Is the government’s electronic market system draining the public treasury?
The stationery and office supplies department becomes a nodal agency to make purchases via GeM
OITH In a bid to eradicate abusive practices in various government procurements and increase transparency and efficiency (time and cost) in procurement, the Government of India has introduced the Government Electronic Procurement System, also known as name of GeM on December 8, 2017. This has been made mandatory for every government department. to buy and hire services.
However, during a press conference held recently in Jammu, Balvinder Singh, a well-known RTI activist, said:
“Due to several loopholes in the Govt e-GeM market system, around 20-50% commission is involved in transactions conducted through GeM and according to official data, there is an annual turnover of Rs 2,200 crore in J&K”,
During the press conference, Balvinder Singh exposed many shortcomings of the GeM portal. He said that one of his RTI applications filed with the Jammu Health Services Authority disclosed how the GeM official made purchases which resulted in huge losses to the public treasury which amount to million rupees per year. He said several purchases were made 30 to 300 percent higher than current market rates of purchased items. The RTI activist secured a quote for some items on March 12, 2022 for the purchase of an Ultrasound Machine (USG) Model BPL E-Cube 5 @ Rs 9,91,200, with a three-year warranty. The machines were procured by Directorate of Health Services Jammu (DHSJ) @ Rs 13,18,000. About 7 USG machines were procured for which Rs 79,06,000 (seventy-nine lakh six thousand rupees) was paid under contract number 511687710463117 dated September 7, 2020. This was 30% higher than the rate of the existing market, which means a loss of Rs 18 lakhs to the Treasury. Balvinder disclosed that the same department purchased eight issues of Radicon-Binocular Polarizing Microscope at Rs 58,300 inclusive of tax on 23rd December 2020 under Contract No. 511687769910866 dated 23.02.2022 for an amount of Rs. 4,66,400 which was 50% higher than the market value of this product as quotations had already been obtained by Mr. Balvinder Singh for the same product on March 11, 2022 which amounted to Rs 37816 only including taxes. This is how the Department of Health Services cheated the Treasury to the tune of Rs 1,63,872.
Supply of stationery and office supplies
The Department of Stationery and Office Supplies (DoSOS) is one of the oldest government departments in J&K which was established during Dogra rule. It has always been the nodal agency for the procurement of stationery, paper and binding materials for office use by all government/semi-government offices and establishments in Jammu and Kashmir. This department facilitated the provision of these items at uniform rates to each department on cashless transactions, which was more or less a transparent process.
DoSOS versus GeM?
In accordance with Rule 149 of the General Financial Rules (GFR)-2017 issued by the Ministry of Finance and Section 4.17.5 of the Goods Procurement Manual-2017, procurement through the Govt e market-GeM portal has become mandatory for all departments. The Department of Stationery and Office Supplies (DoSOS) has procured stationery items through an electronic bidding process in the past. After the creation of the GeM, this Department (DoSOS) should have been transformed into a kind of Request Aggregator which would act as a one-stop solution for purchasing all stationery and other related items from GeM Portal via e-bidding or Reverse auction mode (RAM) after consolidating requests from all of J&K’s indentation departments.
In view of GFR-2017 Rule 149 and its subsequent amendment, see Ministry of Finance (OM) Office Memorandum dated: 02.04.2019, Expenditure Department, if all J&K indentation departments opt for an individual purchase on the GeM portal, the majority of the departments will have to opt for the direct purchase mode (DPM) or the direct purchase with the L1 mode of GeM since hardly any department would be able to cross the ceiling of Rs .5,00,000 (five lakhs) for mandatory auctions, using the online or reverse auction tool provided on GeM. This will lead to higher rates than could be obtained by this department after opting for bulk purchase from GeM via electronic auctions/reverse auctions on behalf of all indentation departments under the J&K government, which entails enormous losses for the public purse.
This is completely against GFR-2017 Rule 149(viii) and also contradicts the latest amendment to Rule 149, see Ministry of Finance OM dated 02.04.2019, Department of Expenditure Section (xi). Section 22.214.171.124.1/126.96.36.199.2 of the GeM Handbook also discusses the same aspect of demand aggregation and aggregation/grouping.
All of this has been discussed in various communications viz. DGSS/Adm./235 of: 07-09-2020, DGSS/Adm./280-82 of: 28-09-2020, DGSS/Adm./19 of: 22-01-2021, addressed to the administrative department by the Director General of Department of Stationery and Office Supplies (DoSOS). These communications also suggested providing a roadmap for reviving the Department on modern lines.
Relevantly, the overall demand for stationery and other related items from J&K Govt stands at around Rs. 1500 lacs or more as per the budget released by the Department of Finance for the financial year 2020-21, 2021 -22.
Information obtained under RTI
In an RTI request to the Chief Secretary, J&K dated 10-08-2021, information was received from various departments as to how they purchased their stationery. From the communications received from various departments, it was abundantly clear that the indentation departments were purchasing stationery items from the cooperative stores and GeM, but they were opting for piecemeal purchases without aggregating the demand for no kind. RTI responds by Superintendents of Jammu District Jail under Letter No: DJJ/Acctts/1832-33 dt: 29-9-21, Central Jail Srinagar under Letter No Acctts/CJS/1632-33 dt : 29-9-21), Central Jail Srinagar see letter No Acctts/CJ/1532 dt: 15-9-21, District Jail Baramulla see letter No Estt/234/DJBK/2021/711-12 dt: 28-9- 21), DGP, Department of Prisons void letter No Accounts/5671-72 dt: 9-29-21, Superintendent District Jail Kathua void letter No DJK/Acctt/1099 dt: 9-29-21 purchased stationery from ‘worth several thousand rupees without demand aggregation, thereby losing the benefits of wholesale purchase latent losses to the treasury.
After the reorganization of the former state of J&K, empty Govt. Order No: 1211-JK (GAD) of 2021 Dated: 15-11-2021 Stationery and Office Supplies Department of UT Ladakh is to be staffed with more staff which is proof enough that this department is still functioning in UT of Ladakh, but the budget allocated to the J&K Stationery & Office Supplies Department has not been released in the last three fiscal years 2019-20, 2020-21 or 2021-22 and all of suddenly the released funds were withdrawn by the Department of Finance vide communication n°: FD -VII25 (11)2000 of: 16-01-2020 indicating that these funds were released inadvertently, thus leaving this department in a state suspended animation
The Department of Stationery and Office Supplies (DoSOS) had stationery depots in 12 J&K districts. The department through its To buy Committee and Investigation Committee constituted by the government ensured that stationery and related items were procured at the lowest rates and that only the highest quality items were purchased for consumption in government departments, in addition to fixing various tariff contracts. But after purchases started to be made through the GeM portal, this department became dysfunctional. The government plans to liquidate this ministry. It would be a blunder. In fact, the DoSOS should become the nodal agency for government procurement and marketing (GeM) at J&K, which will ensure no further loss to the treasury.
The opinions expressed in the article are those of the author and do not necessarily represent the editorial position of Kashmir Observer
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