Friday, 30 September, 2022
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The Indian govt has its own Amazon and it is a GeM that’s saving them big bucks

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Ideas That Worked
We generally hold our government in more than healthy scepticism. The sarkari system is seen as inefficient, incompetent, wasteful, mired in red tape and corruption. Much of journalism focuses on exposing this establishment and railing against it. For good reason. 
Yet, in this sea of despair, some ideas work. Typically it needs a few crucial and virtuous factors to come together. Good politics and a fine civil servant or two, but above all, a great idea. 
Going ahead, ThePrint’s reporters will be on the lookout for such ideas, reporting and assessing them, and also searching for lessons for the future. In the mood of overwhelming despair with the government system, it is even more important to acknowledge what worked in spite of the “system”, because there may lie some direction of how it could be made better.

A year and a half since its launch, the Digital India initiative has made public procurement simpler, cleaner.

New Delhi: Slowly, but surely, an online marketplace is simplifying and streamlining the purchase of goods and services for the government, promising crores in savings.

It’s been a year and a half since the NDA government introduced the government e-marketplace (GeM), sort of an Amazon for public procurement brought in to replace the long-winding, arduous process of tenders. It has a redressal mechanism. It has deadlines. And, tapping the social media era’s penchant for immediate reviews, it comes armed with the option to rate both buyers and sellers.

The system so far

Over the years, government departments and undertakings have procured goods and services via tenders or rate contracts.

Under this system, any government department, including states’, seeking a product or service – from computers, printers, and stationery, to cars and furniture, as well as security or laundry services – issued a rate contract.

Bids by sellers follow, and the best deal is picked. Once a seller is chosen, rates are frozen at the price decided during bidding, until the goods are delivered.

However, not only is the process fraught with potential for corruption, it often leaves the buyers saddled with out-of-date versions of products, especially the ones to do with technology, that would have undergone updates and upgrades between the time the tenders are issued and the delivery is made.

To begin with, the cumbersome process means tenders are only floated every two to three years. Furthermore, an opaque process often means a small group of sellers colludes with corrupt officials to deliver sub-standard products and pocket big cash.

Things are a-changing

With the GeM, launched in August 2016 under the Digital India initiative, the government is making a consolidated effort to end the so-called procurement raj.

Speaking to ThePrint, GeM CEO Radha Chauhan said the previous system was “inefficient for both the market and the government”, pointing out the real-time interaction the government portal allows buyers and sellers.

“(With GeM) For the first time, the buyer, which is the government, will have access to a market in the typical market environment – where updates and upgrades of products are available in real time to them,” Chauhan said.

About the savings:

GeM offers a dynamic universe for rates, which means competitive prices for the buyers. According to official estimates, the average prices on GeM are 15-20 per cent lower than those found via tender purchase.

Moreover, according to a government estimate, demand aggregation for common-use goods and services needed by several departments could result in annual savings to the tune of Rs 40,000 crore.

While it was impossible to monitor the earlier process, GeM puts a premium on performance. The marketplace requires sellers to deliver their product within 15 days, and the government to accept the purchase within 10. Failure on either end is taken up at a supervisory level.

“When the seller is aware that the goods have to be accepted within 10 days of delivery, he doesn’t have to go anywhere, talk to government officers, sit outside their offices, nothing. In 10 days, the money will be in his account,” Chauhan said.

All the transactions on the portal are cashless and paperless, and involve minimal human interface.

The portal:

The products on offer on GeM are classified under 390 categories and 1,000 sub-categories, with automobiles, computers and paper the most purchased goods.

According to the GeM, the ministries of home, defence and human resource development are the portal’s most active buyers. Among states, Madhya Pradesh, Uttar Pradesh and Maharashtra have emerged as the top buyers.

The GeM has signed MOUs with 19 states and two Union territories that obligate them to make purchases only through the portal.

While the system has been functioning quite successfully, Chauhan admitted there were chinks they were seeking to address through training sessions for buyers and sellers across the country.

“This is the first time all of us are using this completely digital platform. Adoption is an issue… We are trying to do away with it by way of training, a lot of awareness campaigns,” she said.

But things look good. According to Chauhan, though not 10 days, they are notching an average of 19 days for payment, which she described as good given the fact that the initiative was yet in its early days.

The big ‘small’ benefit

While big players like Tata Motors, Maruti and HP India have also begun to sell on GeM, one of its biggest selling points is the fact that it has allowed small and medium enterprises (SMEs) a level playing field.

According to CEO Chauhan, over 60 per cent of the registered sellers on GeM are SMEs. “Over 49 per cent of the portal’s sales of nearly Rs 5,000 crore have gone to them,” she added.

One such seller, Ludhiana’s Ritesh Aggarwal, claimed sales made through GeM accounted for 30 per cent of his company’s total. “One of our biggest orders was with Southern Railways, worth Rs 8.93 lakh. Our deals via GeM to date total Rs 60-70 lakh,” he said.

Another from Jaipur, Rahul Tak, said GeM’s business model was what inspired him to become an entrepreneur. “I got myself registered on GeM in December 2017. Two months in, I am happy with the response I have been getting,” he added.

“I have already struck deals worth Rs 5 lakh, and my biggest order so far was worth Rs 90,000 for medical supplies,” Tak said.

“Here I get maximum opportunities with the minimum investment,” he added.

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  1. what the writer fails to mention is that on this platform the sellers are forced to sell at an unreasonably low rate. for example – service providers who provide any type of manpower services such as security guards, peons, malis etc can only bid at one fixed rate of 1.18%! after factoring in income tax tds and the gst tds, the supplier is left with a negative cash flow. it is impossible to run a contract with this type of cashflows.

  2. This seems like a Government pamphlets.The stake holders have not been asked for their views. Check out with and find out the ground reality

  3. Thanks Divya for this article. It is purely informative as I had never heard about this scheme of the government. It is so refreshing to read a purely incremental report like this without the typical judgement imposed on behalf the ghostly ‘sources’ and ‘experts’. Wish ‘The Print’ and all newspapers have more such pieces where facts are explained first to the full – and then examined and evaluated by mundane, real, flesh-and-blood persons.

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