“Reforming public procurement in India” # GS - 2
# Mint
Context The Supreme Court's
ruling in Central
Organisation
for Railway Electrification (CORE) vs ECI SPIC SMO MCML
(JV) & the finance ministry's
new
guidelines on public
procurement dispute resolution
are
pivotal in India's
arbitration framework. Source : one planet network
Public procurement
It
refers to the process
by which
and state
governments owned
enterprises purchase goods and
services
from the private sector.
Public procurement in India is
Source : ilearn
worth 25-20 % of the
country's GDP .
Contract-Related Disputes Financial Disputes
· Arbitrator appointment . ·
Project cost overruns.
· Unilateral contract Compensation
· claims .
modifications .
Types of ·
Billing disagreements .
· Breach of contract
. Public Payment delays
·
.
Procurement
Project Implementation Disputes Procedural Disputes
· Timeline violations
Disputes ·
.
Tendering challenges
·
Performance conflicts. · selection controversies .
Scope of work
· ·
Transparency & fairness
interpretation . concerns .
Lack
of impartiality in
dispute resolution mechanisms.
Unilateral arbitrator Prolonged litigation
appointments. processes .
Challenges
limited incentives in dispute Fear
of official
for negotiated resolution screting during
settlements. dispute resolution.
Supreme Court Judgment (CORE vs ECI SPIC SMO MCML)
Aimed at
Emphasized principle reducing
of equality between > perceived bias in
parties . asbitration panels.
N
struck down unilateral arbitrator appointment clauses in
contracts.
public
Finance Ministry Guidelines
In June 2024 ,
the
ministry introduced a
hybrid dispute
resolution
framework prioritizing
, institutional arbitration
for smaller disputes and mediation
for larger ones ,
followed by court
litigation if necessary
.
Source : PIB
The Mediation Act , 2023
provides a structured
framework for mediation .
For
high-value disputes , the
government may form an
Level Committee (HLC) to mediation process.
High oversee
Accelerated Infrastructure
Enhanced development
.
Investor Improved ease
of
Confidence .
doing business .
Potential
Enhanced Account-
Benefits of Reduced burden on
Effective
ability
. Dispute court
system.
Resolution
Reduced perception Reduced economic
of bias . freedom .
Improved government-
business relationships.
Way forward & Recommendations
Invest in Create incentives
developing robust
2
for officials
Y
institutional mechanisms. to
actively pursue mediation .
Use
technology to stream- Invest in
capacity building
C >
line processes . for arbitrators & mediators.
Provide adequate support Promote transparency in
2 3
&
training to officials
.
dispute resolution .
(GeM) facilitates
For prelims
Government e-Marketplace online
procurement of common use Good & Services required
Government
by PSUs ,
organisations and departments.
Practice Questions
Q: Which of the following statements about the Supreme Court’s judgment in the CORE vs
JV case is/are correct?
1. The judgment struck down clauses in public contracts allowing unilateral appointment
of arbitrators.
2. It upheld the principle of minimal judicial interference in arbitration.
3. The judgment aims to ensure equality between parties in the arbit ration process.
Select the correct answer using the codes given below: C
(a) 1 only
(b) 1 and 3 only
(c) 2 and 3 only
(d) 1, 2, and 3
Ans : (b)
Q: Consider the following statements regarding the Finance Ministry's 2024 guidelines for
public procurement dispute resolution:
1. Institutional arbitration is limited to disputes below ₹10 crore.
2. High-value disputes are resolved only through mediation.
3. The guidelines aim to reduce reliance on court litigation in large-scale disputes.
Which of the statements is/are correct?
(a) 1 and 2 only
(b) 1 and 3 only
(c) 2 and 3 only
(d) 1, 2, and 3
Ans : (b)
