GeM – Revolutionizing government procurement

Pavni Gupta

(The author is Deputy Director, Press

Information Bureau, Guwahati)

Procuring of goods and services by the government accounts for about 20-22% of the GDP of India. As the simplest of Keynesian fiscal policy goes, this public procurement has a multiplier effect from the national to hyper-local levels i.e. it enables a directed development of social and economic infrastructure across the country. Government e-Marketplace (GeM) is the online market for all such procurement done by the government for its day-to-day functioning, be it computers and IT equipment, office supplies and furniture and even cars. One can also outsource services such as technical staff, housekeeping and security etc. and it has revolutionized the public procurement space in India in a matter of only five years.

Initiated in 2016 and launched in 2017, the platform replaced the 100 year old DGS&D (Directorate General of Supply & Disposals) with technology. This technology of an online marketplace was not new. It had already been developed and used by a few countries such as USA and South Korea. Private platforms like Amazon and Flipkart were already flourishing in India. The challenge was not as much about the development of the GeM platform but the implementation of the same, especially since it had to incorporate the financial rules of procurement and other developmental policies of the government. But the three pillars of GeM – inclusivity, transparency and efficiency- are what have driven it to become a success today.

Firstly, GeM has enabled an inclusive marketplace. There are around 42 lakh sellers/service providers on GeM of which 7.6 lakh are MSME sellers, 1.75 lakh artisans/weavers, 1.3 lakh women entrepreneurs, 13,000 start-ups and about 3,788 Self-Help Groups. GeM has provided them a platform to showcase their products all across the country and to directly enter a huge potential market. What GeM has additionally done is seamlessly integrate the policies of the government. The attempt to boost the domestic manufacturing industry by 'Make in India' was actualized in GeM by identifying made in India products and pushing government departments and organizations to procure goods with high level of domestic content. Similarly, it allows buyers to give relaxations to MSMEs and start-ups with the click of a button. The ease in the entire process has resulted in 187% increase in seller onboarding on GeM in the last financial year alone.

Secondly, GeM embodies transparency and has played a key role is curbing potential corruption and buyer discretion-based procurement. For majority of the day-to-day procurement, the need for interface between government and seller has become redundant. If one wants to buy a computer, simply enter the specifications of the product and it will be delivered to your office. There is no option to choose a preferred seller. But as much as the sellers, the buyers i.e. the departments and organizations of the government have been freed from the cumbersome tendering processes. With the features of this technology, the entire shopping trends, expenditure made in a given time-span, market intelligence and demand/price forecasting are available on the user dashboard. In the last financial year alone, the Gross Merchandise Value in GeM crossed Rs 1 lakh crore, which is 2.5 times the GMV the year before.

Thirdly, GeM has done all of the above without sacrificing efficiency of the market. India continues to be one of the biggest demand-generating markets in the world. Although the government as a single entity is one of the biggest procurers in the country, its procurement arm GeM enables it to become a seller-welfare centric monopsony (a market situation with only one buyer). In an analysis in the Economic Survey 2021-22, a cost comparison of various commodities on GeM with those of popular online platforms such as Amazon and Flipkart showed that GeM prices were 9.5% lower. This is the situation when the government is also actively endeavoring to boost MSMEs, start-ups and individual entrepreneurs.

Lastly, what sets GeM apart is the organic nature of the platform. It can be seamlessly customized as per the prevalent rules, regulations and policies of the government. Its features can be enhanced with new technological solutions. Its potential buyers can be added beyond the government and maybe in the future be opened for private/individual consumers. It's a market worth 20-22% of the GDP and though its already a globally acknowledged success, the platform is set to grow manifold in the years to come. (PIB)