Tag: Small-scale units

Covid-19: impact on Small Scale Industries

It has been over a year since the Covid-19 pandemic came to India and caused widespread havoc. The virus got noxious day by day even after the implementation of a nationwide lockdown.

This catastrophe was and is still so devastating that it has latched itself on to the economy of the country like a deadly sting of a bee. Though no sector has been left untouched by the pandemic’s spell, the small-scale industries have been hit very hard.

Indian small-scale industries play a key role in India’s export business. 45% to 50% of the Indian export is being contributed by Small Scale Industry sector. Unfortunately, this key business sector has been blown severely by the situation.

More than 80% of the small-scale businesses have suffered a negative impact due to Covid-19 and 70% expect that would take a year for their demands to recover to the pre-pandemic times, as observed by the survey of Dun & Bradstreet, a provider of commercial data, for businesses.

The survey also found out that 60% of the small business would require more support including initiatives by the government to stand up to the ill effects of the pandemic.
It further pointed out the 3 top challenges that might hinder these small businesses to expand, which are- market access (42%), improving the overall productivity (37%), and having access to more finance (34%).

During this time digitization in various sectors and even small businesses have earned them cost reduction and productivity. Small scale businesses have cut their costs by 54% during the time.
The Managing Director of Dun & Bradstreet India says “globally, digital adoption has been accelerated by 7 years due to the covid-19 crisis”.

The pandemic has aggravated the problems of credit facility, market support, and technological advancement that already persisted in pre-covid times.
“Given the intensity and duration of Covid-19, these problems will continue to exist in near future,” says Arun Singh, Global Chief Economist, Dun & Bradstreet, India.

STEPS TO TACKLE THE SITUATION:

  1. Government should allocate funds to these small businesses through financial institutions. These institutions must provide loans at low rates.
    2. These banks must provide loans after obtaining minimum security.
    3.The gap between the customer and producer must be bridged through effective marketing, by organizing fairs and exhibitions.
    4.The licensing procedure must be simple and at ease.
    5.Technological support must be provided to these businesses for their modernization.
    6.Training must be provided to entrepreneurs in technological, managerial, financial, and marketing areas.

We as the citizens of our country and potential customers of the small businesses must also contribute to uplifting them.
After all, what is more, heartwarming than lighting someone’s home and life?

WHAT WE CAN DO FROM OUR SIDE?

There are many small small steps that we can take, for instance,
instead of buying packed flour, we can purchase grains and get them ground from the small local mills.
We can privately fund small incense stick manufacturers and help them in their progress.
We can buy dry snacks from local bakery shops.
Likewise, we can support many other small businesses in our everyday life and bring a difference to them.

After all, helping others is not just a responsibility but it gives real meaning to our lives.

Small Business, Big Trouble: The Viral Times

The outbreak of coronavirus has taken back happiness from our lives, at least for some time. It has forcefully changed our long habits. Lot of people from different walks of life are at the receiving end of our changed habits. One important segment is the small traders, shopkeepers and hawkers. Apart from their everyday sale they also depend on major festivals for huge sales. The demand for new clothes and other consumer items usually ensure good profit for them. But no more going out for shopping in crowded markets. It is a difficult situation for them.

The virus has already stopped the celebrations of the Bengali New Year, Eid ul-Fitr and Rath Yatra. The same fate awaits many more. Shopkeepers who sell essential commodities are in a little more comfortable position than the rest. The official notification only permitted opening of shops selling essential goods in the lockdown. In the Unlockdown 1.0 only some non-essential shops have been allowed to open. Still people are afraid to go and buy because of the fear of infection. Hawkers face the worst situation. According to the National Hawker Federation, there are around four crore hawkers in the country. They have incurred a huge loss of Rs. 48,960 crore out of total turnover of Rs. 2,88,000 crores within April. What has happened to them in this lockdown? How much loss have they incurred personally? We do not know clearly. Let us discuss few instances.

Poila Baisakh or Bengali New Year is celebrated in a big way in West Bengal. It is one of the very special days for Bengalis. Each year the markets in Kolkata offer Chaitra Sale, annual shopping festival, from 14 March to 14 April. It ensures a huge sale of new clothes, shoes, earrings and many more items. The markets are kept open till midnight and for a month they remain very crowded. During this time in a month hawkers make about 35% of their total annual profit. The sale attracts around fifty to sixty lakh customers. But this year all those vibrant scenes were missing. The markets and pavements were all empty day and night for the first time in decades. It came as a huge blow to thousands of hawkers. They do not even know how the business will get back to normal.

