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
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

R-Day: 10,000 special guests invited to witness the parade

Approximately 10,000 special guests from different walks of life have been invited to witness the 77th Republic Day Parade at Kartavya Path this year. The guests include those who have carried out exemplary work in income and employment generation, best innovators, researchers & start-ups, Self Help Gr

Why civilization is a precarious thing

The Decline of Hindu Civilization: Lessons from the Past By Shashi Ranjan Kumar Rupa Publications, 416 pages, Rs 995

End of an era: BJP poised to rule Mumbai after 25 years

The BJP-led Mahayuti alliance was set for a decisive victory in the Maharashtra municipal corporation elections, consolidating its dominance across Maharashtra’s urban landscape. As per the latest trends from the vote counting on Friday afternoon, the state`s ruling coalition was leading in 19 of the

Startup India initiative: A decade of building India’s innovation backbone

* With over 2 lakh DPIIT-recognised startups as of December 2025, India stands firmly as one of the world’s largest startup ecosystems. * A decade of Startup India has built a full-lifecycle support system spanning ideation, funding, mentorship, and scale-up. * Around 50% of DPIIT-r

How toll policies are redefining the highway journeys

With the phenomenal growth in National Highways, queues at toll plazas used to affect commuters. However, over the last decade, tolling has undergone a major technological transformation, bringing faster movement and significant ease for road users. Building on this progress, year 2025 saw further people-c

From vulnerabilities to empowerment: Building resilience for small and marginal farmers

India’s small and marginal farmers are at the centre of a paradox in agrarian economy. They are the backbone of the food economy, but they are the most vulnerable stakeholders within agricultural economy. Among the 126 million farmers in India today, nearly makes 86% operate on small and marginal hol


Archives

Current Issue

Opinion

Facebook Twitter Google Plus Linkedin Subscribe Newsletter

Twitter