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    Over one-third MSMEs start shutting shop as recovery amid Covid-19 looks unlikely: AIMO survey

    Synopsis

    The govt's package has not reached the MSMEs and is also not enough to make up for the loss, a study said.

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    The government’s financial package has not reached the MSMEs and is also not adequate to make up for the loss of business activity during the lockdown period, AIMO said.
    About 35% of micro, small and medium enterprises and 37% of self-employed individuals have started shutting their businesses, saying they saw no chance of a recovery in the wake of the Covid outbreak, a survey by the All India Manufacturers’ Organisation has revealed.

    The government’s financial package has not reached the MSMEs and is also not adequate to make up for the loss of business activity during the lockdown period, AIMO said, adding that such a “mass destruction of business” was unprecedented.

    After a nationwide shutdown since March 25 that brought economic activity to a halt, India started a phased reopening on April 21. The Centre issued a fresh set of guidelines on Saturday to be implemented for the opening up of the economy from June 1.

    The findings of the survey are the first of three parts that will be released by AIMO this week. The survey was based on over 46,000 responses from various associations and industry groupings in the country.

    Of the MSMEs that took part in the survey, 32% said they would take about six months to recover and 12% estimated three months.

    “India has over 65 million MSMEs employing over 150 million people and over 130 million people are self-employed. This kind of mass destruction of business has not been witnessed since our Independence,” KE Raghunathan, the immediate past president of AIMO, was quoted as saying in a statement released on Monday.

    As per the survey report, the undecided category of respondents was about 11% in the MSME category and about 17% among the self-employed.

    “They still have scope to recover,” the survey said.

    Corporate respondents indicated that while business was affected by the lockdown, 46% said it may take three months to recover while 26% expected to bounce back by the end of the year.

    “This sector will not see many closures but will see many people losing jobs, scaling down of operations, focus on core business and a fine financial balancing act,” said Kenny Ramanand, general secretary of AIMO.

    About 6% of the corporate respondents and 11% of the self-employed were buoyant and were unaffected. These respondents were primarily employed or involved in the essential sector.

    The government had announced various measures last month to help MSMEs, including collateral-free loans of Rs 3 lakh crore and a fund of funds for the sector that will invest Rs 50,000 crore as equity in small businesses.

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    26 Comments on this Story

    Anil 40 days ago
    The bad one were in any case seasonal small time job contributed, environment polluter and Non tax payers. It’s natural correction of industrial sector. Let them start something else
    dhruve140640 days ago
    I think shutting down of a lage number of MSMEs is a short term pain ! The efficient and productive will survive . We will have to work harder and ppl who are willing to do that this is actually a good opportunity . Just like covid the healthy are surviving and the weak unfortunately are dying .. it is going to be the same with industries .. the once’s which are efficient , keep costs low , spend on development and innovate will survive and business with grow faster once the demand starts . As sad as it may sound but I feel businesses should use this time to shed the extra fat in their organizations ... same as we tried to lose kilos by exercising In the lockdown
    Guru Samy41 days ago
    It is simple, without MSMEs big concern can not run long time. May be time being they can run.
    So Govt norms should be relax and timely action to boost our economy and get good revenue. If Govt think about support to only big business industry. We the small and medium business people should close our business and submit blank sheet.
    Because we can not ran away from our native. Big shots easily run away from India.
    The Economic Times