Skill, Labour, Talent for MSMEs: The problem of migrant labourers was most relevant in construction, real estate, manufacturing and power sectors and was least relevant for BFSI sector followed by service and trading sectors.
Companies in the construction and service sectors saw maximum closures post Covid.
Skill, Labour, Talent for MSMEs: The labour problem in the post-Covid world is more acute among micro-enterprises than small, medium and large businesses. Nearly 35 per cent of the micro businesses have stated that migrant workers have not returned to work during the unlock period vis-a-vis 26 per cent SMEs and 19 per cent large businesses for which migrant workers are yet to come back, according to a survey by Care Ratings. Only 16 per cent micro-units in comparison to 27 per cent SMEs and 35 per cent large businesses claimed labourers have returned to their businesses. “The problem of migrant labourers was most relevant in construction, real estate, manufacturing and power sector and was least relevant for BFSI sector followed by service and trading sector,” the survey titled Unlock India: State of Business involving 621 respondents noted.
Moreover, among all businesses, majority micro units felt that businesses in their segment had closed down due to Covid. While 47 per cent SMEs and 38 per cent large enterprises felt that ventures in their respective categories had shut because of the pandemic, the share of micro-units here was relatively higher at 69 per cent. Companies in the construction and service sectors saw maximum closures.
Covid perhaps proved to be a double whammy for businesses, particularly micro-units, that were already witnessing a slowdown before the pandemic. Importantly, 64 per cent of respondents from the micro category felt that their businesses were suffering from a slowdown even before Covid broke out in comparison to 49.7 per cent SMEs and 39 per cent large businesses that felt the same.
“There are expectations of government intervention in terms of guarantees, deferral of charges, tax subsidy, waiver of payments etc. There is also big hope on rural demand driving the economy across sectors. However, there is no enthusiasm when it comes to capacity expansion which does not bode well for investment. Close to 30 per cent of the sample companies surveyed expect negative growth in sales this year,” the credit rating agency said.
The share of micro-enterprises in businesses expecting a rise in the non-performing assets in their verticals was also higher than the shares of SMEs and large units. While 69 per cent micro-enterprises believed NPAs to rise among their segment, 51 per cent respondents each in SME and large business categories felt NPAs in their industries to go up. Similarly, the share of problems related to lack of credit and excess inventory or unsold goods was higher among micro-businesses than SMEs and large companies.