Centre, State Govts and Pvt Sector Owe Over Rs 5 Lakh Crore in Unpaid Dues to MSME Sector: Gadkari

This startling figure is owed to the sector by the Centre, state governments, PSUs and corporates.

New Delhi: While the Narendra Modi government may have announced a Rs 3 lakh crore collateral-free automatic loan package aimed at resolving the working capital and financing woes of India’s MSMEs, their distress may have been exacerbated by the fact that the sector is owed over Rs 5 lakh crore in unpaid dues by the Centre, state governments and the private sector.

The ‘official estimate’ for unpaid dues to the sector is found on the MSME Samadhaan portal, a website that tracks settlement of delayed payment filings put up by affected businesses.

But MSME minister Nitin Gadkari says this doesn’t represent the whole picture.

“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 on Thursday.

According to the Indian Express, over half of this Rs 5 lakh crore can be chalked up to pending payments by the Centre (ministries, departments, public sector units) and state governments (departments and state PSUs).

“Many Central, state governments, PSUs, corporates owe almost Rs 5.5 lakh crore to MSMEs and almost 30% of it are due over 120 days, 45% 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,” K.E. Raghunathan, former national president of the All India Manufacturers Organisation, told the newspaper.

‘Less than Rs 10,000 crore’

On Friday evening though, expenditure secretary T V Somanathan clarified that dues from the Centre and PSUs are less than Rs 10,000 crore.

“As of now, dues from central govt and PSUs are less than Rs 10,000 crore. Rs 5 lakh crore is an aggregation of many different things…,” Somanathan said in response to a question.

Earlier this week, while announcing the MSME package, finance minister Nirmala Sitharaman said that all unpaid dues to the sector would be cleared within 45 days. She did not, however, provide a figure for how much the Centre owed the distressed industry.

In India, MSMEs employ over 10 crore people and contribute to almost 30% of the country’s GDP.

Update: This story was updated at 6:56 PM to add a statement made by expenditure secretary T V Somanathan at the Friday press conference regarding the quantum of the Centre’s dues.