prabhu

INFLATION MEASUREMENTS

Introduction: In response to Question No. 4 of the Discussion Paper on the Review of the Monetary Policy Framework – “Should the target inflation level be removed, and only a range be maintained within the overall ambit of maintaining flexibility without undermining credibility?” This blog argues that India’s economic reality requires a shift towards a flexible range instead of a rigid inflation target. India’s diversity, the complexities of its economy, and the lived experiences of its people make it imperative that inflation is not viewed as a narrow statistic but as a broad, dynamic measure reflective of real conditions. Inflation: Beyond Numbers In the Indian context, inflation should be measured across a broad spectrum. No single location or market – whether production or consumption – can represent the vast diversity of the Indian economy. Prices, when conveyed in real-time through appropriate media, could transform the construction of indices into a people’s initiative. Here, the writings of Professor B. R. Shenoy remain highly relevant. He famously said: “We are, instead, seeking to make the traders scapegoat. Monopolies and semi-monopolies apart, contrary to popular belief and the emphatic assertions of administrators, traders have no more control on the prices than the thermometer has on temperature.” This clarity is what India needs today – to recognize that inflation reflects deeper structural realities, not just surface-level “culprits.” Historical Context India has faced persistently high inflation since 1957, in sharp contrast to the pre-1936 period, when the rupee maintained strong purchasing power. The difference between classical and modern economists is striking. Classical economics, much like generalist medicine, offered broad theories, while today’s macroeconomics resembles specialized surgery – sophisticated, data-heavy, and often discussed in academic conferences worldwide. India itself has transformed: from the Planning Commission to NITI Aayog, with over 120 think tanks and the Department of Economics and Statistics harnessing data nationwide. Yet, inflation has remained a subject of debate, discussion, and contention – even cynicism – among citizens and commentators alike. Why a Flexible Range Matters The Discussion Paper itself acknowledges that no single measure of inflation suffices. The Reserve Bank of India’s analyses now resemble forecasting the monsoon – algebraic models, GDP comparisons, international parallels, and projections.In such an environment, a rigid target risks losing both relevance and credibility. A flexible range, by contrast, would capture India’s diversity while maintaining the central bank’s credibility. Currency, Employment, and Prosperity Inflation cannot be managed in isolation. Monetary policy must also address employment generation – ensuring every able-bodied person has access to dignified work. Respect for currency – treating money as not only a medium of exchange, but also a store and measure of value. Savings and professions – honoring the contributions of both traditional and modern professions, as well as farmers and workers in the so-called “unorganized” sector. Radical proposals – such as introducing new denominations (₹300, ₹400) to symbolize the value of farmers’ and workers’ contributions – could reinforce this respect. Equally, proposals such as 23 new RBI regional offices would enhance inclusivity by reflecting India’s diversity in its financial governance. Rethinking Inflation Measurement One drastic and radical proposal is that inflation measurement should not be conducted by the Government or the RBI. Instead, an independent and broader process should handle this responsibility, while the RBI and Government merely respond to the results. This decentralization would improve credibility and public confidence. Building Public Trust For monetary policy to succeed, public trust in currency must be restored. Some steps include: – Redeeming damaged notes easily at post offices. – Encouraging deposits in Postal and Grameen Banks. – Mobilizing ₹5–7 lakh crore into postal accounts without disruptive demonetization. – Reassuring citizens that ₹500 notes will not be demonetized. – Deploying 30,000–40,000 local messengers (not celebrities) to build trust. – Preventing misuse of cooperative banks. – Counterfeit currency should be dealt with through intelligence operations, not by penalizing innocent citizens. From Poverty Elimination to Prosperity Creation India must go beyond a constant rhetoric of “poverty alleviation.” The real goal should be prosperity creation – rooted in employment, savings, currency stability, and flexible inflation management. Food inflation, given its seasonal nature, could even be measured through a separate index for production and consumption regions. The Role of Technology and CitizensInflation management must evolve into a real-time, citizen-driven initiative. – Homemakers monitoring household prices. – Farmers and traders reporting agricultural trades. – Manufacturers sharing production costs. – Service providers reporting fees. All of this could be enabled by dedicated apps, processed by PARAM supercomputers, with daily insights generated for policymakers. Beyond “War on Inflation” Inflation is often framed in adversarial, militaristic terms – a “war” to be fought. But this language is misplaced. Civilian issues require calm, precise action, not war metaphors. Here, India’s cultural philosophy offers guidance. Praxeology (theory of action) and the Bhagavad Gita’s Karma (theory of action) both emphasize constructive, disciplined engagement – not hostility. The Way Forward India is a professed market economy. Prices ultimately move with demand and supply, and consumer choice is the ultimate determinant. Thus, while the government’s role remains the promotion of economic efficiency, inflation management must be anchored in discipline, self-discipline, and informed citizen participation. The flexible range approach ensures that monetary policy remains credible, realistic, and aligned with India’s needs. Conclusion Inflation targeting in India must evolve. A rigid point target neither reflects India’s diversity nor inspires confidence. Instead, a flexible range, combined with a renewed focus on employment, respect for currency, financial inclusion, and citizen participation, will serve India better. Ultimately, monetary policy must not be about battling inflation as an enemy, but about enabling prosperity. As in cricket, where concentration is always “on the ball,” policymakers too must stay focused – not distracted by excessive commentary, but guided by clarity, discipline, and purpose. India’s future lies in anchoring inflation flexibly while empowering citizens, fostering employment, and building prosperity.
Posted by G Giridhar Prabhu