Railways for payments to vendors within 10 days on GeM portal
08 Sep 2020 01:22:33
By Sagar Mohod :
Delay in release of payment would attract 1 per cent penalty as Central Government aims to cut down red tape and ensure faster clearances to bolster supply chain and boost production capacity
With new financial order in place, Railway Board directed all units to ensure prompt clearance of vendors’ payment within 10 calendar days as under new rules any delay would attract 1 per cent penalty. The period is calculated post generation of Consignee Receipt and Acceptance Certificate (CRAC) in the GeM, that indicates delivery of goods or completion of service contract. The new norms would be applicable for all purchases made through Government-e-Market (GeM), an umbrella framework created by Central Government for placing orders by public bodies.
The scheme is aimed at ensuring faster rolling as current economic crisis due to novel coronavirus pandemic showed that worst hit Medium Small Micro Enterprises (MSMEs) cash flow was impacted as their bills were stuck in Government system. Taking cognisance, Department of Expenditure (Procurement Policy Division) notified that all Central Government establishment operating through GeM should stick to fixed payment schedule. The push under Atmanirbhar Bharat campaign of Central Government is aimed at ending dogmatic practice to sit upon payment due to lack of specific guidelines.
Now with introduction of penalty clause it possible to fix accountability as now persons involved in processing bills are now duty bound to adhere to deadline for payment or face music. The rule is applicable to purchases made under rule 149 of General Finance Rules 2017 and penalty calculation would be on prorata basis, wherein only the period of delay post deadline is calculated as default. So, if CRAC is generated on 1st day of month and payment is made on 20th day, interest of 10-days would only be charged. The formula for calculating penal interest will be 10/30 multiplied by 1 per cent i.e. 0.33 per cent, and month would be counted for 30-days only.
Penalty money however is not going to vendor, instead GeM portal would keep it in separate account and use same for creating awareness among buyers/sellers. And the new move is covered Supply of Goods and Services; Supply, Installation, Testing and Commissioning of Goods; Supply, Installation, Testing, Commissioning of Goods and Training of operators and providing Statuary Clearances (if any), all three formats. As to Supply of Goods, 100 per cent payment including GST be made after receipt of acceptance of goods and generation of Goods CARC, subject to recoveries either on account of short supply or liquidated damages or for delay in supply.
In relation to Services, payment would be defined as per contract and it could be either quarterly, monthly, or any other periodicity as decided but GST be released 100 per cent. For the last item about installation and testing, the Railways should do cost break-up to indicate basic price, GST, installation and commissioning charges, incidental services, training etc and same be mentioned in bid document. Installation of intensive products, the different configurable payment terms must be incorporated in GeM functionalities, particular for turn key projects.
To prevent default, the Finance Ministry has proposed that respective departments while clearing file for listing on GeM portal should capture all essential data as to sanction and clearance for payment. This is so as payment on GeM portal is done through Public Finance Management System (PMFS) or GeM pool account.
‘Procure common use goods through GeM portal’ Railway Board has notified Zones and Production Units that all common use goods should be procured through GeM portal. Board said Central Government has made it mandatory under Rule 149 of GFR 2017. In case the required services or goods are available on GeM portal then railway units cannot source same from outside vendors.
The matter was considered by Member (Materials Management), Member Rolling Stock (MRS) and Financial Commissioner who then approved the Central Government rules. Gaurav Kumar, Director, Railway Stores (F), Railway Board, in the communication further directed Finance Officers of Zonal Railways, PUs, and other units to take an undertaking from the executive officers while vetting the estimates and tender documents that the item/service is proposed to be procured through GeM portal only, if the same is listed on the portal.