Union Minister Nitin Gadkari has said that micro, small and medium enterprises (MSME) sector is on the edge of collapse and urged major industries to release the outstanding dues to such companies within a month. He said the position of MSMEs was worst as they were now engaged in a battle for their survival. He also noted that the pendency of dues owed to MSME units by the central government, state governments, public sector undertakings and major industries was very high.
The minister further said he was trying to introduce a scheme envisaging setting up of a rolling fund where the interest cost on the payments due to MSMEs shall be borne either by the supplier or the purchasing industry. He said rolling fund will be helpful for MSMEs to get their working capital. Last month, the minister had said the government will set up a Rs 1 lakh crore fund to repay outstanding payments to MSMEs owed by the central and state government undertakings as well as major industries.
Gadkari had said he has devised a scheme to set up the fund, and the proposal may be placed before the Cabinet for approval once the finance ministry gives its go-ahead. He said ‘we have decided to set up a fund of Rs 1 lakh crore. We will insure this fund with the government paying the premium. We will come up with a formula for sharing of the interest burden between the paying entity and payment-receiving entity and banks against this fund, for the payments due to MSMEs which are stuck with the PSUs, centre and state governments and major industries.’