Micro, Small & Medium Enterprises (MSMEs), in a recent meeting with Finance Minister Nirmala Sitharaman, raised the issue of the nearly Rs 48,000 crore of their payments stuck with PSUs.
Sitharaman assured stakeholders that the payments would be released in a time-bound manner. While the MSMEs sought the release of payments within the next 45 days, Sitharaman did not state a particular timeline.
Anil Bhardwaj, Secretary General, FISME said a timeframe would have been better since it would allow MSMEs to get a bank discount or guarantee against the said payment. The delay in payments has led to working capital issues.
In 2012, the Centre implemented the Public Procurement Policy to encourage MSMEs. Under this policy, it is mandatory for PSUs to acquire a certain percentage directly from MSMEs.
The key sectors where public procurement takes place is railways and electricity board and aeronautics. The railways are a huge buyer from MSMEs with demands for carpets, fabrics and consumables. Bhardwaj says there is a delay of 4-5 months in payment from railways. The main issue is of†process-related delays due to bureaucracy which in turn results in delayed payments.
Since the payments are in small amounts, the government may not be empathetic to the problem of suppliers.
The electricity board acquires transformers and cables in huge quantities from MSMEs. Payments are made usually six months to a year after procurement.
S.K Gagroo, Secretary General, CISME said it is easier to receive payments from the Centre. However, payment due from state governments takes time as they seem to have a genuine fund constraint.
While there are some payments withheld due to litigation, Bhardwaj said the Finance Minister directed concerned departments to start the pending payments with no disputes.