Unlock 1.0 May Have Come A Little Too Late As 1/3rd Of Small Businesses Are On Verge Of Closing
After over two months of nationwide lockdown which saw the economic activity coming to a standstill, India is all set to open up again as the restrictions have been eased to facilitate the resumption of factories, offices and other key business.?
However, it looks like the damage has already been done and many small and medium industries are already on the verge of collapse.A survey by industry body All India Manufacturers Association has found that around 35 per cent of the country's Micro, Small and Medium Enterprises (MSMEs) and about 37 per cent of self-employed persons are starting the process of shutting down operations.?
Just 12 per cent expected a recovery in less than three months, while 32% said they would take about six months to recover.?
The AIMO survey comprises 46,525 responses from MSMEs, self-employed, corporate CEOs and employees. It was conducted online between May 24 and May 30.This is the first of the three parts of the survey results that will be released by AIMO.?
"The most striking aspect was that 35 per cent of MSMEs and 37 per cent of self-employed respondents said that they see no chance of recovery in their businesses and have begun shutting down operations. To put this in perspective, 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," said K E Raghunathan, Immediate Past President, AIMO.?
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.?
Around six per cent of the Corporate and 11 per cent of the self employed respondents were buoyant and were unaffected by the Covid-19 situation as well. These respondents were primarily employed or involved in the essential sector.?
Recently, in an effort to boost the economy, the government had announced a Rs 20 lakh crore financial stimulus packages 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.?
Raghunathan said that the benefits of financial packages announced by the Finance Minister has still not reached the doorsteps of the MSME¡¯s and also inadequate to meet the impact of Covid over business in the last 3 months of non operation.
