A quarter of MSMEs may shut shop if the lockdown persists

Bengaluru: More than one fourth of India's 69 million micro, small and medium enterprises (MSMEs) may shut shop if the lockdown extends beyond four to eight weeks, as a majority of them will have a cash crunch, said Ravi Venkatesan, chairman, Global Alliance for Mass Entrepreneurship (GAME).Citing data available with All Indian Manufacturers' Association, Venkatesan said "that 19% to 43% of the MSMEs may disappear if the crisis persists 4 or 8 weeks".Venkatesan, who was formerly co-chairman of Infosys and chairman of Bank of Baroda, said GAME is also in the process of creating a $100-million Small Business Stabilisation Fund to help these small businesses tide over this crisis.This fund, which is likely to be set up in a couple of weeks, would be used to disburse low-interest loans to these small businesses. Small businesses might get a moratorium of up to three months for repayment of such loans. The MSME sector, which has created more than 90% of the jobs in India, expects a large number of these jobs to disappear if lockdown is extended for long.The association for entrepreneurs said each sector will see loss of jobs. Venkatesan said the hospitality industry, which employs 4 crore people, could see 1.2 crore of those jobs disappear at the end of this crisis; while the retail industry, which employs 4.6 crore people, may face up to 1.1 crore job loss.GAME said it would soon have a discussion with the government with right set measures to avoid "mass extinction" of these MSMEs as a result of pandemic-led economic slowdown. 74880964 According to Venkatesan, these small businesses would see cash crunch as one of the primary challenges due to a sharp fall in business. As movement of perishable and other goods are getting delayed or stuck, these businesses stare at mounting losses.GAME has also highlighted that MSMEs will see operational challenges with low or zero manpower over the next few weeks since migrant workers are fleeing to their hometown.

from Economic Times https://ift.tt/33VmatP