Rs 40K cr MSME dues cleared, rest by Oct 1st week: FM

Finance Minister Nirmala Sitharaman Friday announced another dose of stimulus for small businesses by way of clearing their dues worth Rs 40,000 crore. This comes within a week of handing out a corporate tax cut of Rs 1.45 lakh crore, and the fiscal implications will be reconciled at a later stage.

Sitharaman, who reviewed the capital expenditure plans of various ministries, told reporters that the remaining Rs 20,000 crore will be paid in a week's time.

The move is expected to improve the cash flow to MSMEs, the largest job creators in the country, who have been complaining of lack of credit growth hindering their business. Road and Transport Minister Nitin Gadkari had recently held a meeting with their representatives after which he had impressed upon the Finance Minister to look into their delayed payments.

"My intention is to have government departments clear all pending payments whoever it belongs to," the Finance Minister said after meeting top officials of 21 key infrastructure ministries.

During the review, Sitharaman asked the ministries and departments to make regular payments to their vendors, which in most cases are MSMEs, as it spurs the investment cycle. She emphasised that all efforts must be made to ensure that outstanding payments are cleared before the festival season.

To a question on the fiscal implications of the move, she said it can be reconciled at a later stage. The fiscal deficit target of the 2019-20 is 3.3% of the GDP. However, it is expected to increase by a percentage point or two in the wake of slower revenue collection on the tax and non-tax fronts.

Expenditure, both revenue and capital, made by the government provides a major boost to aggregate demand. Total expenditure of the Centre for fiscal 2019-20 through the budget is Rs 27.86 lakh crore. Of this, the capital expenditure is budgeted at Rs 3.38 lakh crore (12.2%) as against the revenue expenditure of Rs 24.27 lakh crore (87.8%).