Unlocking MSME Growth: Addressing Delayed Payments and Credit Access

The Economic Survey highlights that Rs 8.1 lakh crore in delayed payments is stifling MSMEs, urging cash-flow-based lending to enhance credit access. Despite digital strides, formal credit remains hard due to lack of collateral. Women-owned MSMEs are particularly underrepresented, but steps are being taken to improve credit flow.

The recent Economic Survey has spotlighted that Rs 8.1 lakh crore worth of delayed payments is hampering the growth of the nation's MSMEs. It emphasizes innovative solutions like cash-flow-based lending to improve credit access for micro enterprises and first-time borrowers.

While credit footprints are expanding, formal credit accessibility remains a significant barrier due to limited collateral and inadequate documentation. The Survey, tabled in Parliament for 2025-26, reveals that women-owned MSMEs account for a minuscule share of commercial credit, despite efforts under 'Udyam' aimed at bridging this gap.

In recent times, MSME credit has seen a positive trend, supported by government interventions to enhance credit flow into this sector. Yet, operational challenges persist, with delayed payments notably impacting liquidity for micro suppliers. The Survey recommends accelerating digital lending partnerships to provide timely, affordable financing to a broader range of enterprises.

(With inputs from agencies.)