#DelayedPayments: 10.7 Lakh Crore of MSME money is locked up annually

An estimated INR 10.7 Lakh Crore i.e. 5.9% of the gross value added (GVA) of Indian businesses is locked up annually as delayed payments from buyers to MSME suppliers.

A vast majority (~80%) of the annual delayed payments amount is owed to Micro and Small Enterprises (MSEs) in particular, INR 8.55 lakh crores.

If we are to take an average 18% GST (state and central) and subtract it from the delayed payment figure of 10.7 lakh crores, a whopping INR ~2 lakh crores of taxes have to be paid for by MSMEs from revenue that has not hit their account.

From Payments on Time, Growth Har Time report by GAME (Global Alliance for Mass Entrepreneurship)

Delayed payments in 2020-21 constituted a whopping 

  • 65.7% of all sales of microenterprises
  • 31.09% of small enterprises
  • 25.19% of medium enterprises 

Median debtor days beyond the legally recommended 45-day period in 2020-21 was 

  • 6.5 months (195 days) for Micro enterprises 
  • 2 months (68 days) for small enterprises 
  • 1.5 months (47 days) for medium enterprises

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