FM urges companies to clear their dues to MSMEs

13 Sep 2022 , 01:35 PM

On Tuesday, Nirmala Sitharaman, the union finance minister, urged large corporations to pay their debts to micro, small, and medium-sized businesses (MSMEs), noting that these companies would require the same level of support from the government and more established companies.

Support for MSMEs extends beyond what the government can provide. It most definitely depends on it. Central and state governments, as well as central and state-owned businesses, still owe money. The Union finance minister remarked at the Hero Mindmine Summit, “But I was astonished to see that large outstanding and overdue payments were also from the big companies.

Sitharaman stated that although she could pressure states, PSUs, and departments, she could only “appeal to the industry.” Can we shorten the period of time that the MSMEs must wait for payment after all the tears we shed on their behalf? ” Sitharaman praised larger businesses for listing the sums owed to MSMEs in their annual filings but emphasized that these corporations also have to pay off these debts.

According to statistics, by the end of 2021, India’s MSMEs accumulated debts of Rs 10.7 trillion. Private clients, governmental agencies, and PSUs are the sources of the payment delays. Of this, Rs 8.73 trillion, or 80% of the total outstanding amount, is owing to micro and small businesses. The worst affected are the micro industries, where 65.73 % of payments are late.

According to Sitharaman, the public believes that the government is responsible for all of these debts, a misconception she set out to dispel. In India, 45 days is the legally advised time frame for paying debts owed to the MSME sector. For tiny industries, it was 195 days in 2020—21, nevertheless.

For the purpose of settling outstanding federal dues to MSMEs, the government has established the portal MSME Samadhan. Data from that website shows that cases involving outstanding debt totaling Rs19,499 crore have been submitted, while cases totaling Rs4,859 crore have been resolved.

Sitharaman reaffirmed her previous statement that the Modi administration will prioritize job creation over everything else in her comments on other subjects. “How would it help the workforce would be the first genuine litmus test when making plans for the Indian economy over the next 25 years. People graduate from high schools and universities with a variety of skill sets, but they all need opportunities for the future. The next 25 years will be devoted to it, she stated.

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