In a strong bid to make public procurements transparent and corruption-free, the finance ministry has asked all arms of the government to make electronic payments to vendors of goods and services from April 1.
The Department of Expenditure has directed all ministries and departments including defence, finance and railways to ensure direct credit by electronic transfer to the specified bank account of suppliers, contractors, guarantee and loanee institutions above R25,000 for services provided to government bodies.
?The e-payment system will facilitate easier payments and bring transparency into the system,? expenditure secretary Sumit Bose told FE.
The scope of e-payments has also been expanded to include settlement of retirement benefits above R25,000 such as gratuity, commuted value of pension and leave encashment. Government servants have been allowed to choose this option for salary receipts.
The government will also enable electronically signed payment advices to financial institutions for withdrawals from the general provident fund and the central government employees group insurance scheme.
While major reform measures call for elusive political consensus, the government wants to do whatever is administratively possible to make private sector participation in government contracts hassle-free. To facilitate this, the Central Government Account (Receipts and Payments) Rules, 1983 have been amended. The ministry has issued two separate orders to facilitate electronic payments to suppliers and public servants.
The new policy is expected to cut down payment delays faced by private vendors. It is also expected to bring efficiency into the procurement programme, especially the capital-intensives ones managed by the ministries of defence and telecom.
The government will be spending close to Rs 15 lakh crore this fiscal, two-thirds of which is for making interest and subsidy payments and for running the state machinery (non-Plan spending). The rest is for various Plan projects and for central assistance to state projects.
The shift to e-payments is in line with the government’s move to extend the Unique Identification Authority of India’s (UIDAI) Aadhaar-enabled payments for various government schemes in at least 50 selected districts within the next six months. Under Aadhaar-enabled payments, subsidies are directly transferred to the beneficiary’s bank accounts. The Aadhaar platform is also expected to cover direct payments under the rural employment guarantee scheme, old age, widow and disability pensions and scholarships in selected areas.