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MSME dues: Over Rs 75,000 crore paid by govt between June 2020 and October 2021, says FinMin

Credit and Finance for MSMEs: Announcing the Covid-related measures, Finance Minister Nirmala Sitharaman had in May last year said that the government and CPSUs will release MSME receivables in 45 days.

Credit and Finance for MSMEs: Government ministries, departments, and central public sector units (CPSUs) have cleared MSME dues worth Rs 75,471.78 crore during Covid. The payment for goods procured was made during June 2020 – October 2021 period, according to the data on dues paid shared by Minister of State for Finance Minister Pankaj Chaudhary in a written reply to a question in Lok Sabha on Monday. However, the details 

on the total dues and dues pending weren’t disclosed. Also, it wasn’t clear whether the amount paid included payments from state governments and PSUs as well.

Announcing the Covid-related measures, Finance Minister Nirmala Sitharaman had in May last year said that the government and CPSUs will release MSME receivables in 45 days (from date of receipt). In July this year as well, the minister had categorically said that the “central government” has taken this position that any pending payments to MSMEs will have to be given in 45 days.

“It is not clear whether this figure included payments by state PSUs also. My payment as well of Rs 5 crore has been stuck for the past seven months with the local electricity board. The government must have paid the Rs 75k crore but they never clearly say that such payments involve those by state units as well. Generally, they refer to the central government PSUs whenever they mention government PSUs,” Pankaj Kumar, Promoter at UP-based electricals goods manufacturer A-Powertech Electricals and immediate past President at Indian Industries Association told Financial Express Online.

Importantly, the Rs 75k-crore amount cleared was only 15 per cent of the Rs 5 lakh crore in outstanding dues owed to MSMEs by the central and state departments and private sector as well. A PTI report had noted that in a video conference with the members of Calcutta Chamber of Commerce in May last year, the former MSME Minister Nitin Gadkari had said, “State governments, their ministries and public sector undertakings, Government of India, its ministries and undertakings, and major industries combined owe an estimated Rs 5 lakh crore to MSMEs, money that is stuck and not cleared.”

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However, as per the data from the delayed payment monitoring portal MSME Samadhaan, the total amount involved in applications filed by MSMEs for payments stuck as of December 13, 2021, since October 30, 2017, stood at Rs 25,616 crore. On the other hand, the total amount involved in the mutually settled cases and those disposed by MSE Facilitation Councils, wherein MSMEs had received their dues, was only Rs 3,302.98 crore. This indicated that many MSMEs hadn’t even filed applications for delayed payments. “MSME Samadhaan only reflects applications that are filed. 90 per cent MSMEs, whose payments are due, avoid filing applications. Hence, this Rs 75k crore amount must have been paid by the government as the actual dues must be much more than that amount. Also, the government didn’t say that this was delayed payments. Hence, this might be the on-time payment to MSMEs that has been cleared,” Vishnu Goyal, President, Haryana Chamber of Commerce and Industry told Financial Express Online.