Govt, big pvt firms owe Rs 6 lakh cr to MSMEs; Centre to address issue in 3 months: Gadkari in RS

MSME Minister Nitin Gkari on Thursday expressed serious concern over n-payment of nearly Rs 6 lakh crore dues to micro and small enterprises by government and large private firms, and said Centre is working to find a solution of this serious problem.

Responding to a discussion in Rajya Sabha on working of Ministry of Micro, Small and Medium Enterprises (MSME), Gkari said he has also sent a proposal to finance ministry suggesting measures for providing relief to micro, small and medium enterprises to mitigate impact of coronavirus outbreak.

minister anunced that government will revamp Khi and Vill Industries Commission (KVIC) within three months and make it more export-oriented.

Gkari also told House that all banks, including scheduled, private and cooperative, as well as n-banking financial companies (NBFCs) are w allowed to lend money to MSME sector. He said loans sanctioned and disbursed under various schemes will be monitored through a central portal in his ministry.

" government undertakings procure products but do t pay for 3-4 months. MSMEs are on verge of collapse. Passing a legislation is easy... re are 20,000-22,000 cases. As per my estimates, big industrialists, state and central government undertakings owe Rs 5.5 lakh crore to Rs 6 lakh crore to small industries," Gkari said.

"This is a serious situation. We are in discussion with finance ministry and we will find out some solution to it... We have to give ir payments within three months," he ded.

On concerns raised by various members about impact of coronavirus outbreak on MSME sector, Gkari said sector is facing a big challenge and he is aware of problem.

"I have sent recommendations to finance minister," he said ding that it would t be fair on his part to reveal details as a meeting is scheduled for Friday.

Finance Minister Nirmala Sitharaman has called a meeting on Friday to discuss proposals, minister said.

"re has been impact of coronavirus on MSME sector... It is a natural calamity," Gkari said.

On Thursday, fourth death due to coronavirus infection was reported in country and more than 170 people have tested positive so far.

Highlighting achievements of MSME ministry, Gkari said six lakh industrial units have been restructured under RBI-appointed U K Sinha Committee on MSMEs.

A proposal to create a "Fund of Funds" of Rs 10,000 crore has been approved by finance ministry and Cabinet d will be sought on it, he ded.

In dition, finance ministry has approved a proposal for a "Distressed Asset Fund" of Rs 10,000 crore and ministry will send it for Cabinet d, he ded.

On KVIC, minister said he will revamp it in three months and commission will be strengned professionally.

ministry will appoint a financial consultant to study and suggest methods to strengn KVIC.

"A three-member committee under chairmanship of secretary will be set up and we will revamp KVIC in three months and make it export-oriented," minister said.

Ackwledging challenges faced by sector, Gkari said government believed in turning "challenges into opportunities".

Earlier, funding under MSME was limited to only scheduled banks but w all banks, NBFCs and cooperative banks can lend to m.

About credit flow in 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 khi, sale of its products has increased to about Rs 4,500 crore this fiscal as against Rs 3,215 crore in previous financial year, he said.

To promote MSMEs, ministry has created a "Bank of Ideas" and a ranking system for states will be approved.

Highlighting sector's achievement, minister said re are 6.3 crore units that produce about 8,000 products and employ over 12 crore people.

MSME sector accounts for 33 per cent of manufacturing output and 45 per cent of total exports of country, he said.

On some members' concern over decline in budget for sector, he said ministry's budget allocation has grown to Rs 7,572.20 crore in 2020-21 from Rs 3,007.42 crore in 2015-16.

Under Prime Minister Employment Generation Programme, in current year, 58,000 units have been approved so far with a subsidy of Rs 1,712 crore.

minister ded that after review of n-sanction of loans with bank officials, "almost 22,000 proposals are to be disbursed in March 2020".

He ded that banks h rejected 11 per cent proposals, saying it fell out of service area and ar 11 per cent as targets were reached.

Emphasising need for setting up clusters, minister said government is providing Rs 5 crore grant for setting up such clusters involving 500 persons which can boost local ecomy.

Earlier, Congress member Jairam Ramesh suggested that those t making payments above Rs 1 crore to MSMEs should be "named and shamed" by putting a defaulters list on website.

Lauding Gkari for "n-toxic brand of politics" and "dynamism", senior Congress leer praised minister and expressed faith in his ability to revamp sector.