Credit and finance for MSMEs: Delayed payment applications filed by micro and small enterprises (MSEs) against central public sector units and departments dropped 11.7 per cent to 31,192 in the calendar year 2022 from 35,347 in 2021, according to the official data. The amount involved in these applications also dropped by 9 per cent from Rs 7,849 crore to Rs 7,128 crore. However, in comparison, 31,614 applications involving Rs 9,693 crore payment were filed by MSEs in 2020, indicating the Covid-induced impact on trade and transactions in 2021, as per the delayed payment monitoring portal Samadhaan’s data on MSME Dashboard.
However, the number of applications disposed or cleared by MSE Facilitation Councils, which are essentially dispute settlement units established by state governments in their respective geographies to address delayed payments cases filed by small businesses, declined in 2022, indicating lesser disputes resolved. According to the data, out of the total applications filed, 1,056 applications involving dues worth Rs 71 crore were disposed by the councils across India in 2022 vis-a-vis 3,815 applications with Rs 580 crore cleared in 2021 and 6,232 applications involving Rs 1,500 crore cleared in 2020 by the councils.
Also read: Only around 20,000 MSME delayed payment cases disposed of in five years; doubled in past 12 months
The number of such councils had increased to 113 in the current fiscal from 79 in FY20. Importantly, states/UTs viz., Delhi, Jammu & Kashmir, Karnataka, Maharashtra, Punjab, Rajasthan, Tamil Nadu, Telangana, etc., have more than one council. The information was shared by the minister of state for MSMEs Bhanu Pratap Singh Verma in a return reply to a question in the Lok Sabha in December 2022.
While the amount involved in over 1.30 lakh applications filed by MSEs since the launch of the Samadhaan portal in October 2017 was Rs 33,190 crore at the time of filing this report, of which 21,955 applications involving dues worth Rs 4,166 crore were disposed, there are no official estimates about the aggregate amount stuck in delayed payments to small businesses by their customers.
Also read: Delayed payment complaints by small businesses against ministries, PSUs drop in H1 FY23
Nonetheless, according to a report launched by the non-profit entity for promoting entrepreneurship Global Alliance for Mass Entrepreneurship (GAME) and analytics company Dun & Bradstreet (D&B) in June 2022, Rs 10.7 lakh crore, amounting to 5.9 per cent of India’s gross value added (GVA), is locked up annually in delayed payments to MSMEs. “If India is to become a $5 trillion or even $10 trillion economy, it must ensure that its economic actors are reliable and trusted, and timely payments are made to MSMEs by buyers,” the report had said.
Mostly MSEs have been at the receiving end of the delayed payment crisis due to a power asymmetry between smaller suppliers and large buyers. In particular, around 80 per cent of the annual delayed payments amount is owed to MSEs.
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