30 November 2006 | Paul Snell

A business organisation in India is calling on the government to improve public procurement.

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has urged political leaders to create a public procurement agency to cut costs and improve performance.

ASSOCHAM and the World Bank have sent a joint paper to several government departments, explaining how decentralised procurement is making it hard to monitor transactions.

The association said that implementing such an agency would allow the government to cut purchasing costs by 20 per cent, reduce the time public procurement projects take and shorten the time the government takes to pay suppliers.

Anil Agarwal, president of ASSOCHAM, said the Indian government needed to emulate the models used in other countries, such as the UK and US.

He also said the private sector should monitor procurement and tell the government about problems in deals with which it has been involved.

Rachid Benmessaoud, head of the World Bank in India, told delegates at a conference on public procurement that impressive savings should not be the only reason for adopting an agency.

"The importance of public procurement extends beyond its significance in overall spending," he said. "It is a prime place where budgets get translated into goods, works and services."

Last month the Indian government announced it would create separate procurement agencies for defence and railways, because of the large purchases made in those areas.

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