Small business sentiment remains low for third quarter amid macroeconomic environment

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December 30, 2019 5:50 PM

Ease of Doing Business for MSMEs: The sentiment of micro and small enterprises (MSE) saw moderation for the third straight quarter (July-September) and lowest in over a year, showed the 8th CriSidEx survey.

Ease of Doing Business for MSMEs: The sentiment of micro and small enterprises (MSE) saw moderation for the third straight quarter (July-September) and lowest in over a year, showed the 8th CriSidEx survey. The score for the quarter ending September 30, 2019, was 106 down from 120 in the April-June quarter and 124 in July-September 2018. The decline has to be be seen “in the context of macroeconomic factors such as production cuts by automobile manufacturers impacting utilisation of components, decline in both volume and realisation in commodity-linked sectors such as steel, and a slowdown in consumption impacting gems & jewellery, and hotels,” said Amish Mehta, Chief Operating Officer, CRISIL.

Only 27 per cent MSE manufacturers, unchanged from the previous quarter, reported a good quarter. This had declined from 37 per cent in the same quarter a year back. Importantly, this 27 per cent was the lowest in five quarters. Service MSEs, on the other hand, with positive sentiment were even lower this time. From 38 per cent in the September ending quarter of 2018 to28 per cent in the quarter ending June 2019 to just 19 per cent service MSEs reported a good July-September quarter.

Also read: Budget 2020: MSMEs tell Nirmala Sitharaman make this new law to speed up government payments

Coming to MSEs involved in exports and imports, 21 per cent of export-oriented MSEs reported an increase in their order book vis-a-vis 15 per cent of domestic peers, the survey revealed. However, this wasn’t the case for importers as the percentage of such MSEs seeing higher procurement in the September quarter stood at 9 per cent, down from 13 per cent in the preceding quarter.

The low sentiment also prevailed on the hiring front as the activity was muted. Only 7 per cent of the MSEs hired more in comparison to 16 per cent MSEs in the June ending quarter. 6 per cent MSEs reductions, according to the survey. CriSidEx also highlighted the below-par outlook lenders have on the business climate as only one out of 10 lenders surveyed saw an improvement in the overall business situation of MSEs while four out of 10 and five out of 10 rated it satisfactory and below satisfactory respectively.

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