By P Sesh Kumar
For decades, buying something as ordinary as an office chair for a government department could become an extraordinary exercise in bureaucracy.
Files moved from one table to another. Rate contracts dictated choices. Approvals climbed through multiple layers. Suppliers waited. Officials waited. Payments waited. Somewhere along the way, allegations of favouritism, cartelisation and inefficiency often found space to thrive.
This was government procurement in India for decades—a system designed for another era. It functioned, but it was slow, fragmented and heavily dependent on paperwork.
Then, in 2016, India attempted something remarkably ambitious.
Instead of merely digitising existing procedures, it sought to redesign the entire procurement architecture. The Government e-Marketplace (GeM) was born—a single digital platform where ministries, departments and public sector organisations could buy goods and services through online bidding, reverse auctions and completely digital workflows.
Few countries had attempted such a transformation at this scale.
The numbers today are nothing short of extraordinary.
In the financial year 2024-25 alone, procurement worth nearly Rs 5.4 lakh crore was carried out through GeM. Since its launch, the platform has processed around three crore purchase orders with a cumulative procurement value approaching Rs 15 lakh crore, making it one of the world’s largest public procurement platforms.
On paper, this is one of India’s most significant governance reforms.
But every system that manages public money deserves one uncomfortable question.
Does digitisation automatically guarantee integrity?
Technology can record every click, every bid, every quotation, every approval and every payment. Yet technology, by itself, cannot eliminate manipulation if the procurement process remains vulnerable.
That is precisely where this story begins.
This article looks at GeM not merely as a technological success story but through the eyes of an auditor. It explores why the platform was created, what it has achieved and whether India’s oversight institutions have examined a marketplace of this scale with the rigour it deserves. It also looks beyond India—to Parliament, the World Bank and the United Nations—to understand how the world’s largest procurement systems safeguard transparency and accountability.
FROM FILES AND RATE CONTRACTS TO A DIGITAL MARKETPLACE
To understand why GeM matters, one must first understand the system it replaced.
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For decades, government procurement revolved around the Directorate General of Supplies and Disposals (DGS&D). Procurement largely depended upon centrally negotiated rate contracts and an elaborate paper-based system.
Over time, the cracks became impossible to ignore.
The Comptroller and Auditor General (CAG) later pointed to several structural weaknesses. Demand across government departments was rarely aggregated effectively. Competition remained limited because participation was largely confined to firms registered with DGS&D or the National Small Industries Corporation (NSIC). The system focused mainly on products rather than services. Procurement and payment systems functioned independently, leaving departments trapped in cumbersome manual processes.
Perhaps most worrying was the environment such a system created—one where cartelisation could flourish and efficiency remained elusive.
Recognising these shortcomings, two Groups of Secretaries submitted recommendations to the Prime Minister in January 2016 proposing a technology-driven procurement ecosystem.
The proposal quickly received political backing.
While presenting the Union Budget for 2016-17, the Finance Minister announced the creation of an online Government e-Marketplace.
What followed surprised many.
Within barely five months, on 9 August 2016, GeM became operational.
The transition represented much more than replacing one organisation with another.
DGS&D itself was eventually wound up. GeM was established as a 100 per cent government-owned, non-profit Special Purpose Vehicle (SPV) under the Department of Commerce and incorporated as a Section 8 company.
Its legal foundation came through Rule 149 of the General Financial Rules (GFR), 2017, making procurement through GeM mandatory for Central Government ministries, departments and public sector undertakings.
India had not simply digitised procurement.
It had redesigned its very architecture.
THE THREE PROMISES OF GeM
From the beginning, GeM rested on three powerful promises—efficiency, transparency and inclusion.
Efficiency would come from replacing paperwork with digital workflows.
Departments could compare products online, conduct electronic bidding, organise reverse auctions and aggregate procurement demand across organisations. According to estimates frequently cited by the World Bank, such systems have the potential to generate median savings of nearly 9.75 per cent compared to traditional procurement methods.
Transparency formed the second pillar.
Unlike physical files, digital platforms create permanent electronic trails. Every tender, every bid submission, every evaluation stage and every purchase order is automatically recorded, making arbitrary decision-making significantly more difficult.
Perhaps the boldest promise, however, was inclusion.
For decades, government procurement had largely favoured established suppliers who understood bureaucratic procedures and possessed the necessary institutional familiarity.
GeM attempted to democratise this marketplace.
Micro, Small and Medium Enterprises (MSMEs), start-ups, women entrepreneurs, artisans and self-help groups could now directly access government buyers without relying upon traditional intermediaries.
The philosophy was simple yet powerful.
Technology would reduce discretion, increase competition, widen participation and lower procurement costs simultaneously.
It was an elegant design.
Yet every auditor knows an important distinction.
A well-designed system is not automatically a well-implemented system.
That distinction lies at the heart of every serious audit.
FROM AN EXPERIMENT TO A RS 5.4 LAKH CRORE MARKETPLACE
Few governance initiatives in India have grown as rapidly as GeM.
During 2024-25, the platform recorded its highest-ever Gross Merchandise Value (GMV) of nearly Rs 5.4 lakh crore.
Interestingly, GeM had already crossed Rs 4.09 lakh crore within just the first ten months of the financial year—a growth of almost 50 per cent over the previous year.
The nature of procurement has also evolved.
While GeM initially concentrated largely on products, services today account for nearly 62 per cent of procurement, with products constituting around 38 per cent. The shift reflects the platform’s increasing maturity and its ability to handle far more complex government procurement requirements.
The ecosystem supporting GeM has expanded just as dramatically.
By early 2025:
- More than 22 lakh sellers had registered on the platform.
- Over 1.6 lakh government buyer organisations were actively procuring through GeM.
- Cumulative procurement had crossed Rs 15 lakh crore through nearly three crore purchase orders.
- Around 1.5 lakh women-led enterprises had become part of the marketplace.
Its geographical reach is equally impressive.
Today, GeM operates across all 36 States and Union Territories. At least eight states have already made procurement through GeM mandatory. Financial management systems have also been integrated in Assam, Kerala, Odisha, West Bengal and Delhi, enabling procurement and payment systems to communicate seamlessly.
Measured purely by scale, GeM stands among the world’s largest public procurement platforms.
But scale brings its own responsibilities.
When a digital platform annually handles procurement exceeding Rs 5 lakh crore, should independent scrutiny not grow proportionately?
The larger the marketplace becomes, the greater becomes the public interest in ensuring that competition remains genuine, prices remain competitive, suppliers remain accountable and taxpayers continue receiving value for money.
That is where the story moves beyond impressive numbers.
It enters the far more important territory of audit, accountability and institutional oversight.
To be continued in Part II…
In the next part, we examine whether India’s constitutional watchdog—the Comptroller and Auditor General (CAG)—has comprehensively audited GeM, what Parliament’s Standing Committee observed, and what lessons India’s procurement ecosystem can draw from the oversight practices followed by the World Bank and the United Nations.
About The Author– (Mr. P Sesh Kumar is a retired 1982-batch officer of the Indian Audit and Accounts Service (IA&AS) who servedas Director General of Audit at the Comptroller & Auditor General of India.)
Disclaimer – (The views and opinions expressed in this article are solely those of the author and do not necessarily reflect the views of Indian Masterminds. For feedback or queries, please write to [email protected].)
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