Underspending on MSME schemes increased in 2020-21, shows govt data

Credit and Finance for MSMEs: Out of Rs 7,572.20 crore earmarked for the MSME Ministry in the Union Budget 2020-21, Rs 5,647.50 crore was spent across various MSME schemes.

msme schemes
Technology Upgradation and Quality Certification was one of the few categories where expenditure had exceeded the budget estimates. (Image: pixabay)

Credit and Finance for MSMEs: The underspending across various schemes related to the development of the micro, small and medium enterprise (MSME) sector by the MSME Ministry increased during the Covid year 2020-21, government data revealed. Out of Rs 7,572.20 crore earmarked for the MSME Ministry in the Union Budget 2020-21, Rs 5,647.50 crore was spent across various MSME schemes while the remaining 25 per cent or around Rs 1,924.7 crore was left unspent. In comparison, 99.39 per cent of the allocated Rs 6,552.61 crore to the MSME Ministry during 2018-19 and 95.81 per cent of the Rs 7,011.29 crore allocated during 2019-20 were spent with only less than 1 per cent and 4 per cent of underspending respectively. 

“The data of expenses between budgeted and actuals clearly exposes the lip service to MSMEs by the government. Most MSMEs are finding it difficult to sustain operations without significant relief from the Ministry of MSME. Due to the Covid impact in 2020-21, the ministry spent around 25 per cent less than the budgeted amount and in fact, 14 per cent less than the actual amount of 2019-20” KE Raghunathan, Convenor and Spokesperson for Consortium of Indian Associations told Financial Express Online.

The data shared by the MSME Minister Narayan Rane last week in a written reply to a question in Lok Sabha on details of funds released under various MSME schemes during the last three years showed the amount spent across nine broad categories. Below are the details of the amount earmarked for various MSME schemes, sub-schemes, and related expenditure during 2020-21 based on the data shared in the Parliament.

Development of Khadi, Village & Coir Industries: Total Rs 1525.94 crore allocated; Rs 947.52 crore spent. Sub-schemes included: 

  • Khadi Grant: Rs 383.60 crore allocated; Rs 222.17 crore spent 
  • Scheme for Fund for Regeneration of Traditional Industries (SFURTI): Rs 464.85 crore allocated; Rs 349.12 crore spent 
  • Coir Vikas Yojna: Rs 103.87 crore allocated; Rs 80.44 crore spent 
  • Khadi Vikas Yojana: Rs 370 crore allocated; Rs 258.44 crore spent 
  • Gramodyog Vikas Yojana: Rs 102.92 crore allocated; Rs 37.35 crore spent 

Prime Minister’s Employment Generation Programme (PMEGP) and Other Credit Support Schemes: Rs 2,800 crore allocated; Rs 2,413.21 crore spent. Related schemes below: 

  • PMEGP: Rs 2,500 crore allocated; Rs 1,905.80 crore spent 
  • Credit Support Programme: Rs 100 crore allocated; no spending 
  • Interest Subvention Scheme for Incremental Credit to MSMEs: Rs 200 crore allocated; Rs 350 crore spent 
  • Distressed Asset Fund- Subordinated Debt for Stressed MSMEs: data on amount allocated wasn’t shared; Rs 157.41 crore spent 

Marketing Promotion Scheme: Rs 103.63 crore allocated; Rs 14.49 crore spent. Related schemes included: 

  • Marketing Development Assistance (MDA): Rs 83.59 crore allocated; Rs 12.69 crore spent 
  • Marketing Assistance Scheme (MAS): Rs 4 lakh allocated; no spending 
  • International Cooporation Scheme: Rs 20 crore allocated; Rs 1.80 crore spent 

“Underspending could be due to reasons such as first, number of MSMEs would have drastically gone down; second, some MSMEs might have lost eligibility due to adoption of capital-intensive technologies to substitute labour. This in fact happened in some southern states like Tamil Nadu and Karnataka, as I have been told. However, not all MSMEs have suffered due to Covid. Third, some MSMEs might have suspended production operations due to inadequate recovery of demand, including export demand,” M H Bala Subrahmanya, Professor – Department of Management Studies, Indian Institute of Science – Bangalore told Financial Express Online.

