I. Organization Framework

　　The institutional and legal framework for procurement in India is derived from the Constitution of India.  The Constitution vests the executive powers of the Union of India in the President of India.[1]  The President, by his order, and issuance of allocation rules of the Government of India,[2] vested the financial powers of the Indian Government in the Ministry of Finance.  These powers in turn are delegated to the subordinate authorities under the 1947 General Financial Rules, which were revised in 2005.[3]

　　The General Financial Rules (GFR), developed by the Ministry of Finance, establish the principles for general financial management and procedures for government procurement.  The rules contained in chapter 6 concern the procurement of goods and services, while chapter 8 addresses contract management.  All government purchases must strictly adhere to the principles outlined in the GFRs.  The Manual on Policies and Procedures for Purchase of Goods[4] contains guidelines for the purchase of goods.

　　There is no central legislation governing procurement in India.  Comprehensive rules and directives in this regard are contained in the GFR 2005 and Delegation of Financial Powers Rules (DFPR).  A broader framework is also provided by the Contract Act, 1872,[5] the Sale of Goods Act, 1930,[6] the Law on Arbitration[7] and Limitation[8] and the recent Right to Information Act, 2005.[9]

　　As India is a union of states, each state, including the Union Territories, have their own rules, guidelines or legislation on procurement.  State governments and Central Public Sector Units (CPSUs) have their own general financial rules, which are based on the broad principles outlined in the GFR.  Some states have even introduced legislation for procurement, e.g., Tamil Nadu and Karnataka.

　　The constitutionally appointed Comptroller and Auditor General (CAG) oversee the accounts of the Union and states.[10]  The reports of the CAG on Union accounts are presented to each house of the Indian Parliament, while those relating to the accounts of the states are presented to the legislature of each state assembly.  These reports also cover procurement.  The Parliamentary Accounts Committee (PAC), the Standing Committees and the Legislative Accounts Committees in the states oversee the functioning of the executive power. To ensure transparency in the process at each level of the Indian Government, a local fund audit for local bodies has been established.  Reports on the audits are presented to each state legislative assembly.

　　Complaints of corruption and the vigilance administration of the central government are investigated by the Central Vigilance Commission, a statutory body founded as a result of the enactment of the Central Vigilance Commission Act, 2003.[11]  As a signatory to the U.N. Convention against Corruption, internationally, India has also pledged its commitment to the zero tolerance of corruption.