One in every three small businesses in the country is staring at shut down and while coronavirus has aggravated the problems, it is not the sole reason behind derailing these businesses.
One in every three small businesses in the country is staring at shut down and while coronavirus has aggravated the problems, it is not the sole reason behind derailing these businesses. “The reasons for winding up businesses may not be completely due to the pandemic. The respondents were already facing issues in their businesses, whether from demonetisation or GST, over the last three years, along with a slowdown in the economy,” KE Raghunathan, former President, AIMO said in a survey report by All India Manufacturers’ Association (AIMO) in partnership with nine other industry bodies, The Indian Express reported. In fact, coronavirus has been the “final nail in the coffin” for these businesses which witnessed their debts piling up.
Over 33% of small businesses and self-employed businessmen now don’t see a ground for recovery in the coming months even as the government has now announced unlock 1.0. The survey got responses from 46,525 MSMEs, self-employed, corporate CEOs and employees. While one in every third MSME is of the opinion that recovery is a far shot, another 33% of MSMEs said they hope for recovery in the coming six months. On the other hand, corporations are more hopeful of recovery in the coming three months.
The government had imposed a coronavirus lockdown on 24 March 2020 to keep the spread of the pandemic in check. After four successive runs of one of the harshest lockdowns in the world, restrictions have been eased with the center allowing even shopping malls to open now albeit with caution. Cases are still exploding in states including Maharashtra, Gujarat, Tamil Nadu and Delhi. ““This kind of mass destruction of business has not been witnessed since Independence,” KE Raghunathan said.
Meanwhile, the country’s GDP numbers, which were released last week by the National Statistical Office, has also fallen with the fiscal deficit widening as well. India’s growth rate has dipped to an 11-year low of 4.2% in 2019-20. Rating agency Moody’s has also downgraded its India forecast for this year in the light of the recent developments.