Time to assess impact of procurement reforms

The first 15 years of this century witnessed rising decibels of protests from Indian industry about two specific issues in doing business with the government - hugely delayed payments and the infirmities embedded in the L-1 (lowest bidder) method of selection.

- VINAYAK CHATTERJEE

On both counts, many businesses that were substantial suppliers to the government faced existential hurdles, and it is believed the country lost out on quality suppliers.

It is not that the government was insensitive to these issues. For instance, the PRAAPTI portal (Payment Ratification and Analysis in Power Procurement for bringing Transparency in Invoicing of Suppliers) did much to track and improve the payments by electricity distribution companies to power generators, along with a series of hard-hitting consequences by the power ministry for delayed payments. From time to time, the government also attempted to improve payments to small and medium enterprises by a variety of directives and penalties.

However, the real systemic attack on this state of affairs happened under the leadership of T V Somanathan (now Cabinet Secretary) during his tenure in the finance ministry. On October 29, 2021, the Department of Expenditure in the Ministry of Finance issued a notification innocuously titled "General Instructions on Procurement and Project Management." Unlike other government announcements on reforms, this was uncharacteristically understated and was indeed, a classic case of "reform by stealth."