Industry
State of MSMEs
State of working report
Azeem Premji University published ‘State of Working’ report for 2021. It included a background paper on Micro, Small, Medium Enterprises (MSMEs). As per the paper 46000 of self employed and Indian MSMEs decided to shut down due to Covid-19. 70% of the firms fired its employees. Indian MSMEs employ 11 cr people, contribute one third of to annual Gross Domestic Product (GDP), and make up half of India’s manufacturing and exports. The crisis also caused acute drop in capacity utilisation from 75% to 11%. Sales fell by 17%. MSMEs were already facing headwinds due to demonetisation and ‘Goods and Services Tax’ (GST).
Government’s response has been unable to help micro and small businesses. The credit and financial relief is difficult to reach, as it takes time. Lack of demand in the economy and lack of formal finance ends up benefiting big businesses. Without the recovery of MSMEs, Indian economy will struggle to recover.
As per the report: The policy response to the COVID-19 crisis in India has largely been supply-sided, with its primary focus on availability of credit. Given the differential access to formal sources of finance, the move favours larger businesses over smaller ones.
Know more: A wasted crisis Link
