As GeM flourishes, it’s time to unlock its full potential

There are three necessary issues that GeM has executed. The primary is price effectivity. Whereas the aim of this platform is to extend transparency, effectivity, and inclusivity for public procurement, GeM resulted in an estimated annual price financial savings of about 10%. Research from the World Financial institution, the Nationwide Financial Survey, these commissioned internally by GeM, in addition to anecdotal proof from patrons validate this. A World Financial institution examine in 2020 estimated on common 9.75% price financial savings by way of GeM and famous a major improve in participation. Primarily based on GeM transaction information, reverse auctions launched on the platform — the place sellers compete to acquire enterprise from patrons and costs sometimes dip as sellers underbid one another — achieved a worth discount of about 26% compared to the reference worth revealed by the bidders.

The second is its expanded attain. GeM has led to a multi-fold improve in attain, inclusivity, and participation. Greater than 50% of GMV on GeM is constituted by micro, small and medium enterprise (MSME) sellers. In FY2021-22, 53% of GMV was generated by means of interstate consignments, by making it simpler for small and native suppliers to entry demand. Primarily based on pattern information, 92% of transactions acquired three bids or extra on GeM, vs. 71% outdoors it.

The third is the price of doing enterprise (CoDB) with the federal government, which has decreased. A survey of 4,500 sellers and patrons confirmed that journey, paperwork, printing or courier bills have been lowered. A number of on-line cost modes, penal curiosity on delayed funds, and lively monitoring improved the timelines for cost to sellers. The launch of GeM Sahay made it simpler for underserved MSMEs to entry simpler working capital credit score.

GeM can result in change in how public procurement is perceived by stakeholders. India continues to be ranked 85 on the Corruption Perceptions Index 2022 by Transparency Worldwide, indicating large enchancment potential on this dimension. Globally, public procurement has been recognized to be susceptible to buyer-seller bid rigging, coordinated bidding by sellers, irregular specs, embezzlement, affect peddling, bribery, and fraud, amongst different points. Attributable to its faceless nature, GeM might be essentially the most dependable resolution to the issue of corruption in procurement.

That is only a begin. Each step taken on the GeM portal creates a knowledge path that can be utilized to establish questionable transactions. Whereas information visibility is itself potent sufficient to discourage unethical motives, GeM has began testing use instances to leverage Synthetic Intelligence (AI), and Machine Studying (ML) to establish, forestall and act in opposition to unscrupulous behaviour.

Constructing a sturdy fraud management system isn’t just about leveraging superior analytics but additionally constructing know-how programs, insurance policies, processes, and specialised groups. KONEPS, South Korea’s public procurement portal, for instance, leverages automated detection programs for suspicious bid methods. These are validated by inside investigation groups, and selectively shared with the fair-trade fee for corrective actions. E-commerce platforms, together with Amazon and Flipkart, even have AI-ML-based high quality checks, and infrequently massive groups to research questionable transactions and catalogue anomalies.

A well-designed information lake, a know-how platform that permits implementing AI-ML, a powerful threat and fraud management coverage, well-defined processes, a reliable staff, and partnerships with different companies are wanted for GeM to unlock its potential and allow environment friendly, clear, and inclusive procurement. It may go a great distance in catalysing clear governance in India.

Ashish Garg is managing director and senior companion, BCG and Ankush Wadhera is managing director and companion, BCG India

The views expressed are private