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HomeIndiaWhy Modi govt's Amazon-like e-marketplace venture is unable to attract buyers

Why Modi govt’s Amazon-like e-marketplace venture is unable to attract buyers

The government e-marketplace was introduced as a measure to plug corruption in procurement, but it still faces resistance among buyers.

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New Delhi: The Amazon-like e-marketplace introduced by the Modi administration to ease government procurements is functioning at just about 2 per cent of its potential, ThePrint has learnt.

Since it became operational in 2017, the government e-marketplace (GeM) has been the portal for purchases worth Rs 32,800 crore. This, against a projected potential for quick, transparent transactions of Rs 7-8 lakh crore every year.

Even among the transactions carried out through the portal, dues are mounting. According to data from the Ministry of Commerce, which oversees GeM, 35 per cent of the transactions are classified as dues, most of them pending for over 60 days.

Government officials blame the lackadaisical use of GeM on old attitudes that veer towards the traditional mode of procurement with its prospect of commissions. The dues, they add, defeat one of the biggest promises of GeM, that is, timely payments to vendors.

‘Old mindsets’

The GeM was introduced as a measure to plug corruption in government procurement and make transactions quicker.

Almost everything required by government departments and public sector undertakings — from computers and ATMs, to taxis for hire, automobiles for purchase, and office furniture — is available on GeM.

The inventory totals over 13 lakh products and services, although government officials did clarify that some things remain off its realm.

Prior to GeM, the government used to make its procurements through the directorate general of supplies and disposal or through its own procurement cell. Tenders were issued and the whole process could go on for months and years.

Under the GeM system, vendors register themselves on the portal and are selected as suppliers if they meet the eligibility criteria for different procurements.

If a product or service sought costs less than Rs 25,000, government agencies can directly select a suitable vendor and proceed with a transaction. If it costs between Rs 25,000 and Rs 5 lakh, a comparison has to be made among three vendors before a final decision is taken.

For products and services over Rs 5 lakh, the government entity has to decide its own bid and then pick the lowest bidder from among the respondents. Additionally, it allows both buyers and sellers to be reviewed.

Two years since the portal went live, however, government departments seem to be taking their time warming up to it.

While central ministries have procured around 60 per cent of the goods and services required through GeM, states and different central public sector undertakings (CPSUs) are way behind, with purchases of just around 7 per cent, government officials said.

States, PSUs and public sector banks are reluctant to make their procurements through GeM, a government official added.

“Government departments/PSUs are still beset with the old mindset of procuring products the old way,” the official said. “Inviting tenders, maintaining files, etc despite a technology platform like GeM that has been made available for the purpose.

Unlike GeM, a second official said, the old system of procuring goods offered a lot of scope for corruption.

“Commission from vendors was very common. There is a nexus between buyer and vendor,” the official added. “But GeM is very transparent with no avenue for corruption. There could be some reluctance to use the GeM platform because of this also.”


Also read: This is why Modi govt wants to punish Amazon, Flipkart for deep discount sales


Mounting dues

It’s not only about not buying enough.

What is becoming a bigger concern for the commerce ministry is the delay in payment to vendors, a senior official said. “This defeats the main objective of GeM that vendors will get timely, assured payment when they do business with the government.”

As on date, dues for transactions conducted through GeM stand at Rs 5,488 crore, according to commerce ministry data. Most of the delays are over 60 days.

The defence ministry has the maximum dues — Rs 1,179.09 crore, of which payments of Rs 906 crore have been pending for over 60 days. The other big defaulters include the ministries of home (Rs 413 crore), human resource development (Rs 227 crore), railways (Rs 176 crore), and communications (Rs 158 crore.)

Cabinet Secretary Rajiv Gauba chaired a meeting on 24 October to review the status of dues, and former expenditure secretary G.C. Murmu also raised the issue with ministries multiple times.

In a 13 September letter to secretaries of 81 Union ministries, Murmu said, “Delay in payments not only discourages the sellers to quote competitive rates but also defeats the objective of bringing discipline and savings in public procurement through an online marketplace.”

According to guidelines, after a delivery is made, the buyer has 10 days to check the product and certify that payments can be made. After the consignment receipt and acceptance certificate are generated, payments should be done within 10 days.

However, a senior commerce ministry official said the delay in clearing payments varies between 10 and over 60 days.

A government official said the delay was not because ministries do not have the money. “It’s simply because they are so used to doing things the old way, where payments were kept hanging for months and years on end.”

Former commerce secretary Rita Teotia said the portal was helpful to the vendor and the government both — the former is assured of timely payment, while the government saves a lot of money as there is an electronic audit trail of all procurement is available.

“However, it will require continuous monitoring to ensure that payments are not delayed to vendors and more states and PSUs use the platform for all their procurements,” she added.

Earlier, Teotia said, there was no centralised structure from where the government could procure both goods and services.

“Many departments had set up their procurement teams and were carrying out procurements on their own. They were encouraged to come on to the GeM. We will have to make the same effort with PSUs and municipal and local bodies,” she added.

“Only if a certain item is not available on GeM and the procurement cannot wait for enlisting should ministries do their own procurement,” she said.


Also read: Lost in the data localisation debate: Does India have full power to exploit its own data?


 

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1 COMMENT

  1. good to see your concern over mounting dues of vendors on Gem portal.
    There must be provision for punishment to buyer for delaying payments to vendors. Accountability must be fixed on HOD .

    Dynamic Systems Indore

Comments are closed.

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