April 20, 2023

A GeM that has saved ₹40,000 crore of your money. My article on how Government e-Marketplace (GeM) is realising PM Narendra Modi ji’s commitment to inclusive, transparent & efficient government procurement.

The Government e-Marketplace (GeM) crossed a historic milestone at the end of 2022-23: GoI and state governments, official agencies, public sector undertakings and cooperatives purchased goods and services worth more than Rs 2 lakh crore ($24bn) through more than 5mn online transactions in a single financial year – a testimony to PM Narendra Modi’s commitment to inclusive development, transparency, efficiency and corruption-free governance.

GeM is truly a gem that has replaced the obsolete Directorate General of Supplies & Disposals (DGS&D). Befittingly, Vanijya Bhawan, the new office building of the commerce and industry ministry, has been built on the land once occupied by DGS&D.

At the foundation stone laying ceremony of the building, Modi rightly observed: “Now this more than 100 years old organisation has been closed and it has been replaced by a body based on digital technology – Government e Marketplace. GeM has completely revolutionised the way the government procures the goods required by it.”

Seven spectacular years of GeM
GeM has grown spectacularly since it was set up in August 2016. The total value of transactions on the portal almost doubled in 2022-23 to Rs 2.01 lakh crore from Rs 1.07 lakh crore in the previous fiscal. The trailblasing journey began with business worth Rs 422 crore in 2016-17.
The portal was launched to align public procurement of goods and services with Modi’s mission of ‘Minimum Government and Maximum Governance’ and his strategy of using technology to make government systems honest, effective and accessible to all.

GeM’s transparent practices such as competitive bidding have helped government departments and undertakings save about Rs 40,000 crore of taxpayer’s money. Such initiatives have helped the Modi government in substantially raising welfare expenditure without compromising on fiscal health.

Transformation from manual to digital

In this context, GeM’s significance goes far beyond its phenomenal growth in financial terms, which itself would make any e-commerce major jealous. The new system replaces age-old manual processes that were riddled with inefficiencies and corruption. Government procurement used to be opaque, time-consuming, cumbersome and prone to corruption and cartelisation.

Only a privileged few could break through huge entry barriers.
Buyers had no choice but to purchase sub-standard goods at high, non-negotiable rates from privileged, often unscrupulous suppliers.
Potential sellers had to run from pillar to post, completely at the mercy of the facilitating agency, to get empanelled, and then to get timely payments.

In contrast, there is hardly any human interface in vendor registration, order placement and payment processing through the technology-driven platform. At every step, SMS and e-mail notifications are sent to the buyer, the head of her/his organisation, paying authorities and sellers.

The paperless, cashless and faceless GeM gives buyers the freedom to buy goods and services directly from unlimited sellers at competitive rates. This new, competitive system has transformed public procurement and given MSMEs and small businessmen access to sought-after government orders.

Independent research validates GeM
Hard data and insightful third-party analyses testify GeM’s success. An independent study conducted by the World Bank and IIM Lucknow estimated an average 10% savings from the median price. The World Bank noted that with the addition of every new bidder, savings increased by 0.55%.

A study by Boston Consulting Group (BCG) showed that annual cost savings in 2021-22 were in the range of 8%-11%. Modi appropriately summed up GeM’s objective as “Minimum Price and Maximum Ease, Efficiency and Transparency”.

The portal is home to:
More than 11,500 product categories
Over 3.2mn listed products
It has over 280 service categories with more than 2.8 lakh service offerings

GeM is catering to diverse procurement needs of more than 67,000 government buyer organisations, which have together saved about Rs 40,000 crore. It gives equal opportunity to all buyers and sellers.

About 60% of orders by value from states have gone to micro and small enterprises. States have also placed orders worth Rs 1,109 crore on start-ups, demonstrating the ease of access for relatively underprivileged business people, including those in far-flung areas.

Given the scale and complexities involved in realigning the old, deeply entrenched procurement processes, this is one of the largest change-management exercises globally.

The portal’s transformational success bodes well for the entire economy because the ‘gem’ is magnifying efficiency and integrity during the ‘Amrit Kaal’ as India marches to become a developed country by 2047 under the decisive and visionary leadership of Modi.

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