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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 donations.

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 gets tax-money.

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.

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