Micro, small and medium enterprises (MSMEs) are in a bad shape due to market conditions caused by the Coronavirus outbreak and the situation could turn worse without government intervention, said industry body All India Manufacturers Organisation (AIMO).
“Over 60 odd million MSMEs are in real danger due to market issues with over 92% drop in domestic sales compared to the same time last year, over 100% drop in export sales compared to the same time last year,” said Sushil Vyas, AIMO secretary.
A 21-day lockdown was declared on Tuesday by Prime Minister Narendra Modi to check the outbreak of the new Coronavirus, or Covid-19, which has infected millions the world over and killed thousands. The number of cases as on Wednesday stood at 606 which includes 43 cured, or discharged, and 10 deaths, according to the ministry of health.
AIMO also requested the finance minister to waive bank interest as in the case of farmers, and instruct banks not to mark entrepreneurs as defaulters for non-payment of interest till Dec 31 2020. “If certain banks and airlines and corporates have been bailed out even MSMEs should be bailed out considering MSMEs employ over 121 million people in this country,” AIMO said.
“If Indian banks wrote off large sums of loans of large corporates, why is the struggling entrepreneur community being harassed for recovery even though their loans are fully secured using SARFASI Act?” said Vyas.
The body said that even online startups (barring those in healthcare services) have seen a huge fall in demand and some even have an unsold Inventory increase of around 58%. It said that it felt the impact of inter-state restrictions on the transportation of goods.
“Our members and their associates are unable to pay wages to staff due to lack of revenue and lack of production, late delivery charges or cancellation of orders or demurrages.”
AIMO also suggested that the government can provide a stipend of ₹6000 per month per worker employed by MSMEs or startups directly to the employees for a period of six months or till the Coronavirus situation is under control. It stressed that the government should urgently look at formulating policies on universal basic income and unemployment insurance.
“Several sectors like automobile, aviation, hospitality, apparel, consumer durables, electronics, hotels, tourism, restaurants and bars, the entertainment industry, airlines, BPO, seafood and livestock, construction and real estate, transportation are among the worst hit by this epidemic. All the MSMEs/self-employed individuals/entrepreneurs associated or whose revenues depend either directly or indirectly on these sectors are on the verge of a shutdown situation,” Shrikant Dalmia, Zonal Vice President ( AIMO) said.
“Work from home is applicable to less than 8% of the core MSME and services sector and the services sector has seen a mass migration of labour to their villages,” Dalmia added.
AIMO said that entrepreneurs are India’s biggest assets are and that segment cannot be allowed to die. “Survival of every existing entrepreneur equals creating two fresh new entrepreneurs. The above suggestions are required on war footing basis. If we miss this last opportunity, then we might not have any MSME in existence at all,” the trade body said.