Page 11 - newsletter 14 aug

Impact of COVID-19 on

MSMEs

Atharv Gupta, XII B
All the marketplaces are empty which has hurt our
economy badly and has occurred due to harm to the
backbone of our economy, MSMEs, which make
up about 70-80% of all enterprises in India.
Studies have shown that while the large enterprises
have been able to cope up with these hardships,
MSMEs have failed to follow their footsteps. They
have recorded a large decline in business
activities. Most of our country’s MSMEs have halted
operations due to their inability to implement
preventive health measures such as provision of on-
site lodging for employees, sanitizers and hand
washing equipment for customers. These preventive

measures have resulted in an increment in operating
expenses for businesses that continue to stay open.
Consequently, a majority of MSMEs predict that
they will have to close within three months of the
pandemic continues and current restrictions are
maintained. Sectoral analysis also reveals higher
resilience among agriculture and manufacturing
firms as compared to service sector firms. So,
smaller the firm, harder it has been hit. Firms with
fewer than twenty employees are most affected as
they typically lack cash flow and capital.
Continuing to operate has been impossible for
MSMEs which provide hands-on services like hair

and beauty salons and spas, home improvement
and repair persons, dentists and medical offices.
These firms already operate on thin profit
margins and most new businesses aren’t even
profitable yet. About 43% MSMEs will disappear
till July. They are facing an acute shortage of labour
as migrant workers have been fleeing to their
hometowns. Government has announced a relief
package, the ‘PM Garib Kalyan Yojana’ and will
announce a few more keeping in mind the MSMEs.
What can be done is to stop importing the goods
which MSMEs can provide and produce cheaply.
The impact on MSMEs has been huge. It has
changed the way we move, shop and do business
and it could even reverse the trend of globalisation.
Unfortunately for these businesses, it’s still a matter
of waiting and seeing.