Coronavirus pandemic has left the world abandoned and overwhelmed about the current health and economic situation worldwide. And it’s all due to one contagious infection that has brought everything to a halt. Amidst the pandemic, all countries are going through tough economies phases where millions are unemployed and another major part is going through pay cuts. Among all the sectors which are affected by this virus, MSMEs of India have been hit hard. This is the sector that is facing the maximum backlash.
However, the government has taken many steps to improve the condition. These steps include reducing the interest rate for the loans, reducing the repo rate, ensuring a smooth credit approval facility and providing COVID-19 relief package for MSMEs under Atmanirbhar Bharat Abhiyan.
The number of cases is mounting and proportionally it is affecting the worldwide economy. Lack of monetary support, shutting down of industries for a long time(due to lockdown), disturbance in the supply chain are some of the common reasons which Indian MSMEs are facing as of now which is further affecting the country’s economy and GDP.
Challenges MSMEs are Facing Currently
Lack of Capital
Some of the biggest challenges faced by MSMEs are accessing the capital they need to stay functional, keeping their supply chain alive, assuring their employees can work even remotely.
As per Facebook’s recent survey, while two-thirds of closed businesses expect to re-open in the future, whereas one-third did not because they can’t afford their bills, paying staff and the rent which they need to pay for their workspace.
Shortage in Demand
Even though the lockdown has been lifted, people are fearing to come out and shop around how they used to do before this pandemic. However, the demand for essential items remains the same but there has been a tremendous decrease in the demand for non-essential items. This decrease in the demand has forced many of the SMEs and MSMEs to limit/stop their production.
Lack of Manpower
We all are aware of the crisis of migrant workers which started with the imposition of lockdown in the country. Well, it has been 4 months since then and with the unlock 3.0 almost everything is re-open now. Be it construction sites, industries, markets, and companies all are open now, but now many of these businesses/sectors are facing a lack of manpower as a major part of workers are still in their native place.
To Adapt to the recent trend and converting business online
As people are still indoors due to the contagious coronavirus, one of the trends which have emerged is the need for providing online service to the customers.
As such, there has been an increase in the demand for e-commerce business availability. However, building online stores on both Facebook and Instagram are easy and cost-effective options.
SMEs owners are having a million concerns right now, among all the challenges and concerns it has become important to know what to prioritize and take actions towards it.
This can be done by analysing what is really important to your business at this particular time. The priority will vary from everyone, for some, it can be their employees while for some it can be customers, vendors or partners.
Whatever it may be, your priority should be to keep your business operational fulfilling the needs of customers and your employees both.
For many businesses, there is an intense money crunch because of a sharp fall in business and operational difficulties. Be it for purchasing inventories, raw material, paying partners, or employees.
Fall In Creditworthiness
During this corona crisis loans taken from Banks/NBFCs can witness a considerable increment in default payment levels for MSMEs. This fall in CIBIL and CARE Ratings can further affect their creditworthiness for the future.
Fear of Shutting Down
On the off chance that their business doesn’t pick-up during COVID-19 many of the SMEs and MSMEs are in great fear of being shut down. But, despite the government’s effort and help, many are struggling for its survival.
MSME structures the establishment of the Indian economy and is one of the fundamental sections that let the economy rise and develop. It provides work to more than 114 million people. With the government’s commitment and the prime minister’s ‘self-reliant India’ campaign, we hope the condition of this sector will improve soon with more opportunities and monetary support.