MSME Closures: The number of micro, small and medium enterprises (MSMEs) shut or closed during the financial year 2022-23 has more than doubled from the previous fiscal, according to the government data. During FY23, 13,290 Udyam-registered MSMEs were closed, up 113 per cent from 6,222 MSMEs closed during FY22, as per the data shared by Bhanu Pratap Singh Verma, Minister of State in the MSME Ministry in a written reply to a question in the Lok Sabha on Monday. The number had shot up drastically post Covid from only 175 units closed during July-March FY21.
In the current financial year (till July 18), 5,152 units were closed, taking the total tally of closed MSMEs since July 2020 to 24,839 while 19,687 were shut till FY23.
Moreover, the number of MSMEs closed between July 2021 and March 2023 was 19,248 and the number of people employed in those MSMEs was 1,32,205 as of July 13, 2023. However, during the same period, 45,99,944 new MSMEs were incorporated and registered on the Udyam portal with employment of 2,89,35,351 (2.89 crore).
Also read: Over 6,000 MSMEs registered on Udyam portal shut during FY22: MSME Ministry
The 24,839 closures were 0.11 per cent of 2.08 MSMEs registered on the Udyam portal. As of Monday, out of 2.08 crore units registered, 2.01 were micro enterprises, 5.59 lakh were small enterprises and 52,792 were medium units. This included 30.93 lakh micro enterprises registered through the Udyam Assist portal to help micro units without GST registration get on the Udyam portal and benefit from priority sector lending.
Maharashtra had 6,317 MSME closures while Tamil Nadu saw 3,158 units shutdown, Uttar Pradesh recorded 2,292 closures and Gujarat saw 2,123 closures, according to the data.
Also read: Over 6,000 MSMEs registered on Udyam portal shut during FY22: MSME Ministry
Importantly, in late 2021, SIDBI had conducted a survey to assess the impact of the change in MSME classification in 2020 and the losses suffered by MSMEs during the Covid-19 pandemic. According to the survey, it was found that 67 per cent of MSMEs were temporarily closed for a duration of up to three months in FY21 due to the Covid-19 situation.
Also read: Number of MSMEs shut in FY23 so far doubles from FY22. Here’s why
Additionally, another study conducted by the Khadi and Village Industries Commission (KVIC) during the same year revealed that 88 per cent of the beneficiaries under the government’s Prime Minister Employment Generation Programme (PMEGP) were negatively affected by the Covid-19 pandemic. Among these affected beneficiaries, 57 per cent of their units were temporarily shut down at some point during the Covid-19 period.