In the Interim Budget 2019 announced on February 1, Finance Minister mentioned Government e-marketplace (GeM). Government-e-marketplace is a strategy by the government of India to promote the growth and expansion of the Micro, Small, and Medium Enterprises in the country. Let us further understand what GEM is, how it works, and what its benefits are for MSMEs.
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What is Government e-Marketplace?
Suppose you are a seller of stationery items like pen, penholders, etc. If you want to sell your products to the government, you can register your products on the government e-marketplace. After authorization, the government will buy from you and pay you online. So, GeM is an online portal for government agencies and officials to buy products from an end-to-end online marketplace.
GeM was set up initially just to help the Central & State Government officials who wanted to purchase goods like writing & desk equipment, heaters, AC units, etc. And also services like cleaning staff, security, personnel, etc. Now, government e-marketplace India facilitates all government and public purchases by the government agencies and officials for state and national.
However, direct purchases of only up to INR 50,000 is allowed on the online portal. And the public procurement is done through bidding and reverse auction.
What are the Objectives of the GeM?
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The GeM is a one-stop platform for procurement of common use Goods & Services required by various government department and organizations. The following are the objectives of the online platform:
- Easier availability of various goods and services for the government buyers.
- Create transparency in public procurement.
- Cost saving on government expenditure.
- Achieve and promote cashless transactions.
How Does Government e-Marketplace work?
The GeM registration takes place through an OTP verification with Aadhaar card verification. The product and services sellers have to register separately on the portal. There are two users on the online marketplace – the primary and secondary users. The primary users conduct material management and the secondary users are the buyers who are involved in the transactions directly. Finance representatives also come under secondary users.
The online portal is hosted by the Directorate General of Supply & Disposal. He fixes the rates of the items required. The (DGS&D) purchases products and services every year worth Rs. 10,000 crores for various government departments and ministries. The government procures 200+ products and services every year.
The platform also allows leasing products apart from buying and selling. Also, services like HR hiring, transportation, security, and even sanitation can also be leased. The government e-marketplace also places orders for World Bank projects for over Rs. 40 lakhs.
What are the Benefits of GeM?
Government e-Marketplace was established in 2016. The platform currently procures goods and services of over Rs. 5 crores annually. The following are the benefits of GeM:
Transparency: The platform has eliminated human interface for the government e-marketplace registration, order placement, and payment processing. So, this eliminates barriers for the vendors who wish to do business with the government of the country. There is 100% transparency also due to the digital verification that happens at all time to buyers and sellers, and the Heads of Departments – who authorize the purchase.
Efficient: The online platform is efficient in terms of business takes place in just a couple of minutes. Additionally, there is no paperwork which also saves time. Plus online payments also saves time and makes the entire business procedure easy.
Secure: The online platform is absolutely secure and it runs multiple checks. The government verifies, authorizes, and signs documents of the suppliers.
Value for Money: The average prices of the goods are lowered by 15% which further goes to over 56%. The aggregation of all the goods and services required by government results in an annual savings of up to Rs. 40,000 crores.
How GeM Benefits MSMEs?
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Of all the sellers and vendors registered on Government e-Marketplace, 26% approximately are MSMEs. The government hopes and is working towards increasing this number post the budget implementation. As a part of MSME support and outreach programme, the online platform wants to onboard a large number of MSMEs.
The government is seeking to ease the credit availability for MSMEs to encourage them and support to join GeM. This step is being taken especially for startups. The government e-marketplace is now also focusing on service sectors like analytic services, inspection, webcasting, and transportation. This platform by the government is just an indicator of how online shopping in India has gone to the mainstream.
The government e-marketplace has eliminated tedious multiple levels of verification. This significantly reduces the lead-time in government procurement. Likewise, MSMEs can register themselves easily and enjoy these new opportunities. Also, with them getting registered with GeM, the eliminate intermediaries.
In the previous 2 years, government e-marketplace has provided MSMEs a wider market reach with access to a number of potential suppliers. In addition, GeM has also helped in job generation- the platform has helped in creating and securing jobs in the government sector.
What Interim Budget 2019 has for GeM?
Piyush Goyal announced in the budget that the government is working towards the expansion of GeM. He also added that they are working for the centralization of government e-marketplace to central public sector enterprises.
Piyush Goyal, in his speech during the budget announcement, said that this online platform has successfully made public procurement absolutely transparent, efficient, and inclusive. In addition, the government e-marketplace recorded transactions of worth over Rs. 17,500 crores. And this resulted in savings of up to 25-28%.