Under this kind of purchasing, the purchases the government makes are
discussed with all their characteristics.
We ended up last week with the sources of revenue for such
institutionalized purchasing, namely , they being generally taxes, grants and
There is a very big difference between the institutionalized
purchasing and the other types of purchasing: profit.
Business means profit; without profit, no business can be run for
long. You put ten rupees in a business
means it must bring at least Twelve rupees or more. Without this excess money,
no business is possible. But in institutionalized purchasing, that is, when a
government makes a purchase, it is not doing so for any profit but to provide
services to the public. The reason is
not difficult to find: the government gets money through taxes and people pay
taxes. For tax, the government is expected to give back some necessary service
to the tax-payer. Government gets money from taxes and the tax structure is a
very big affair and we need not go into all those different ways the government
Because the government is getting money from the public for services,
it must be extremely cautious in spending and it must be what we say
cost-conscious so that not even a single rupee is spent in excess. If the
government saves one rupee means, it need not collect one rupee more; that is,
one rupee saved means less tax from the people by one rupee.
The government is actually elected people; ministers, members of
legislative assemblies, members of parliament --- these elected people make the
government and they are endowed with power by the law of the land. Actually,
they run the government and they decide upon all the policies of government. It
is clear now in institutionalized purchasing, the government high officials
have the power to decide. Of course, they are assisted by endless experts from
various departments; but, the final decision is by them only. This enormous power very often is said to
lead to corruption in government. Simply, paying more money than necessary
because the seller happens to be a relative of the minister is a form of
corruption. Likewise, hundreds of
instances can be quoted of corruption. Principles are right generally and those
execute those principles if they are not right, corruption creeps in. Buying
wisely and buying timely are the two major pillars of business since they
assure you of profit which you deserve. You have put your money, your time and
energy and you are right in expecting some excess money. Corruption happens if
purchase is made unwisely and consciously.
To sum up, the bottom line for any business is profit and it is
service in institutionalized purchasing. Business cannot be a service and
government cannot be a business. Hope you understand now all kinds of
purchasing which form a part of logistics.