MSMEs receive 78% dues from public sector units

Radheshyam Jadhav Pune | Updated on February 09, 2021 Published on February 09, 2021

Though the Central govt cannot force State govts to make the payments on time, it has mandated a 1% penal interest for the period of delay

Micro, small and medium enterprises (MSMEs) across States have received 78 per cent of the dues in eight months (May – December 2020). Public sector undertakings of the Centre and the States owed over ₹34,500 crore to MSMEs for the work done. Till December 2020, MSMEs have received dues of over ₹26,800 crore.

Industry bodies had demanded that States and Central government departments must immediately pay dues to industries that are passing through a rough period following the Covid-19-led lockdowns. Various industries fulfilled the orders given by government departments but faced problems in receiving payments for the same. According to industry players, MSMEs are facing liquidity and solvency problems. The government has addressed the liquidity issues but industries can’t depend on the government to resolve solvency problems, according to the industry. Industries have to find a way to increase revenue, as well as to reorient and find new avenues and opportunities, industry players had told the government.

Also read: ‘RBI’s special schemes helped MSMEs, NBFCs tide over liquidity crisis’

The Ministry of Finance told the Lok Sabha on Monday that as soon as the government announced the directive for clearing of dues of the MSMEs, the Ministry of MSME got active to play an important role in the clearance of dues.

The data presented by the Ministry to the House shows that from May 2020 to December 2020, Ministries and CPSEs had to pay ₹34,506 crore to MSMEs, of which ₹26,821 crore has been paid by December 2020. ₹Rs 7,685 was pending.

The Ministry said that the government has taken many steps to get the dues payable to MSMEs cleared by public sector units of State and Central governments. “The Ministry has taken up the subject vigorously with the Central Ministries, Central Public Sector Enterprises (CPSEs), State governments and corporate entities. But, it is to be noted that the Central government cannot issue any directions to, or force, State governments or State PSEs to pay the dues,” the Ministry told Lok Sabha.

In order to promote greater discipline and timeliness in payment to vendors, the government has issued guidelines that whenever a Consignee Receipt and Acceptance Certificate (CRAC) in the Government e-Market place (GeM) is issued by a buyer and payment is not made within 10 days thereafter, the buyer organisation is required to pay penal interest of 1 per cent per month for the delayed payment beyond the prescribed timeline till the date of such payment.

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on February 09, 2021
  1. Comments will be moderated by The Hindu Business Line editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.