A snap poll conducted by Confederation of Indian Industry (CII) among its micro, small and medium scale enterprise (MSME) members has shown that 32 percent of their outstanding dues mostly from various government departments and public sector enterprises are pending for more than two years. The cumulative pending payments for the 450 respondents alone comes to Rs 1,819 crores. Bulk of the dues - Rs 1,709 crores are from government entities.
The poll was conducted after finance minster Nirmala Sitharaman announced a stimulus package to boost liquidity availability to MSMEs with 100 percent government guarantee and also instructed quick clearance of pending dues to MSMEs from various government agencies.
According to Chandrajit Banerjee, Director General, CII, the payments need to be settled soon to save MSMEs from solvency. Out of the total delayed payments amount, manufacturing contracts account for Rs 153 crores, services contracts for Rs 723 crores and other sectors together account for Rs 930 crores. "Almost Rs 723 crores are delayed payments from services sector areas including EPC contracts (Rs 92 crores), Engineering contracts (35 crores), IT & ITES (47 crores) and other services (Rs 113 crores)," a CII statement said.
The amount stuck in disputes comes to Rs 895 crores. Appreciating the recent announcement of finance minister, Banerjee suggested various measures to alleviate the issue of pending payments to MSMEs, including tax refunds and incentives.
First of all, the apex industry chamber wants the government to monitor payment delays by central public sector undertaking (CPSUs) to MSMEs closely through a portal for complaints and ensure necessary funds are provided and utilised for this purpose. They also said that in order to overcome the delays in payments to MSMEs due to disputes, all pending GST refunds should be cleared immediately.
"All incentives due to MSMEs under various central and state schemes should be released immediately and banks should provide additional reconstruction term loans to MSMEs impacted by the lockdown, with Government of India offering a guarantee upto 20 per cent of the default," Banerjee said.