Credit and finance for MSMEs: Out of Rs 36,221 crore payable to MSEs across 1.47 lakh cases of delayed payments filed since October 30, 2017 (when the delayed payment monitoring portal MSME Samadhaan was launched), 28,800 applications involving Rs 5,037 crore were disposed as of June 7 by MSE facilitation councils.
Credit and finance for MSMEs: The amount disposed in delayed payment cases filed by micro and small enterprises (MSEs) against their buyers viz., government departments, ministries, central public sector units, and others has crossed Rs 5,000 crore. Out of Rs 36,221 crore payable to MSEs across 1.47 lakh cases of delayed payments filed since October 30, 2017 (when the delayed payment monitoring portal MSME Samadhaan was launched), 28,800 applications involving Rs 5,037 crore were disposed as of June 7 by MSE facilitation councils.
Out of the total amount disposed, Rs 952 crore was held across 1,480 applications filed against central PSUs led by Bharat Sanchar Nigam Ltd (Rs 425 crore), WAPCOS (Rs 103 crore), Indian Oil Corporation (Rs 75 crore), ITI Ltd (Rs 54 crore), IRCON International (Rs 44 crore), and others.
The second highest amount of Rs 590 crore disposed was held across 1,997 applications filed against state governments led by the Jharkhand government (Rs 69 crore in 70 delayed payments cases), Andhra Pradesh government (Rs 68 crore across 123 cases), and Rajasthan government (Rs 64 crore across 319 cases), as per data from the Samadhaan portal.
However, the amount involved in delayed payment applications rejected by the councils was higher at Rs 7,503 crore across 37,451 applications due to multiple reasons such as lack of documents.
Other than applications rejected, 13,915 applications involving Rs 1,825 crore were mutually settled between the buyer and MSE seller so far while 31,478 applications amounting to Rs 11,282 crore were currently under consideration by different facilitation councils across India.
Importantly, the number of delayed payment applications by MSEs disposed in the financial year 2022-23 had dropped by a significant 73.5 per cent year-on-year in comparison to a 50 per cent decline in FY22. According to the data, 1,043 applications involving Rs 182 crore were disposed by the councils in FY23 vis-a-vis 3,937 applications involving Rs 441 crore disposed in FY22 and 7,879 applications involving Rs 1,599 crore disposed in FY21.
Overall, 29,252 applications involving Rs 7,093 crore were filed by MSEs against various buyers in FY23, indicating only 3.5 per cent of applications disposed by facilitation councils during the year. However, the total applications filed in FY23 were down by 15 per cent from 34,515 applications involving Rs 7,656 crore filed in FY22.
For the uninitiated, to boost recovery of the amount stuck in delayed payments to MSMEs, the government in the budget this year had announced amending section 43B of the Income Tax Act. The amendment will allow buyers to claim a tax deduction for payments made to MSMEs only after they actually make the payment to their MSME sellers otherwise they would be liable to pay income tax on it.