Rs 10.7 lakh crore of MSMEs money locked up
India’s MSME sector accounts to 4/5th of the employment sector. Even after being one of the key drivers in Indian economy, it faces a cash flow crisis due to the delayed payments, impacting the ease of doing business. This segment has been challenges firstly due to demonetisation then the pandemic. A revised restructure of payment cycle can bring a change in their financial growth and a change in the economy.
I am writing to share with you India’s first comprehensive report on the impact of delayed payments on MSMEs was presented to Mr. Narayan Rane, Honorable Minister of MSME Govt. of India. The report titled ‘Payment On Time; Growth Har Time’ written by Global Alliance for Mass Entrepreneurship (GAME) and Dun & Bradstreet (D&B) India, estimates that INR 10.7 Lakh Crore, i.e., about 6% of the Gross Value Added (GVA) of Indian businesses, is locked up annually as delayed payments due from buyers to MSME suppliers. The Report is the first of its kind to comprehensively uncover the issue of delayed payments and looks into the impact of this practice on the MSMEs’ survival and growth, supply chains and the overall economy. The Report draws from both public and proprietary datasets as well as original qualitative research conducted among micro and small businesses and was supported by Omidyar Network India (ONI).
Highlighting the key role of MSMEs in powering the Indian economy to its $5 trillion dollar future, Narayan Rane said, “Delayed payments from buyers weaken the MSME suppliers and impede their growth. The government has been implementing a series of interventions to address this problem. At the same time, given the complexity of the problem, a lasting solution will need all stakeholders- the buyers, solution providers and MSMEs -to come together to address it.”
“Delayed payments are a significant impediment to the growth and competitiveness of MSMEs. While we had a sense of the overall impact of the problem, this study delves deeper into the problem and explores different nuances within the segment, which will aid policymakers and lenders develop differentiated solutions. There is an urgent need for collective action to solve delayed payments and it should be based on a profound understanding of its real impact on the economy,” said Dr. Arun Singh, Global Chief Economist, Dun and Bradstreet.
Attached is the press release on the report. Let us know if you would be interested in carrying the piece.
Dr. Arun Singh, Global Chief Economist, Dun and Bradstreet will be happy to speak to you at length on the impact of delayed payments on MSMEs.