Credit and Finance for MSMEs: Even as the government has been urging buyers to pay MSMEs on time, Former MoS Finance Anurag Singh Thakur had informed Lok Sabha in February last year that “the Central Government cannot issue any directions to, or force, State Governments or State PSEs to pay the dues.”
Credit and Finance for MSMEs: Delayed payment applications filed by micro and small enterprises (MSEs) have crossed the jaw-dropping 1 lakh mark, official data showed. The total number of applications on Monday evening stood at 1,00,203 involving Rs 26,210.86 crore since the launch of the delayed payment monitoring portal MSME Samadhaan by the government on October 30, 2017. Data from the portal showed that the applications were filed against central ministries, central departments, central public sector units (PSUs), railway zone, railway division, ordnance factory, state government and PSUs, MSME units, individuals, proprietorships, and others.
Here’s the break-up of 1 lakh applications filed so far:
- Only 12,099 cases (12 per cent) were disposed by MSE Facilitation Councils (MSEFCs). The amount these cases carried was Rs 2,084.18 crore. 9,737 applications amounting to Rs 1,400.99 crore were mutually settled. This implied that MSEs received their dues only in these 21,836 applications (21.8 per cent applications), data revealed.
- 20,974 applications involving Rs 4,450.58 crore were rejected by councils.
- Lastly, the remaining 57,392 (57.2 per cent) were the applications wherein MSEs were yet to see the final outcome.
- This included 30,489 applications amounting to Rs 7,030.07 crore that were yet to be viewed by councils and 26,903 applications involving Rs 9,806.11 crore that were currently under consideration by councils.
“In terms of the provisions of MSME Development Act, MSE Facilitation Councils were established to address the problem of delayed payments of MSEs. The progress of redressal of complaints of delayed payments is very slow. The government should therefore strengthen the MSE Facilitation Councils and provide them more legal powers to address the issue of delayed payments of MSEs. Medium industries should also be covered under the provision of such Facilitation Councils,” Kanika Shriram, Chair, MSME Committee, PHD Chamber of Commerce and Industry told TheSpuzz Online.
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MSEFCs are dispute settlement units set up by state governments in their respective geographies to resolve delayed payment issues. After MSE files an application against the buyer before the concerned MSEFC of its state, the council examines it and accordingly issues directions to the buyer for payment of due amount along with interest as per the provisions under the MSMED Act 2006.
According to MSME Samadhaan, every reference made to MSEFC has to be decided within a period of 90 days from the date of making such a reference. The Department of Expenditure had in July last year issued an Office Memorandum asking buyers to pay penal interest of 1 per cent per month for delayed payments beyond the prescribed duration.
To solve the delayed payment challenge for MSMEs, the Reserve Bank of India had operationalized TReDS in 2017 where receivables of MSMEs drawn against buyers (large corporates, PSUs, government departments, others.) were financed through multiple financiers at competitive rates through an auction mechanism. As of December 3, 2021, 26.64 lakh invoices amounting to Rs 56,694.14 crore were discounted, MSME Ministry had said in its year-end review.
Even as the government has been urging buyers to pay MSMEs on time, Former MoS Finance Anurag Singh Thakur had informed Lok Sabha in February last year that “the Central Government cannot issue any directions to, or force, State Governments or State PSEs to pay the dues.”
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