Post demonetisation on the 8th of November, India’s $2 trillion economy is expected to undergo a sea change with a bold plan laid down by PM Narendra Modi and the Central Government. In a move that could see the end of corruption and red-tapism, the Central Government plans to shift all official government purchases, from the tiniest item like a metal clip to titanic objects like ships and power-plant turbines, to an online marketplace, similar to the e-commerce sites used by the common man. The Modi government has much riding on this new online market, which has already witnessed trading worth 390 million rupees, equivalent to an estimated $5.7 million since it began in August.
An astounding 86% of all of the cash circulating in the Indian economy was rendered worthless post demonetisation. A new online portal which will handle all government purchases and might eventually amount to a fifth of India’s $2 trillion dollar economy, roughly $ 400 billion, will be set up soon to streamline the vision of a ‘Digital India’.Rita Teaotia, the top bureaucrat of the Ministry of Commerce, was quoted as saying “This provides India an opportunity for transformation. The transparency and competitiveness it has brought very encouraging and so far we’ve seen that the government’s savings are at least 10 percent on every transaction.”
The portal, when operational, is expected to support trade worth 20% of all of India’s GDP once all state governments, state-owned companies and undertakings, all utilities, defence and finally the railways come online, according to Vishal Singh, additional director at the National E-Governance Division, which has set up the platform of the ‘GeM’ or the ‘Government e-Marketplace’ with the tagline ‘Procurement Reimagined’.
Hurdles and Solutions:
This ambitious plan is destined to create unprecedented openness in a nation ranked 76th on ‘Transparency International’s 167-nation corruption index, an unenviable performance. The World Bank’s Enterprise Survey in 2014 cited bureaucratic delays and corruption as the biggest obstacles to business in India. A ‘Digital India‘ will change that perception. The challenges, however, are daunting. Only 20 percent of all Indians are able to access the Internet,leaving the majority of the people out of the digital space. A diverse nation with changing social patterns adds to the chaos. Considering the fact that this e-market is at the centre of Modi’s key reform plans ‘Digital India,’ aimed at increasing the ease of doing business in India and ‘Make in India,’ with plans to boost the domestic manufacturing sector, the challenges are considerable. PM Modi’s cabinet assigned $16.5 billion in Dec. 2014 for a 3-year digital push and will seek to reiterate India’s 7% GDP growth rate. A 4-point solution plan has been highlighted below.
Learning,Training and Empowering:
Senior diplomats are being trained at the National Institute of Financial Management in New Delhi on digital methods to skirt red-tape and run the government’s policy decisions like a trimmed privately-owned company like Amazon and Flipkart. A digital platform will allow users, that is us and government contractors, to choose from ‘products’ listed with visual aids. It even allows the user to compare prices offered on the marketplace with those on competing websites, much like these commercial sites do.
Changes in Rules To Fast-Track Projects
The current tendering system being used by the Indian Government will be replaced with a new and improved system that will allow vendors across India to bid for any government purchase, state or central notwithstanding. This will open up the digital market to ensure greater transparency and will rid cartelization. The Finance Ministry’ updated rules will allow payments within 10 days of the purchase or completion of a tendered work, a move that will free suppliers from long waits, harassment and will ensure timely payments.
The Era of Biometrics:
This aspect has already been launched with the Unique Identification Authority of India(UIDAI) program of the government, and the resulting ‘Aadhar’ database that comprises of biometric data, including fingerprints and iris scans. This database will prevent willful misuse of time and resources. Projects will be freed of delays, and the government’s activities will be monitored.
The Future: Upping The Ante:
This digital marketplace will only succeed when maximum participation is witnessed, especially byIndia’s biggest state purchasers, the Ministry of Defence and the Indian Railways.The market’s user base is expected to eventually rise to about 200,000 buyers making 5,000 concurrent trades. Radha Chauhan, Chief Executive Officer at India’s National e-Governance Division said 1,259 vendors selling 2,534 products through to more than 9,108 users across 469 registered government departments are already in the pipeline. It is not yet compulsory for departments to join, she added.
To round up, Harsh Kumar, director of the National Institute of Financial Management, said”This experiment will put us on a par with nations like the U.S. and South Korea. If it is implemented on the scale it’s being envisaged, no procurement system in the world will be as transparent and efficient as this one.” The future will surely be a bright one.