Over Rs 26k crore MSME dues cleared during May-Dec 2020 but govt can’t force buyers to pay: MoS Finance

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February 16, 2021 1:35 PM

Credit and Finance for MSMEs: 4,72,035 invoices involving Rs 10,285 crore were discounted via TReDs platform from April till December 2020. TReDs allows MSMEs to discount their invoices and raise short-term credit from banks to tide over their delayed payment issue.

REAfter the launch of the ECLGS scheme, credit originations, which peaked in June 2020 to 115 per cent YoY growth rate, contracted to around 20 per cent in September 2020.

Credit and Finance for MSMEs: Central ministries and central public sector enterprises (CPSEs) have cleared MSME dues worth Rs 26,821.08 crore during the May-December 2020 period, according to the Finance Ministry’s data. The total dues stood at Rs 34,506.09 crore while dues pending amounted to Rs 7,685.01 crore during the period. The highest procurement by 26 ministries and 105 CPSEs was made worth Rs 6,499.92 crore in December out of which Rs 4,821.90 crore was cleared to MSMEs while Rs 1,678.02 crore was pending at the end of the month. Ministry of Communications, Heavy Industries and Public Enterprises, Petroleum and Natural Gas, Steel, Power, Coal, etc., had received the majority applications for delayed payments by micro and small enterprises, according to the latest data available at the delayed payment monitoring system MSME Samadhaan.

“The Ministry has taken up the subject vigorously with the Central Ministries, Central Public Sector Enterprises (CPSEs) and State Governments and the 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,” MoS Finance Anurag Singh Thakur said in a written reply to a question in the Lok Sabha recently sharing data on the dues cleared. The MSME Ministry had written to 500 corporates in September and another 2,800 such businesses in October to clear pending MSME dues in the respective month.

Also read: MSME lender SIDBI posts Q3 net profit of Rs 630 crore as NII grows, credit growth remains strong

The procurement by ministries and CPSEs in December had increased nearly 3X from Rs 2,349.52 crore of goods and services procured from MSMEs in May, according to the data shared by Singh. While the Finance Minister Nirmala Sitharaman had asked government entities in May last year to clear MSME dues within 45 days, the Department of Expenditure had issued an Office Memorandum in July mandating buyers to pay penal interest of 1 per cent per month for delayed payments beyond the prescribed duration till the date of such payment.

The government had also urged buyers to on-board the Trade Receivables Discounting System (TReDS) platform, which offers MSMEs an option to discount their invoices and raise short-term credit from banks to tide over their delayed payment issue. According to the data shared by Singh, 4,72,035 invoices involving Rs 10,285 crore were discounted via TReDs platform from April till December 2020.

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