Covid-19 and Impact on Small Business
The cash ridden MSMEs of this country have been devastated due to this lockdown due to disruptions in the supply chain and also low levels of product demand. According to a survey conducted by All India Manufacturers’ Association (AIMO), 35%of the MSMEs and 37% of self-employed respondents said their enterprises are beyond recovery. This sector vulnerability to downfall started with the GST and Demonetization eventually leading to bad loans that were piling up on their debt sheet. But the COVID-19 gave them their last blow bringing the business activity down to nil. The MSMEs which are involved in the essential product business continue to thrive amidst this crisis. A sector employing 11 crore people of this country in the state of crippling down brings a huge blow to the sentiments of the working-class community of this country.
So, let’s get into the details of how exactly COVID-19 impacts small businesses across the world. When travel restrictions were imposed by countries in the early stages of COVID_19 then a lot of small businesses where unable to ship their product from vendors or their shipments were stuck in areas. Soon a lockdown was imposed by many governments across the globe leading to the closure of the non-essential businesses. The small business with nil economic activity and piled up loans fired employees to save capital for the business and loan payments. Then many companies big and small laid off people leading to lower sentiments of buying by the people. Post-Lockdown the sentiments are not going to change much and people have built a mentality of savings for future consequences. Many NBFCs or Banks refused to lend money to this sector due to bad financial conditions leading to capital drying away from this sector.
Now let’s look at the government response to this crisis. The Indian government announced a relief package of $266bn of which a part was allocated particularly for this sector. These include an emergency credit line of collateral-free loans worth $40bn resume business activity and safeguard jobs. A bailout plan was announced for more than 200000 ailing small business and also prohibiting global tenders for government procurements worth up to $26.5 m to help local business to sell to government. Most of this sector can be transformed into the WFH model due to intensive machine-oriented work. But there is a digitalization wave coming to uplift this business presence and upskilling of this sector workers. But the question remains “ Can we save it before its too late to realize?”.
Contributed By- Soham Roy, Content Writer @ Mitti Ke Rang
At Mitti Ke Rang, we started with a COVID-19 community support fundraising, as an emergency response to provide a safety net to families. This will help them survive in the lockdown period. We aim to directly support these families by providing a minimum wage, through transferring the same into their accounts or partner with local NGO, Organisation, Fellow, or a Volunteer and support them with groceries.
You can donate at:
Our Social Media:
LinkedIn — https://www.linkedin.com/in/mitti-ke-rang-mkr-81b230120/
Twitter: https://twitter.com/mitikerang?s=08
Instagram: https://www.instagram.com/mitti_ke_rang?r=nametag
Facebook: https://www.facebook.com/Mitikerang/
YouTube:
