Millennium Post

Rs 3-lakh-cr relief package for MSMEs but Govts, pvt firms owe them more

The first tranche of the Centre's relief package may have been targeted at the country's micro, small and medium enterprises (MSMEs), but much of the working capital-related distress faced by these units can be traced back to one major source — the government machinery. The total outstanding payments to units in the MSME sector, as on March 31, 2020, was pegged at upwards of Rs 4.95 lakh crore, according to government estimates accessed by The Indian Express.

Sources indicated that over half this amount can be attributed to pending payments by Central government ministries and departments, state governments and public sector units under the Centre and state governments. On Wednesday, announcing the Rs 3-lakh-crore credit guarantee for MSMEs, Finance Minister Nirmala Sitharaman had said that the Centre and Central PSUs would clear pending MSME dues in 45 days.

The only available official estimate is on the MSME Samadhaan website, an online delayed payment monitoring system for settlement of disputes on filing of delayed payments by affected MSMEs, which has listed out payment claims of Rs 40,720 crore as on May 14, a fraction of the total dues.

Of this, 11.6 per cent or Rs 4,738 crore are claims of dues from the Central government. Total mutually settled applications were at 3524, with the settled amount at Rs 288.54 crore, as on Thursday. However, this does not reflect actual government dues owing to a reluctance among MSME unit owners to wrangle with the government over pending payments as this may have a negative impact on fresh order flows.

"The exact data (on MSME dues) is not available. It (the data) is coming from state governments and major industries and other agencies… It will be more than Rs 5 lakh crore," Minister for MSMEs and road transport and highways Nitin Gadkari said in an interview to CNBC TV18 Thursday.

Industry estimates are even higher. "Many Central, state governments, PSUs, corporates owe almost Rs 5.5 lakh crore to MSMEs and almost 30 per cent of it are due over 120 days, 45 per cent are between 60 to 120 days and rest below 60 days. We request the Finance Minister to consider settling the dues with interest so that it will apply pressure to pay as soon as possible," said K E Raghunathan, former National President of All India Manufacturers Organisation.

In September last year, then Expenditure Secretary G C Murmu had said that of the outstanding non-litigated MSME dues of Rs 60,000 crore, payment of Rs 40,000 crore had been cleared.

MSMEs, which make up for about 45 per cent of the country's total manufacturing output, 40 per cent of exports, almost 30 per cent of the national GDP and operate across the value chain. They employ an estimated 11 crore persons, are stressed due to depleting internal reserves and low visibility of demand.

(Inputs and image from

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