The Department of Expenditure, Ministry of Finance, has been monitoring, on a monthly basis, the performance of the 32 top Maharatna and Navratna Central Public Sector Enterprises (CPSEs) to review their capital expenditure and the dues to vendors with specific emphasis on MSME vendors since August 2019.

Clear directions have been given that the CPSEs must ensure that regular payments are cleared expeditiously as it spurs investment cycle. Special efforts must be made to clear dues of MSMEs and resolve cases on the SAMADHAN portal of Department of MSME. Secretary (Expenditure) wrote a letter in the last week of April 2020 to the Secretaries of the Ministers and Departments requesting them to monitor the due payments by the CPSEs.

Public procurement as a percentage of GDP in the country is estimated between 20% to 22%. The share of the gross turnover of CPSEs to the Gross Domestic Product (GDP) of India at current prices is around 15 to 16%. The Government wants the CPSEs to double their contribution to the Gross Domestic Product (GDP) and be the “third major source” of revenue for the Centre after direct and indirect taxes. CPSEs must make efforts to reduce the country’s imports bill and expanding India’s global strategic reach by 2022.

Responding to the instructions given by the Union Minster of Finance & Corporate Affairs Smt. Nirmala Sitahraman in her meeting with the top officials of the CPSEs in September 2019 and constant monitoring by Department of Expenditure, CPSEs have reduced their payment cycle considerably for the vendors in general and MSME vendors in particular.

Data collected from the CPSEs as on 31st March 2020 showed that they had pending bills from the MSMEs worth ₹ 775.76 crore as on 1st March 2020. Bills worth ₹ 2,730.46 crore were received during the month and a total of ₹ 2,813.39 crore were paid till 31st March 2020.  For the month of April 2020, bills worth ₹ 1,598.27 crore were received and the CPSEs made payment of ₹ 1,785.78 crore leaving a balance of ₹ 512.34 crore. It has been stated that majority of the bills were received in the last week of April and under process for payment.

Vendor payment compliance: CPSEs required to prioritise timely clearance of MSME dues and use portal-based dispute resolution. The Department of Expenditure implemented monthly monitoring and directives to ensure vendor payment compliance by 32 Maharatna and Navratna CPSEs, prioritising timely clearance of MSME dues and use of the SAMADHAN portal for dispute resolution; communications by the Secretary (Expenditure) reinforced departmental oversight, and reported March-April 2020 data show ongoing receipt, settlement, and a remaining balance of MSME bills largely under process.