For India, Micro, Small, Medium Enterprises are engines of the manufacturing sector economy. MSMEs contribute around 30% of Gross Domestic Product and 40% to Indian exports. It significantly generates employment, develops regional areas and empowers socio-economic growth. It gives employment to almost 100 million people, which makes it the largest source of an employment-generating sector after agriculture. Therefore, any change in the MSME sector greatly affects the country as a whole. Like how 2020 and 2021 brought uninvited circumstances for the entire nation. A death-dealing phase, which shook the entire economy drastically and caused a widespread loss in MSMEs in terms of profit, sales and employment.
Impact of Covid19:
MSMEs became the most vulnerable sector during the lockdown. Around 95% of firms were negatively impacted in 2020, according to surveys and studies. Situations did not go back to ‘normal’ even after experiencing progressive unlocking. MSMEs saw a decline of 46% in 2020 amid complete lockdown due to the Covid19 pandemic. Later, at the end of the year, somehow the sector came into the recovery phase at the end of the year. But India saw the second blow of pandemic in 2021, which again pulled the MSME sector back.
State in 2021:
This time the wave of Covid19 pandemic was way more fatal than the last time, but MSME saw lesser damage than it experienced in 2020. Due to lockdown in 2021, a dip of 11% can be seen in the MSME business compared to 46% in 2020. The ecosystem of MSME turned out to be more resilient in 2021. Two major reasons are:
Unlike 2020 complete nationwide lockdown, 2021 saw lockdowns in phases. And this helped the sector to remain afloat amid the pandemic. The risk of lockdown is directly related to declining MSME growth.
The unique thing that happened in 2021 was the increasing preference for digital platforms by MSMEs. There is a 72% increase in usage of in-app features per user from the last year. This indicates that MSMEs are now more open to making use of digital solutions according to Ravish Naresh, Co-founder of ‘Khatabook’. The business got managed through online deals, WhatsApp chats and digital payments.
Therefore, phased lockdown and adoption of digital platforms made MSME prepared for external circumstances, which eventually contributed to strengthening the business.
According to reports, automobiles, textile/apparel, footwear and traders have seen growth in business recovery in 2021. Although these MSME categories still need close attention, because these continue to be the most sensitive categories to lockdowns. Despite external circumstances, some sectors continued growing in 2021, like health, transportation and agriculture. According to the Retail Business Survey by the Retailers Association of India (RAI), retail sales reached 88% of the pre-pandemic levels in August 2021, in comparison to 72% in July 2021. The sign of growth can be seen in sales by 12% in the second half of 2021 as compared to 2019, according to Quick Service Restaurants (QSR) And food and groceries showed growth of 4%.
However, these are sectoral progress that showed in 2021, MSMEs are yet to catch up to the pre-pandemic business state. And for that, the government needs to step forward to advance the ease of doing business for small and medium enterprises.
There are some of the steps that have been taken to revamp Indian MSMEs:
In the Union Budget 2021, the government has doubled the allocation from INR 7,572 crore in 2020-21 to INR 15700 Crore in 2021-22 for the MSME sector. The government has announced Rs 10,000 crore funds for Guarantee Emergency Credit Line (GECL), a facility to boost the MSME sector by giving benefits to eligible MSME borrowers. The government also proposed to allocate Rs 300 to establish new technology centres for MSME units. High duties on mobile parts and auto parts to encourage the program of ‘Atma Nirbhar Bharat’ A direct benefit for MSME by the reduction of customs duties on steel and ferrous and non-ferrous scrap. It helps to reduce the raw material prices. The budget also introduced a special framework for depth resolution for MSME.
Government e-Marketplace (GeM):**
The government of India has increased the procurement share for MSME by starting its e-marketplace. A digital platform to activate a market ecosystem that can improve work efficiency, reduce the cost price, take care of product development and improve the safety of workers.
The World Bank supports the Indian government by approving a $500million program to revive the MSME sector, which was severely impacted during the Covi19 crisis. It will target around 555,000 MSMEs to have better finance and working capital. Enable to scale-up technology-based solutions. Like, online dispute resolution mechanism, which can help in problems like payment delays.
Many other initiatives and steps have been a positive help to the MSME sector in 2021. But the country needs a more robust ecosystem for MSMEs because this sector is still struggling to exist at the global level.
The government of India has an aim to become a $5 Trillion economy. Further, enhance the MSME contribution in GDP and exports. Along with this MSME has the potential to be the key employment generator. So, to make this sector well efficient the government needs to boost the MSME ecosystem more effectively.
Here, ShramIN has taken an initiative to support the employers who want blue-collar workers for their business. Most of the MSMEs require blue-collar workers, but it becomes difficult for an employer to find such workers online. A lot of patience goes into finding a good blue-collar worker. So, ShramIN provides a job portal site for employers who exclusively want to hire blue-collar workers in India.
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