COVID-19: Nearly 80% MSEs hit as economic activities come to standstill, says survey

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April 22, 2020 7:13 PM

The survey showed that five out of 10 businesses would run out of their working capital within two months and they will depend on loans from peers or friends or family to survive.

The survey showed that five out of 10 businesses would run out of their working capital within two months

Nearly 80 per cent of micro and small business (MSEs) in the country have been impacted negatively as the economic activities have come to a standstill due to the disruptions caused by the COVID-19 pandemic, according to a survey. The survey showed that only 24 per cent of MSEs are operational now, of which 18 per cent are operating at less than 50 per cent capacity.

The findings are based on a survey of 420 players in 12 cities by market research and consulting firm, Kantar.  These respondents were from sectors such as manufacturing, banking, financial services and insurance (BFSI), IT/ IT-enabled services (ITES) / telecom, travel, transport, logistics, retail and outlets, education and related areas, and other professional services sectors.

“79 per cent of the MSEs are negatively impacted by the COVID-19 crisis,” the survey showed. The sectors that are hit majorly by the COVID-19 crisis include travel, transport, and logistics industry.  Seven of the 10 MSE players have seen a substantial decline in customer footfalls or enquiries during the past few weeks, it said.

According to Kantar’s executive vice president (insights division) Biswapriya Bhattacharya, MSEs were already facing turbulent times since the past one year, and the present crisis has affected them very severely. “Only 80 per cent of MSEs have less than three months of working capital,” he said.

The survey showed that five out of 10 businesses would run out of their working capital within two months and they will depend on loans from peers or friends or family to survive.  Seven of ten manufacturing businesses are unlikely to procure raw materials for the next one month.

The survey showed that restricted movements, low demand from customers, financial and workforce woes are leading to high level of customer-oriented challenges for these MSEs.  Small businesses having 11 to 100 employees are majorly looking for opportunities to drive their business in this crisis situation through tech adoption, sales/marketing strategies, it said.

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