India procures 20% of GDP publicly: World Bank

Public procurement is the process of purchasing goods, services or works by the public sector from the private sector

GN Bureau | December 3, 2016


#Economy   #World Bank   #GDP   #Ease of Doing Business  
World Bank

South Asia has the highest share of public procurement in GDP, at 19.3%; followed by sub-Saharan Africa at 14.9%. “India procures 20% of GDP publicly, Pakistan 19.8%. East Asia has the lowest share, 9.3% of GDP, largely driven by China, where only 2.8% of GDP is generated through publicly procured projects. The Philippines and Thailand also procure less than 3% of GDP publicly,” said a World Bank blog.

The blog “Is public procurement a rich country’s policy?” by Simeon Djankov and co-authored by Federica Saliola and Asif Islam said that public procurement is the process of purchasing goods, services or works by the public sector from the private sector.

The range of economic sectors concerned by public procurement is as wide as the needs of a government to properly function and deliver services to its citizens. Governments turn to the private sector to supply goods and services for the construction of schools, to purchase hospital supplies, to secure computer services in public buildings, renew a fleet of city buses, or construct a new road as indicated in the World Bank Doing Business 2017 report.

 It added: “It is surprising that no attempt has been made to-date to systematically and consistently collect reliable statistics on the size of public procurement in economies around the world. Data are publicly available for high-income countries. The European Union calculates the average share of public procurement in the GDP of its 28 member states to be 16%. The OECD also collects statistics on the share of public procurement in its 35 member countries, which averaged 12% of GDP in 2015. For the rest of the world, there is scarce data and studies. The World Trade Organization estimates the share of public procurement in GDP globally to be between 10 and 15%, implying that public procurement is as used in middle-income and poor countries as in high-income ones. Is this actually the case?”

The blog said that the data show low-income countries have the largest share of public procurement in GDP, at 14.5%; followed by upper-middle income countries, at 13.6%. In Eritrea, for example, public procurement is a whopping 33% of GDP, due to both significant inflows of development assistance that go through public procurement and the small tax base which makes government expenditures almost entirely dependent on development aid. In Angola, the share is 26% of GDP, for much the same reasons.

Some rich countries also have high shares of public procurement in GDP, for example the Netherlands at 20.2% or Finland at 18.5%. The ratio of government expenditure to GDP in these countries is twice as large as in most emerging economies, underscoring the significance of public procurement. High-income countries in the Middle East, however, show markedly lower share of public procurement: Oman at 6% of GDP, Bahrain at 8.2%.

The figures suggest that public procurement is indeed as important in developing countries as it is in advanced economies. Governments in developing countries are significant purchasers or good and services, and these markets represent huge opportunities to enhance competition and development. This result can be used to refocus efforts to improve the quality of service delivery.

“If public procurement ensures competitive markets for government goods and services, one would expect benefits for the consumer: higher quality and perhaps lower prices. The ultimate benefit may be reduced corruption, as a transparent procurement process will weed out some corrupt practices,” the blog added.

Comments

 

Other News

Stories to read over the weekend

At one time these pale rooms of the Delhi commission for women looked like sleepy corners of officialdom; they are now best described as a bustling sarkari office. The woman who transformed this moribund organisation hardly looks like a powerful leader. Dressed in casual blue jeans and loose deni

Tata Trusts, PFA to build state-of-the-art veterinary hospital

Tata Trusts and People For Animals (PFA) announced their collaboration to build a state-of-the-art, multi-specialty veterinary hospital and emergency clinic at Navi Mumbai to serve the needs of all domestic and farm animals at affordable rates.   The hospital will be built in Kala

The shot just got smarter

A long queue of women, infants in their arms, extends outside the immunisation room at the community health centre (CHC) in Bhangel village, Noida, a pink double-storey building beside a bustling market. Unmindful of the chit-chatting and baby babble, Mariamma Samuel, an auxiliary nurse-cum-midwi

Do you think fugitive industrialist Vijay Mallya will be extradited from Britain to India?

Do you think fugitive industrialist Vijay Mallya will be extradited from Britain to India?

Reform first, privatise later: Bibek Debroy to railways

Before privatisation and corporatisation, the Indian Railways need to undertake major reforms including commercial accounting, decentralisation and human resource among others, said Bibek Debroy, economist and member, NITI Aayog at Railways Reforms and Governance Conclave organised by Governance Now on Fri

NTPC plans for 32 GW installed capacity via renewable sources

NTPC Ltd has raised Rs 2,000 crore through green masala bonds in overseas market under its $4 billion medium term note programme, union minister Piyush Goyal informed the Lok Sabha. The proceeds of these bonds will be used for financing renewable energy projects in accordance with applicable

Video

हमेशा रहें चुनाव के लिए तैयार - मोदी ने कहा सांसदों से

Current Issue

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter