Transactions on the Government e-Marketplace (GeM) platform is rising at a scorching pace, and a clutch of state governments are expected to climb aboard the bandwagon soon. Government departments and state-run companies will have to pay 1% penalty for delayed payments for goods and services purchased via the portal effective the end of this month, a senior official said Monday.
In April-August of this year, procurement through GeM stood at Rs 1.1 trillion, up 80% on year. Since its launch in mid-2016, GeM has processed 16.7 million orders worth more than Rs 5 trillion. Last year, transactions worth Rs 2.01 trillion were done on the portal.
In 2020, the government decided to levy a 1% penalty on government departments and agencies for delayed payments to vendors selling goods on the GeM platform. “The functionalities (for the penalty) have been developed…In about three weeks time, it will be fully functional,” GeM chief executive officer P K Singh said here.
He said that for non-Public Financial Management System (PFMS) payments, the portal is calculating the interest but for PFMS things, work is in the final stages. The PFMS, administered by the Department of Expenditure, is an end-to- end solution for processing payments, tracking, monitoring, accounting, reconciliation and reporting.
The government is now looking at taking it to the state level. Some states have already set targets for procurement through the platform. Singh said the board has approved setting up offices in major states for increasing regional footprint and tapping state’s procurement.
The central government state-run companies and banks are also planning to increase procurement through GeM, he said.
The GeM-Sahay initiative that gives working capital loans to vendors would now be opened for all categories of sellers. Earlier it was only for proprietorship firms.
“Looking at the response of banks, I am sure that with the renewed GEM SAHAY, we will have all the public sector banks (PSBs) on board,” Singh said.
An average interest offered by NBFCs was close to 14.5-14.7%, but with the involvement of PSBs it can easily come down to 10% level, he said.
To help with the coming expansion the GeM has awarded the contract for replatforming and maintaining its operations to Tata Consultancy Services. Earlier the contract, which is to expire in December, was with Intellect Design Arena.
The incumbent lost out to TCS on financial bids stage though on technical round it had scored higher. As per the bid, TCS will get Rs 2592 for every procurement of Rs 5 lakh or above on GeM while the bid of Intellect was Rs 3087. For every transaction of below Rs 5 lakh the TCS will get 3% of Rs 2592.
Through this model of bidding the government aims to increase the number of transactions on GeM, Singh said.
The duration of the TCS contract is six years which can be extended for a year twice.