CPSEs delay payments to MSMEshttps://indianexpress.com/article/news-archive/web/cpses-delay-payments-to-msmes/

CPSEs delay payments to MSMEs

Reeling under a liquidity crisis and demand slowdown,Micro,Small and Medium Enterprises are yet to get their dues from large central public sector enterprises...

Reeling under a liquidity crisis and demand slowdown,Micro,Small and Medium Enterprises (MSMEs) are yet to get their dues from large central public sector enterprises (CPSEs),many of which are Navaratna companies.

Despite government directions to expedite payment to the sector that supplies goods and services,MSME industry associations said that their members are awaiting payments. “There has been little effect of government issuing directions to CPSEs to pay immediately. Due to delayed payments,the units are defaulting on bank loans,which are being declared as non-performing assets. Slowdown shouldn’t lead to closedown of this huge sector,” said Sudarsheen Sareen,national president,All India Confederation of Small and Micro Industries Associations. The pending dues of all central and state public enterprises put together amount to hundreds of crores,he added.

In a meeting with the industry associations last week,Principal Secretary to the Prime Minister,TKA Nair,who chaired the meeting,assured industry bodies that government will take swift action to meet financial requirements of the unorganised sector. Admitting that there is a delay between policy suggestion and implementation,Nair is reported to have said that the government will look at creation of a special fund for advancing loans to this sector.

In fact,many of central and state PSEs have stopped placing orders and are refusing to take deliveries of finished goods,said an industry body head. The worst off are state electricity boards,which are supplied hardware equipment like conductors by the MSME sector,said Indian Federation of Tiny Enterprises secretary-general B L Behati. Inability to access credit is throttling the sector,despite recent steps taken by government to ease the liquidity situation including rate cuts announced by the apex bank. “Banks are strengthening their position by purchasing government bonds out of additional liquidity made available by stimulus measures,thereby suffocating the MSME sector of credit requirements,” said Savittur Prasad,joint secretary,National Commission for Enterprises in Unorganised Sector (NCEUS).