Credit and finance for MSMEs: MSME dues pending to be cleared by government departments and central public sector enterprises has been a perennial challenge for the MSME sector. In fact, the amount pending to be cleared to MSMEs stood at Rs 2,679.22 crore in 2,886 delayed payment applications and cases as of March 2, 2022, official data showed. CPSUs had the highest amount pending at Rs 2,123 crore vis-a-vis central ministries and departments which were yet to clear MSME dues amounting to Rs 211 crore and Rs 343 crore respectively.
To address this challenge, the finance minister Nirmala Sitharaman in this year’s budget had proposed that payments to MSME suppliers cannot be claimed by buyers on an accrual basis and cannot be set off against taxable income unless the payment is actually made.
While experts had hailed the decision as a solution for MSMEs to get their payments from private buyers and government enterprises on time, the question was raised around how can MSMEs get government departments, who don’t have a profit and loss account and don’t pay taxes, to pay timely? Ashok Saigal, MD, Frontier Technologies and Co-chairman, CII National MSME Council suggests a way out.