Central purchase arm plans marketplace portal to allow government officials to make routine office buys online
Move over, Flipkart. The Indian e-commerce space may soon have a new giant, if the government of India has its way. A portal called GeM, short for Government e-Marketplace, has been conceptualised by the government’s central purchase arm to allow sarkari babus to make routine office purchases from cups and saucers to laptops and printers online.
Officials estimate that expenditure on commonly used office items ranges between 10% and 20% of the government’s non-plan expenditure, a figure which stands at Rs 14.28 Lac Cr for fiscal year 2016-17. That translates to potential purchases of Rs 1.4-2.8 Lac Cr. To put that in context, Flipkart was aiming to sell goods worth up to $12 Bn (Rs. 80,000 crore) by June 2016.
The project is being fronted by the Directorate General of Supplies and Disposals, an organisation that was set up in 1860, just three years after the first war of Indian independence.
“Procurement is not a social welfare project; the government has to save money on it,” said a senior government official aware of the plans. The portal, which aims to sport an interface similar to modern e-commerce sites, will also offer services, in addition to goods. These could be mass procurement of flowers to adorn the desks of officers or booking taxis for official pickups and drops. The government is at present working on rolling out a pilot project in a month which will offer a handful of products including laptops, desktops, printers and photocopiers along with one service booking taxis.
A full-blown rollout is expected early next year. The interface is being architected by department of electronics and information technology . A professional IT service provider will be roped in for the project.
“It brings in efficiencies in buying of standard consumables while removing discretion at the buyers’ end and eliminating potential corruption,” said Sivarama Krishnan, executive director of PwC, adding that traditionally the government only revises rates for products once a year or even once in two years, while prices of products like laptops can fall as much as 40% in any given year. The proposal to reform government procurement was announced by Union Minister Arun Jaitley in the last Budget speech and was presented by a commit ee of secretaries to Prime Minister Narendra Modi as one of the mechanisms to drive cost and operational efficiencies.
The idea is to aggregate demand from government offices and use the power of bulk buying to cut a better deal with firms supplying laptops or air conditioners. The portal will also have provision or reverse bidding which will make rates competitive.
Government procurement is now ridden with significant delays in buying and payments, and often becomes tangled in red tape. Each department wastes time with tenders for even the smallest of office requirements.
Though there are no estimates of potential cost saving through this project, governments in several countries including South Korea, Singapore, the United Kingdom and the United States have implemented similar systems. For example, in the UK, the government estimates that savings from digital marketplaces have been of the order of 20% to 50% compared to legacy contracts.
While it is not mandatory to procure only through the central agency , the department of expenditure may issue instructions to government agencies to put out their requirement on the portal. GeM is also attempting to address another big issue with government procurement that of payments. An official said that there is no reason why departments should not immediately pay for what they purchase. The portal will be bundled with several payment options. “Departments will get the best price only when they pay immediately after the delivery,“ the official said.
Source: The Economic Times (Delhi)