Entrepreneurship and Skill Development Programme: Rs 611.92 crore allocated; Rs 164.38 crore spent under the following sub-schemes: 

  • Mahatma Gandhi Institute for Rural Industrialization (MGIRI): Rs 11 crore allocated; Rs 6.19 crore spent 
  • Promotional Services Institutions & Programmes: Rs 320.92 crore allocated; Rs 130.40 crore spent 
  • Assistance to Training Institutions: Rs 30 crore allocated; Rs 24 crore spent 
  • Information, Education and Communication: Rs 6.55 crore allocated; Rs 3.79 crore spent 
  • MSME Fund: Rs 50 crore allocated; no spending 
  • Fund of Funds: Rs 200 crore allocated; no spending 

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Infrastructure Development Programme: Rs 1,460 crore allocated but only Rs 795.08 crore spent. Schemes under the programme included: 

  • Infrastructure Development and Capacity Building (Tool Rooms + Clusters + Northeastern region and Sikkim+ TC/TS): Rs 801.70 crore allocated; Rs 395.77 crore spent 
  • Infrastructure Development and Capacity Building: Rs 400 crore allocated; Rs 327.10 crore spent 
  • Establishment of New Technology Centres/ Extension Centres Hub & Spoke: Rs 200 crore allocated; Rs 48.58 crore spent 
  • Capital Outlay on Public Works: Rs 58.30 crore allocated; Rs 23.63 crore spent 

Research, Studies & Development: Rs 178.51 crore allocated; Rs 121.58 crore spent across the below schemes: 

  • Upgradation of Data Base: Rs 27.25 crore allocated; Rs 1.21 crore spent 
  • Survey, Studies and Policy Research: Rs 1.26 crore allocated; Rs 37 lakh spent 
  • National Scheduled Caste/Scheduled Tribe Hub Centre: Rs 150 crore allocated; Rs 120 crore spent 

“I’m surprised where they have spent this Rs 120 crore for the SC/ST Hub because I am the Chairman of this hub under MSME Ministry. I don’t know where they have spent the amount,” Milind Kamble, Chairman, National SC/ST Hub and Founder-Chairman, Dalit Indian Chamber of Commerce & Industry (DICCI) told Financial Express Online. 

Technology Upgradation and Quality Certification was one of the few categories where expenditure had exceeded the budget estimates, thanks to National Manufacturing Competitiveness Programme (NMCP). The government had allocated a total of Rs 835.35 crore for the scheme while actual expenditure stood at Rs 1,133.46 crore during 2020-21. 

  • A scheme for Promotion of Innovation, Rural Industry & Entrepreneurship (ASPIRE): Rs 30 crore allocated; Rs 13.26 crore spent 
  • National Manufacturing Competitiveness Programme (NMCP) CLCS-TUS: Rs 805.35 crore allocated; Rs 1,120.20 crore spent 

Development Commissioner (MSME): Rs 34.43 crore allocated; Rs 34.28 crore spent 

Secretariat Economic Services (establishment-related expenses for MSME Ministry): Rs 22.42 crore allocated; Rs 23.50 crore spent 

“Except for the Technology Upgradation and Quality Certification scheme and Secretariat Economic Services, all other areas saw underspending such as KVIC with 45 per cent amount left unspent; 19 per cent amount was left unspent in PMEGP, 85 per cent in marketing and promotion, 80 per cent in entrepreneurship and skill development, 50 per cent in infrastructure programme, and 30 per cent in research and development. What will we call this inaction as? Raghunathan added.

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First published on: 15-02-2022 at 09:00 IST
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