Open, competitive govt procurement seen saving up to 30% in costs

It is estimated that competitive, transparent procurement could result in cost saving to the extent of around 20-30 per cent to the government, according to secretary, ministry of corporate affairs.

Delivering the keynote address at the National Conference on Public Procurement & Competition Law in New Delhi on Monday, the finance minister said the competition regulator was created to ensure effective competition so that consumer interest could be protected. 

Talking about the roadmap for the future, he said that India needs to look at global models and visualise how to deal with emerging situations. 

Public procurement being a very large part of the country’s GDP, Jaitley said the state is entitled to have the best price and quality and this also applies to all statutory institutions. 

He said while there are areas in which tender bids can be global while in some areas, domestic development is desirable, especially in case of the service sector in which the effective competition needs to be build within the country itself. He said that with expansion of the economy, India's market expansion is going to have exponential growth and therefore, the role of the Competition Commission of India (CCI) as a regulator will also expand with time. Size of the service sector, industry and manufacturing sector will also increase, he added.

Earlier, CCI chairperson Sudhir Mital stressed on the importance of building a culture of competition in public procurement systems in India. He said that free, fair and effective procurement can reduce cost of delivery, free resources and make surpluses available, make the PSUs more competitive and allow the public sector to grow. He emphasised on the need for having a pro-competitive procurement systems that can reduce the scope of anti-competitive behaviour by the bidders. He also announced that the CCI is in process of designing a diagnostic tool for public procurement agencies that would facilitate detection of bid rigging in public procurement as well as help design tenders which would promote fair competition. He also mentioned a digital cartel detection software that the CCI is developing, following the international best practices.

Speaking on the occasion, Injeti Srinivas, secretary, ministry of corporate affairs, stated that given the sheer volume of public procurement in GDP, which accounts for more than 26 per cent of GDP, which is equivalent to around Rs28,00,000 crore, it has a significant influence on the economy’s performance. He said that competitive procurement could result in cost saving to the extent of around 20-30 per cent that could have long term impact on the economy. There is a need to redesign the current PPP model to bring in efficiency and promote competition, he said, adding that competition is the single largest force for growth in a market economy.

In his address, Junaid Kamal Ahmad, World Bank’s India country director, announced that contracting with the government will be one of the new indicators to be considered by the World Bank in the next round of their Ease of Doing Business ranking. He stressed that improving competition in public procurement and e-procurement would facilitate market participation, expand business opportunities for a larger number of players and reduce their processing cost. He stated that India has adopted best global practices in government e-marketplace which could be emulated by other developing nations.

The one day conference was organised by the Competition Commission of India (CCI) in partnership with the Indian Institute of Corporate Affairs (IICA), a think tank under the aegis of ministry of corporate affairs. The conference is part of the series of roadshows across the country on competition law and constitutes one of the major advocacy initiatives being undertaken by the CCI.