PSUs to focus on procurement, to spend Rs 650k cr in two years

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New Delhi, Nov 20 : The government and public sector enterprises are likely to spend a whopping Rs 6,50,000 crore on procurement of equipment and raw materials in the next two years. This would help revive the economy impacted by the global financial crisis, heavy industry and public enterprises minister Sontosh Mohan Dev said on Thursday.

Speaking at an Assocham function on improving government procurement, Dev said that due to current world economic crisis, pubic sector companies and major private sector firms are temporarily stopping their investment in procurement of capital goods and infrastructure items.

“All are talking about cost reductions and cost savings in day-to-day consumption. In view of (this), government procurement is to be used as a specialised instrument for globalisation of economy and boosting the domestic demand,” the minister said.

Though the annual government procurement is estimated to be Rs 500,000 crore, “in view of the increased economic activities happening in India because of its potential factor, we expect this procurement may go up by at least 25-30% in the next two years,” he said.

To ensure this, ministries and departments have brought out their purchase manuals, outlining the procurement policies and procedures to ensure timely and quality procurement at the most economic and competitive prices, he added.

Public buying procedures and policy instructions are based on General Financial Rules (GFR) of the central government. Both buyers and suppliers need to be well versed with GFR 2005 procedures for smooth transaction of business, he said.

India is also of late affected by the slowdown in several major economies including the US , European Union and Japan . However, the Reserve Bank of India estimates that India ‘s GDP would grow at around 7-7.5% cent this year.

Central Vigilance Commission’s chief technical examiner V Ramachandran said the public procurement system is prone to corruption and needs more transparency and accountability. Although “we have issued guidelines banning negotiation of contracts and have asked for better the pre-bidding and post-bidding procedures, I am said to say that the things are still in progress,” he said.