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Govt asks PSUs to clear vendor dues by Oct 15 to boost spending and growth

Finance Minister Nirmala Sitharaman reviewed capital spending programmes with heads of 32 CPSEs and said state-owned companies have been asked to front-load investment for the second half of the current fiscal.

Govt asks PSUs to clear vendor dues by Oct 15 to boost spending and growth

Monday September 30, 2019 , 3 min Read

nirmala sithamaran

The government on Saturday set October 15, 2019 as the deadline for central PSUs to clear overdue payments to vendors and exhorted them to front-load capital expenditure as it looks to lift economic growth from a six-year low.


Finance Minister Nirmala Sitharaman, who reviewed capital spending programmes with heads of 32 maharatna and navratna Central Public Sector Enterprises (CPSEs), said state-owned companies have been asked to front-load investment for the second half of the current fiscal.


On Friday, she said various ministries have cleared Rs 40,000 crore out of Rs 60,000 crore due mainly to MSMEs for supply of goods and services.


CPSEs have also been asked to submit a roadmap for the next four quarters by October 15, she said.


This meeting was held as part of the series of consultations the finance minister has been holding with various stakeholders to brainstorm on measures needed to accelerate economic growth, which dipped to a six-year low of five percent in the first quarter of 2019-20.


"It was decided that all pending dues to be cleared by October 15 and by then they will have a portal through which all dealers and contractors shall start monitoring their payment," Sitharaman said.


"Meeting (will be held) with the RBI and the finance secretary and selected number of CPSEs to talk about why bank guarantees are becoming a big hitch or hurdle in government paying up the 75 percent post arbitration awards. If that is the case, I want RBI's help also," she said.


Also, CPSEs have been asked to detail the lifespan of arbitrations that lock payments after disputes with vendors and contractors, she said.


The finance minister stressed that capital expenditure (capex) needs to be given a vigorous push in the next two quarters.


CPSEs must ensure that regular payments are cleared expeditiously as it spurs investment cycle and establish the e-billing portal for enabling stakeholders to track the status of payments, she said, adding special efforts must be made to clear dues of MSMEs and resolve cases on the SAMADHAN portal of the Department of MSME.


Finance Secretary Rajiv Kumar said 34 central PSUs have already spent Rs 48,077 crore till August and have detailed spending of another Rs 50,159 crore till December 2019. An additional Rs 54,700 crore would be spent in the January-March quarter.


The expenditure plan is on track and companies have expressed their willingness to meet the target set for the current fiscal, he said.