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

Provision to enable public procurement portal GeM to impose penal interest for making delayed payments to vendors by ministries and dpts will be fully operational from Sept end, a senior official said

A provision to enable public procurement portal GeM to impose penal interest for making delayed payments to vendors by government ministries and departments will be fully operational from end of this month, 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 functionalities have been developed... In about three weeks time, it will be fully functional," Government e-marketplace (GeM) CEO P K Singh told reporters here.

He said that for non-Public Financial Management System (PFMS) payments, the portal is calculating the interest but for PFMS things, work is in the final stages.

The PFMS, administered by the Department of Expenditure, is an end-to-end solution for processing payments, tracking, monitoring, accounting, reconciliation and reporting.

"wherever there will be a clear violation, penal interest will be collected...but we are liberal in bona fide cases of delayed payments," Singh said.

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.

About GeM-SAHAY initiative, the CEO said that they are working to expand its scope.

Through this platform, MSME sellers can access working capital from banks.

Initially it was open for proprietorship firms, but now "we will open it for all...Looking at the response of banks, I am sure that the renewed GeM SAHAY, we will have all the public sector banks (PSBs) on board," Singh added.

An average interest offered by NBFCs was close to 14.5-14.7 per cent, but with the involvement of PSBs it can easily come down to 10 per cent level also, he said.

Further, he said that sales of goods and services from the GeM portal has crossed Rs one lakh crore during April-August this fiscal and it would cross Rs 3 lakh crore by end of this fiscal.

Singh said that along with goods, services too are helping in recording healthy growth in the sales from the portal.

States including Gujarat, Uttar Pradesh, Maharashtra, Madhya Pradesh, Assam, Odisha, and Tamil Nadu are buying significantly from the portal and the GeM team is working with those states that are lagging behind.

"We have put our team in those states and we are informing them about the huge advantages of buying from the GeM," he said, adding the forward auction facility is helping the government buyers in auctioning goods like used electronic items, land, building and machinery.

Forward Auction is made as an integral feature for GeM registered buyers to auction/sell goods/material/immovable assets and allow potential bidders to buy desired assets/items by bidding against the listed auctions.

IT major Tata Consultancy Services has bagged the contract from the government to redesign and build a new version of Government e-Marketplace (GeM).

"TCS submitted a financial bid of Rs 2,592 versus Rs 3,087 as quoted by Intellect Design Arena and is expected to have a 4050 per cent reduction in the variable payout given to the MSP (managed service provider). The upper ceiling was Rs 5,000," Singh said.