On 9th August 2016, the Government of India launched the Government e Marketplace (GeM) without much fanfare.
The platform, which allows online purchase of common office use Goods and Services by Government buyers, was inaugurated by the Minister of Commerce and Industry, Smt Nirmala Sitharaman. As the blurb on the GeM site. says, "GeM represents our Government's firm commitment to bring greater transparency and efficiency in Public Procurement"
That it does, but the platform can and will do more, and has the potential of disrupting the "disruptors" of the information age (Think any platform - Amazon/Flipkart, Uber/Ola, TaskRabbit/UrbanClap). Here's why:
It makes procurement extremely easy for the Government buyers providing them the required incentive to procure through GeM. The Government rules were amended in May 2016 (GFR 141-A) to allow procurement through this portal. Orders can now directly be placed on any Supplier/Vendor on GeM provided that the order amount is below Rs 50,000/- or if the Supplier/Vendor happens to be offering the lowest price among the available suppliers on GeM. There is no upper limit on the amount of order that can be placed in the latter case.
It (GeM Platform) welcomes Supplier/Vendor with an open arm with a Trust First Verify Later approach. Suppliers can self register themselves - no waiting outside a Government procuring agency to get empaneled as a Government Supplier. The supplier provides relevant details about his/her firm which is validated online against Government databases (MCA-21 Company Database, Udyog Aadhar number, PAN Database, TIN Number etc.). These would be subsequently verified through an offline process.
2. There is a strong support from the leadership team - The responsibility for running this platform has been placed on DGS&D, the Central Procuring Authority of India, whose leadership is fully committed to its success. Large number of trainings are being organised, both for Government buyers and sellers to make them understand the benefits of GeM (We at NIFM have conducted training for over 500 buyers and sellers in the last three months). The DGS&D, which is the central procuring agency, has decided to do away with the Rate Contracts (empanelment of suppliers) for all items that are made available for procurement on GeM. In a way, this is a commitment that there is no turning-back - the bridges are being burnt.
The platform, which allows online purchase of common office use Goods and Services by Government buyers, was inaugurated by the Minister of Commerce and Industry, Smt Nirmala Sitharaman. As the blurb on the GeM site. says, "GeM represents our Government's firm commitment to bring greater transparency and efficiency in Public Procurement"
Why I expect GeM to Take-Off
1. GeM platform is inherently well placed to solve the chicken-or-egg problem faced by conventional platforms.It makes procurement extremely easy for the Government buyers providing them the required incentive to procure through GeM. The Government rules were amended in May 2016 (GFR 141-A) to allow procurement through this portal. Orders can now directly be placed on any Supplier/Vendor on GeM provided that the order amount is below Rs 50,000/- or if the Supplier/Vendor happens to be offering the lowest price among the available suppliers on GeM. There is no upper limit on the amount of order that can be placed in the latter case.
It (GeM Platform) welcomes Supplier/Vendor with an open arm with a Trust First Verify Later approach. Suppliers can self register themselves - no waiting outside a Government procuring agency to get empaneled as a Government Supplier. The supplier provides relevant details about his/her firm which is validated online against Government databases (MCA-21 Company Database, Udyog Aadhar number, PAN Database, TIN Number etc.). These would be subsequently verified through an offline process.
2. There is a strong support from the leadership team - The responsibility for running this platform has been placed on DGS&D, the Central Procuring Authority of India, whose leadership is fully committed to its success. Large number of trainings are being organised, both for Government buyers and sellers to make them understand the benefits of GeM (We at NIFM have conducted training for over 500 buyers and sellers in the last three months). The DGS&D, which is the central procuring agency, has decided to do away with the Rate Contracts (empanelment of suppliers) for all items that are made available for procurement on GeM. In a way, this is a commitment that there is no turning-back - the bridges are being burnt.
Why I think (and hope) that GeM can be the ultimate "Disruptor of Disruptors"
At the heart of GeM user authentication lies the Aadhar ID, the 12-digit unique identification number issued by the Indian government to every individual resident of India. Not only is Aadhar number unique, it is mapped to the biometric details of the citizen (fingerprint, iris scan).Few nations have their citizen's trust their government with this level of personal details. Every transaction on GeM, be it by the buyer or the seller, is e-Signed using the Aadhar number of the person initiating the transaction. With almost all interactions of the citizens/residents with the Government now becoming Aadhar enabled, and with the Aadhar enrolment in India at over 90 % , it has now reached the stage wherein it is ready to serve as the Trust Platform of the Government. The Government can embark on creating a trust score associated with each Aadhar ID for different types of transactions. The various Information age platforms, be it Uber/Ola or UrbanClap/TaskRabbit, or even Facebook ultimately derive value from the trust that they are able to provide to the transacting parties. If a trust platform is created by the Government using Aadhar, and this is made available as a Service to a Government owned or Not-for-profit platforms, then the platform aggregators will stand disrupted. The sharing economy(a misnomer for the Information age disruptors) will truly live upto its name when it is the interacting and transacting parties which share all of the value generated by the exchange, and not the scraps doled out by the aggregator after taking its cut. We all know that Uber or Airbnb can charge 10 to 30 % as their commission for the matching service, and this when their algorithms are not open to public scrutiny!
As a first step, GeM can be expanded to allow residents and citizens, and not just Government buyers, to procure Goods and Services. The algorithms which match the buyer and the seller can have societal benefit as its primary goal, and not profit maximisation. A government owned or backed platform can make its algorithms, both for trust scoring and buyer-seller matching available for audit- say by the Comptroller and Auditor General of India.
This will be a revolutionary development whose time has come. Information has to be recognised as a Public Good, and the Government has to step in to ensure that the digital exhaust of the citizens does not become the property of data aggregators be it Google or Facebook or Amazon, At the same time, any algorithm that works on this data has to be subject to public scrutiny lest the delicate balance between efficiency and fairness is lost for good.
