Govt’s plan for PSUs to procure from Dalit SMEs fails to take off

In 2017-18, Central PSUs bought Rs 543.86 crore worth goods and services from SC/ST enterprises, accounting for just 0.46% of their total procurement of Rs 1,16,837.27 crore.

Written by P Vaidyanathan Iyer | New Delhi | Updated: July 23, 2018 6:30:37 am
MSME sector, PSU, public sector undertaking, public sector undertaking procurement, micro enterprises, small enterprises, MSME, Five years ago, in 2012-13, SC/ST enterprises sold goods and services valued Rs 419.93 crore, or 0.5% of the total procurement of Rs 85,155.18 crore by Central PSUs then. (Photo for representation purpose)

The government’s ambitious plan to get Central PSUs to make 4% of their procurement from Dalit enterprises has not made much headway over the last six years.

In 2017-18, Central PSUs bought Rs 543.86 crore worth goods and services from SC/ST enterprises, accounting for just 0.46% of their total procurement of Rs 1,16,837.27 crore. Five years ago, in 2012-13, SC/ST enterprises sold goods and services valued Rs 419.93 crore, or 0.5% of the total procurement of Rs 85,155.18 crore by Central PSUs then.

The ‘Public Procurement Order for Micro and Small Enterprises Order, 2012’, issued by the UPA-II government on March 23, 2012, required Central PSUs to procure 20% of their annual value of goods produced and services rendered from MSMEs. A sub-target of 4% (20% of 20%) was earmarked for procurement from MSMEs owned by SC/ST entrepreneurs. The procurement goal of 20% from MSMEs was made mandatory from April 1, 2015. Those not meeting this were required to provide reasons to a review committee set up by the ministry.

Information obtained from the Office of the Development Commissioner, Micro Small and Medium Enterprises, under the Right To Information Act and from the Ministry of MSME website shows that Central PSUs’ purchase of products and services from MSMEs and from SC/ST MSMEs dipped sharply in the first year (2014-15) of the NDA government, and rose in the subsequent years. While MSMEs accounted for almost 23% of the total procurement by Central PSUs in 2017-18, the share of SC/ST MSMEs was less than even 0.5%.

“The government did increase transparency by asking Central PSUs to not only make public their annual procurement targets, but also post the list of all goods purchased from and services rendered by MSMEs and SC/ST enterprises on separate websites,” a government official told The Indian Express.

However, data obtained from the MSME ministry shows that of the total 330 PSUs administered by 37 ministries in 2017-18, 233 did not report their annual/monthly procurement targets from MSMEs and SC/ST enterprises or the services and goods procured from the MSMEs. “This suggests that less than a third of the Central PSUs were providing information as required. Consistent follow up is required,” said an industry executive.

While the total number of MSMEs that benefited from the procurement policy during 2017-18 stood at 86,671, only 2,235 belonged to the disadvantaged communities (SCs and STs).

Six PSUs (BEL, BHEL, BPCL, ECGC Ltd, HPCL and National Small Industries Corporation Ltd) procured from more than 50% of all SC/ST MSMEs that benefited from the procurement policy.

In value terms, of the total Rs 543.86 crore procured from SC/ST MSMEs, the PSUs under the Defence and Petroleum and Natural Gas ministries accounted for four-fifths of the purchases. But even these PSUs were far short of their annual target (defence PSUs procured Rs 80.16 crore against a target of Rs 472.53 crore from SC/ST entrepreneurs and oil PSUs procured Rs 335.34 crore worth goods and services against a target of Rs 2,110.17 crore).

The public procurement order of 2012 was part of the UPA-II government’s overall ‘affirmative action’ policy. While this order forced ministries and government departments to prevail upon PSUs to buy more from MSMEs and Dalit enterprises, the Prime Minister’s Office separately monitored the private sector’s affirmative action plan in meetings with industry chambers CII, Ficci and Assocham.

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