Over one-third of MSMEs close to shutting operations: Survey
The brutish impact of the coronavirus pandemic has started revealing itself, with 35% of India's Micro, Small and Medium Enterprises (MSMEs) initiating the process of winding up operations, a survey conducted by All India Manufacturers' Association (AIMO) said. 37% of self-employed persons are also doing the same. This only shows that the "bumper" package announced to revive MSMEs made no difference on the ground.
Operations were shut in March to tackle coronavirus
India imposed one of the harshest lockdowns in the world in March, to stop coronavirus' transmission and buy time for the healthcare infrastructure. Consequently, manufacturing units were shut, the demand-supply chain was hit, and most of them who worked at these companies fled cities for their homes. To provide respite, the government allocated some part of the Rs. 20 lakh crore aid for MSMEs.
Government announced measures to help stressed MSMEs
Changing the definition of MSMEs, setting up a 'fund of funds' of Rs. 50,000 crore for helping viable businesses, and letting MSMEs take collateral-free loans, which can be repaid in four years, were some of the steps. But AIMO's online survey, conducted between May 24 and 30, involving 46,525 responses from MSMEs, self-employed, corporate CEOs, and employees, showed these measures didn't help.
Government's schemes weren't applicable to start-ups: Survey
Nine other industry bodies, including the Federation of India Industry (FII), Association of Indian Industry (AII), and Cement Manufacturers Welfare Association (CMWA), collaborated with AIMO for the survey. The study found that the government's stimulus isn't applicable to start-ups, which account for 11% of MSMEs. Over 6 crore MSMEs employ at least 11 crore people across India, Union Minister Nitin Gadkari had said yesterday.
32% said their enterprise is beyond recovery
Merely 3% of MSMEs, 6% of corporates, and 11% of self-employed respondents said they won't be affected. Most of these were engaged in essential services. Collectively, 32% of respondents said their business is beyond recovery while 29% were optimistic they will revive in the next six months. 11% of MSMEs and 17% self-employed were undecided on recovery, indicating optimism.
Corporates might still fare better, hinted the survey
AIMO's General Secretary, Kenny Ramanand, said 46% of corporates said they will recover within 3 months, while 26% predicted they could get back to business by the end of this year. "This sector will not see many closures but will see many people losing jobs, scale down of operations, focus on core business, and a fine financial balancing act," he pointed out.
A freelance designer explained how she was affected
For instance, Ruhi Jani, a freelance designer, said her business depends on clients' businesses. "We are uncertain on whether they will continue, if so at what scale and how much budgets they will allocate to specific heads like design, marketing etc.," the survey quoted her.
Such an impact was unseen since Independence
Explaining the bloodbath in the sector, AIMO's immediate Past President KE Raghunathan, said, "India has over 130 million self-employed and about 65 million MSMEs employing over 150 million people. This kind of mass destruction of business has not been witnessed since our Independence." He said the government's aid doesn't address the losses of the last few months and it's yet to knock on MSMEs' doorsteps.