Eid ul-Fitr is a much celebrated national holiday after one month of Ramadan. This is a special day for Muslims and they buy new clothes and other items to celebrate with their families. The profit from this festival sale is always more than the normal sale in the market. But in this lockdown the usual hustle and bustle was missing in the streets. It turned out to be a low-key affair this year.

The Jama Masjid in Delhi saw the lowest attendance in prayers for the first time. According to the meat vendors and livestock traders, transportation of Eid special meat was held up in Rajasthan and Madhya Pradesh. The poultry farms have also lowered the production due to their heavy loss in April. The supply chain has been broken by serious restrictions followed during the pandemic. Thus all the vendors have faced huge loss in Eid. Some families are out of work for over two months and almost are out of savings. The rise in price and low supply meant that meat was beyond reach for many families.

Rath Yatra is a week-long festival for devotees of Lord Jagannath and his family. In Puri the event draws around five to ten lakh devotees in a week in June. All of them are seen outside the iconic Puri temple where three chariots remain ready to move. It not only attracts devotees but also small street vendors from Puri and other places to earn extra money. The hotels, restaurants and other business establishments wait eagerly for Rath Yatra to have large footfalls. The religious festival has a major economic dimension.  But this year because of the coronavirus the Supreme Court had initially banned Rath Yatra. This had led to great disappointment to those who were waiting to recover some losses. Then the Supreme Court allowed it but imposed severe restrictions, including curfew, to prevent people from attending the festival. The shutdown of airports, railway stations and bus terminuses for nine days has deprived small traders and hawkers of Odisha from the large customer base they expect during the festival time.

We do not know yet how many festivals will be celebrated without shopping. Small time traders and hawkers in the country are facing tremendous loss even after the Unlockdown 1.0. No one can undermine the importance of safety in such times and no one is arguing that we should crowd the markets as before but the fact remains that they are paying a heavy cost because of the pandemic.   

Financial lending Institutions to support Small-scale units

Union Minister for MSME and Road Transport and Highways, Shri Nitin Gadkari today said that the government is exploring new financial lending institutions to support small-scale units in terms of financial support.  Shri Gadkari said that government is working towards strengthening the NBFCs which will help small businesses to avail easy credit in the coming time.

He was speaking at a meeting via video conferencing with the Members of Calcutta Chamber of Commerce on impact of COVID-19 on MSMEs and the measures taken to address the challenges at hand.

Addressing the members, Shri Gadkari re-iterated that these are trying times as we are waging a war against COVID-19 pandemic as well as the economic instability caused by it. He requested all the stakeholders to work in tandem and urged the industry to maintain a positive attitude during this time to tide over this crisis.

The Minister also stressed  on usage of PPE (masks, sanitizer etc.) and advised to maintain social distancing norms in personal life and at work places.

Apprising the representatives of recent announcement on Special Economic Package: Aatmanirbhar Bharat Abhiyan, he explained various support measures which has been announced for MSMEs such as collateral free automatic loan, distress fund etc. He said that all these measures will provide the required support to MSMEs to face the current economic challenges.

The Minister also informed them  that there has been restructuring of 6 lakh MSMEs till March 2020 and the Ministry is aiming to cover additional 25 lakh until December 2020. He added that the current contribution of MSMEs in export is 48%, which may be increased to 60%. He further shared that currently 11 crore jobs have been created through MSMEs and this to be increased to 5 crores.

The Union Minister mentioned that special focus towards export enhancement is the need of the hour. He further added that there is need to reduce our cost on production, logistics etc. to become economically viable. The Minister shared that the Ministry of MSME is working on two booklets to cover details about last three year’s export and import.

Some of the questions asked and the suggestions given included: issue of delayed payment needs additional thrust to ensure timely payment to MSMEs, interest subvention of 4% should be looked at to provide support to MSMEs and safeguard them from becoming an NPA, how banks can be incentivized for proper implementation of proposed measure etc.

Shri Gadkari responded to the questions from representatives and assured all possible help from the government.