Government asks PSUs to clear vendor and contractor dues by October 15

Nirmala Sitharaman, the Finance Minister of India reviewed the capital spending programs with the heads of 32 Maharatna and Navratna Central Public Sector Enterprises (CPSEs) had said that the state-owned companies had been asked to front-load investment for the second half of the current fiscal year (2019). The meeting was a part of the series of consultations of the stakeholders with the finance minister to brainstorm and think of measures that are needed to raise the economic growth of the country, which dropped to a six-year low (5 percent) in the first quarter of the Financial Year 2019-2020.

The government has set a deadline for the Central PSUs as 15th October 2019 to clear all the vendor’s overdue payments exhorted them to front-load capital expenditure as it looks to lift economic growth from a six-year low. By 15th October, the CPSEs have been asked to submit a proper roadmap for the next four quarters, Nirmala Sitharaman said in a statement. "It was decided that all pending dues to be cleared by October 15 and by October 15 they will also have a portal through which all the dealers and contractors shall start monitoring their payment," Sitharaman added. 

The Indian Finance Minister further added, “Meeting (will be held) with the RBI and the finance secretary and selected number of CPSEs to talk about why bank guarantees are becoming a big hitch or hurdle in government paying up the 75 percent post-arbitration awards. If that is the case, I want RBI's help. Also, CPSEs have been asked to detail the lifespan of arbitrations that lock payments after disputes with vendors and contractors.”

It is important to note that stress is being laid on the fact that Capital Expenditure (Capex) should be given a rather vigorous push in the next two quarters. “CPSEs are required to ensure that regular payments are cleared expeditiously as it spurs the investment cycle and establishes the new e-billing portal for enabling the stakeholders to track the status of the payments,'' she said. Special efforts must be made to clear the dues of the MSMEs (Micro, Small and Medium Enterprises) and resolve the cases on the SAMADHAN portal of the Department of MSME of India. 

The Finance Secretary of India, Mr. Rajiv Kumar said in a statement that 34 central Public Sector Undertakings have already spent a total of Rs 48,077 crore till August 2019 and have a detailed plan of spending of another Rs 50,159 crore till December 2019. An additional Rs 54,700 crore would be spent in the January-March quarter of the current financial year. “The expenditure plan is on track and many companies have expressed their willingness to meet the target set for the current fiscal year”, he added.