India seeks fair play in public procurement

New Delhi: The government on Monday kicked off a drive to boost the spirit of competition in public procurement even as the World Bank is set to introduce government contracts as a parameter for its ease of doing business ranking.

Public procurement is a very large part of the country’s gross domestic product (GDP) and the state is entitled to have the best price and quality, finance minister Arun Jaitley said at a roadshow organized by the anti-trust watchdog Competition Commission of India (CCI).

There are cases where international tenders are desirable, but there may be instances where competition within the country will need to be promoted, especially in the services sector, the minister said. “These are many emerging areas in this sector. I am sure the competition jurisprudence in this area will grow in the next one or two decades,” said Jaitley.

“Contracting with the government” will be one of the new indicators to be considered by the World Bank in the next round of its ease of doing business ranking, said Junaid Kamal Ahmad, the World Bank’s India country director. Improving competition in public procurement and e-procurement would expand business opportunities for a larger number of players and reduce their processing cost, he said.

India’s rank in the World Bank’s Ease of Doing Business 2019 Survey had climbed 23 places to 77 among 190 countries surveyed, making it the only country to rank among the top 10 improvers for the second consecutive year, Mint reported last Wednesday.

The government is laying emphasis on public procurement in the most competitive manner because of the massive size of India’s purchases at the level of the central and state government and of state-run enterprises.

Public procurement accounts for more than a fourth of India’s GDP and amounts to ₹ 28 trillion, said corporate affairs ministry secretary Injeti Srinivas. “It has a significant influence on the economy’s performance,” said Srinivas.

Competitive public procurement could result in cost saving of 20-30% and could have a long-term impact on the economy. The public private partnership model needs to be redesigned to bring in more efficiency and competition, he said.

CCI chairperson Sudhir Mital said there is a need to build a culture of competition in public procurement systems in the country. Free, fair and effective procurement can reduce cost of delivery, free resources and make surpluses available, he said. It can also make state-run firms more competitive, he said.

Mital said there is a need for systems that will reduce the scope of anti-competitive behaviour by bidders.

The competition watchdog is now working on systems that will help state-run firms to detect bid rigging. CCI is also working on a software that will detect cartels.