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All pending dues to MSMEs will be cleared within 45 days, says FM Sitharaman

Finance minister Nirmala Sitharaman

Finance Minister Nirmala Sitharaman has said that any pending payments related to the micro small and medium enterprises will be cleared within 45 days. reiterated that the Centre will clear all dues “I am personally monitoring this,” Sitharaman told the Lok Sabha during the question hour.

Sitharaman added that this is a critical issue.

Earlier, the India Narrative had reported that though the Centre last year announced a Rs 3 lakh crore collateral-free automatic loans to MSMEs with the aim of easing the liquidity crunch, most of the micro units received little assistance as they have no access to formal credit.

Also read: ADB lowers India's growth projection to 10% this year from earlier 11%

Banks, burdened with high non performing assets – loans that do not fetch returns– and also a high level of compliance are reluctant to provide credit to MSMEs. Over 95 per cent of the MSMEs can be categorised as “micro” and have no access to institutional credit. The scheme essentially is for those who already have access to institutional credit.

This has led to severe cash crunch for the sector, one of the pillars of India’s economy.

There are about 63.05 million micro industries, 0.33 million small, and about 5,000 medium enterprises in the country.

The MSME sector, one of the worst affected in the Covid 19-induced lockdown, is critical for overall employment. The sector, largely categorised as unorganised, employs about 11 crore people and is key for economic revival.