GeM pushes procurement prices down by up to 56%

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Anecdotal evidence suggests that prior to the setting up of Government e-Marketplace (GeM), the government’s procurement prices were much higher than the prices prevailing in the market and there were constant complaints about inefficiency and rent seeking.

The use of this e-marketplace has resulted in a substantial reduction in prices in comparison to the rates used earlier, with average prices falling by at least 15-20 per cent, and up to 56 per cent, the Economic Survey for 2021-22 noted.

While in the last year’s analysis, GeM prices were on an average 3 per cent lower when compared to other platforms, this time it is around 9.5 per cent lower for the chosen sample. Ten out of 22 commodities in the sample were cheaper on the GeM portal as compared to other platforms.

In 2016, the government had set up a dedicated e-market known as Government e-Marketplace (GeM) for purchase of certain standard day-to-day use goods. This is a simple, transparent and completely digital process for procurement. The General Financial Rules 2017 mandates all ministries and departments to procure goods and services available on GeM from GeM.

These results are broadly in line with the assessment of GeM conducted by the World Bank, which found that GeM enabled an average savings of 9.75 per cent on the median price for the period between February 2019 and January 2020. The maximum savings in the top five categories ranged from 23.5 per cent to 60.5 per cent. The study attributed this, in large part, to increased participation per bid and better price discovery.

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