The Union Cabinet has approved a procurement policy wherein all government departments and public sector undertakings (PSUs) will give preference to micro and small enterprises (MSEs) in the procurement of goods and services they (government) make.
The government will in three years be mandated to make 20% of all its procurement from MSEs, and a fifth of this would be done from enterprises run by SC/ST entrepreneurs.
The step can in the long run boost employment and address poverty by encouraging these labour-intensive units, largely employing semi-skilled and unskilled labour. Significantly, it can also reduce corruption in public procurement at a time when corruption is central to political discourse, and help the Centre reach out to Dalits and tribals in the run-up to polls in UP and other states.
Significantly, the Group of Ministers on corruption had taken up the issue of public procurement, in view of the VK Dhall Committee’s recommendation that full transparency be maintained in procurement.
Procurement is believed to involve leakages and lack of transparency, and this splitting of the process in favour of MSEs can address large enterprises’ monopoly sale to government departments, believed to be ridden with opacity. “Now SC/ST entrepreneurs will have assured market from the government to the tune of R7,000-R10,000 crore a year,” said a senior government official.
Minister for social justice and empowerment Mukul Wasnik is believed to have lobbied hard for the quota for Dalits and tribals, a decision that will help the Congress project itself as a pro-Dalit force during the UP polls.
Dalit Indian Chambers of Commerce and Industry chairman Milind Kamble welcomed the move: “This is a historic decision and we welcome it as a step towards inclusive growth. The greatest challenge will be in implementation and we are ready to cooperate.”
“At the end of three years, the overall procurement goal of minimum 20% will be made compulsory,” an official release said.