GeM's provision of penal interest on delayed payments to start from July

A functionality enabling public procurement portal GeM to impose penal interest for making delayed payments to vendors by government ministries and departments will be operational in July, a senior official said on Tuesday.

In 2020, the government decided to levy a 1 per cent penalty on government departments and agencies for delayed payments to vendors selling goods on the GeM platform.

The provision would be effective from July, a senior official said on Tuesday.

Government e-Market (GeM) CEO P K Singh said that there are issues pertaining to getting timely payments from buyers, particularly state governments.

In case of the central government, the payments by enlarge happen in 10-15 days, he said, adding there are problems in case of state governments.

"We are working on that and let me tell you that by the end of July, this functionality for imposing the penal interest will be up and running...Interests will be charged from October," Singh said here at CII MSME Growth Summit.

This provision would act as a deterrent for departments not to take time in making payments.

The Government e-Market (GeM) portal was launched on August 9, 2016, by the commerce ministry for online purchases of goods and services by all the central government ministries and departments.

Goyal expressed hope that procurement of goods and services from the government portal GeM would cross Rs 3 lakh crore this fiscal. It has crossed Rs 2 lakh crore in 2022-23.

GeM has over 63,000 government buyer organisations and over 62 lakh sellers and service providers offering a wide range of products and services.

Currently, government departments, ministries, public sector units, state governments and central armed police forces are allowed to carry out transactions through this portal.

The portal provides a wide range of products from office stationery to vehicles. Automobiles, computers and office furniture are some of the major product categories.

Services, including transportation, logistics, waste management, webcasting and analytics are listed on the portal. South Korea's KONEPS is the largest such platform in the world. Currently, GeM stands in the second position.