Govt, big pvt firms owe Rs 6 lakh cr to MSMEs; Centre to address issue in 3 months: Gadkari
The MSME minister also announced various measures to strengthen the Khadi and Village Industries as well.
Micro, Small, and Medium Enterprises (MSME) Minister Nitin Gadkari expressed serious concern over non-payment of nearly Rs 6 lakh crore dues to Indian MSMEs by the government and large private firms on Thursday in the Rajya Sabha. He also said the Centre is working to find a solution to the predicament.
The minister announced that the government will revamp the Khadi and Village Industries Commission (KVIC) within three months, and endeavour to make it more export-oriented.
“A three-member committee under the chairmanship of secretary will be set up, and we will revamp KVIC in three months and make it export-oriented,” the minister said.
Gadkari also told the House that all banks, including scheduled, private, and cooperative, as well as non-banking financial companies (NBFCs) are now allowed to lend money to the MSME sector. He said loans sanctioned and disbursed under various schemes will be monitored through a central portal in his ministry.
“MSMEs are on the verge of collapse. As per my estimates, big industrialists, state and central government undertakings owe around Rs 5.5 lakh crore to Rs 6 lakh crore to small industries,” Gadkari said.
Responding to a discussion in the Rajya Sabha on the working of the MSME Ministry, Gadkari said he has also sent a proposal to the finance ministry suggesting measures for providing relief to this segment to mitigate the impact of the coronavirus outbreak.
Covid-19 has taken the country by storm. So far, more than 170 people have been tested positive in India, and one of the worst affected would be the small businesses.
On concerns raised by various members about the impact of the coronavirus outbreak on the sector, Gadkari said the sector is facing a big challenge and he is aware of the problem.
“I have sent recommendations to the finance minister,” he said, adding that it would not be fair on his part to reveal the details as a meeting is scheduled for Friday.
Highlighting the achievements of the ministry, Gadkari said that six lakh industrial units have been restructured under the RBI-appointed UK Sinha Committee on MSMEs.
A proposal to create a “Fund of Funds” of Rs 10,000 crore has been approved by the finance ministry, and the Cabinet nod will be sought for it, he added.
In addition, the finance ministry has approved a proposal for a “Distressed Asset Fund” of Rs 10,000 crore, and the ministry will send it for the Cabinet nod, he added.
Funding of MSMEs
Earlier, funding under MSME was limited to only scheduled banks. But now, all banks, NBFCs, and co-operative banks can lend money to MSMEs.
Speaking about the credit flow in the MSME sector, he said that by February 2020, Rs 50,532 crore has been disbursed in 50,532 loans sanctioned.
Due to a number of steps to promote khadi, sale of its products has increased to about Rs 4,500 crore this fiscal as against Rs 3,215 crore in the previous financial year, he said.
In an endeavour to promote MSMEs, the ministry has also created a “Bank of Ideas” and a ranking system for states will be approved.
Highlighting the sector’s achievement, the minister said there are 6.3 crore units that produce about 8,000 products and employ over 12 crore people.
Under the Prime Minister Employment Generation Programme, in the current year, 58,000 units have been approved so far with a subsidy of Rs 1,712 crore.
Emphasising the need for setting up clusters, the minister said the government is providing Rs 5 crore grant for setting up such clusters involving 500 persons, which can boost the local economy.
The MSME sector accounts for 33 percent of the manufacturing output and 45 percent of the total exports of the country, he said. It is essential for Indian MSMEs to scale growth in order to help achieve the aspirational goal of becoming a $5 trillion economy.
Earlier, Congress leader Jairam Ramesh had suggested that those not making payments above Rs 1 crore to MSMEs should be “named and shamed” by putting a defaulters list on the website.
(Edited by Megha Reddy)
(Disclaimer: Article written with additional inputs from PTI)