Credit and Finance for MSMEs: Even as the Modi government has been urging purchasers to clear MSME dues on time, the quantity of delayed payment applications filed by micro and modest sellers has jumped 88 per cent in the previous 12 months, according to the government information. From 37,465 applications involving Rs 9,901.31 crore filed as of March 4, 2020, the quantity has enhanced to 70,451 applications involving Rs 19,557.91 crore, showed information readily available with the MSME Ministry’s delayed payment monitoring method MSME Samadhaan. Importantly, the jump in the quantity of applications disposed by MSE Facilitation Councils (MSEFC) has been greater at 109 per cent from 3,012 applications to 6,306 applications throughout the stated period. The quantity involved in applications disposed was Rs 972 crore as of March 4, 2021, up 66.7 per cent from Rs 583.27 crore as of March 4, 2020. However, the share of disposed applications by MSEFC out of total applications filed stood at only 8.9 per cent.
MSEFCs are dispute settlement units established by state governments in their respective geographies to resolve challenges about delayed payments faced by modest corporations. According to the MSME Act, 2006, MSEFC of a state immediately after examining the case filed by the MSE unit challenges directions to the purchaser for payment of due quantity along with interest. Every application filed to MSEFCs has to be decided inside a period of 90 days from the date of generating such a reference.
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The MSME Ministry had initially written to 500 corporates in September final year followed by reaching out to more than 2,800 entities to settle MSME dues on priority. The government had also reminded Central Public Sector Enterprises (CPSEs) and other firms to join the bill discounting platform TReDS as purchasers to support ease working capital anxiety amongst MSMEs. Finance Minister Nirmala Sitharaman had in May final year as effectively asked government bodies to clear pending MSME dues inside 45 days. Moreover, the Department of Expenditure had also issued an Office Memorandum in July asking purchasers from MSMEs to spend a penal interest of 1 per cent per month for delayed payments beyond the prescribed duration.
However, the government couldn’t force at least state government or public sector enterprises to clear dues of modest enterprises. “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 had stated in a written reply to a query in the Lok Sabha lately. Meanwhile, the applications rejected by MSEFCs so far stood at 12,359 involving Rs 2,620.44 crore up from 6,346 rejected instances involving Rs 1,447.17 crore. Separately, 6,298 instances have been mutually settled among MSE and its purchaser involving Rs 926.05 crore, as of March 4, 2021.