Small entrepreneurs find going tough: Number of optimists down 45% as slowdown fears loom

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September 3, 2019 6:28 PM

The moderation in the sentiment of micro and small enterprises (MSE) continued from January-March quarter’s 122 CriSidEx score to 120 for the quarter ended June 30 according to the seventh CriSidEx survey.

27 per cent MSEs in manufacturing reported a ‘good’ quarter though the percentage is lower than 45 per cent in the same quarter last year.

The moderation in the sentiment of micro and small enterprises (MSE) continued from January-March quarter’s 122 CriSidEx score to 120 for the quarter ended June 30 according to the seventh CriSidEx survey. This is down by seven points in comparison to 127 score for the same period last year. The common positive index among manufacturing and services was employee base as both sectors saw a fall in other parameters vis-a-vis the previous year. The survey received responses from 1,100 MSEs with turnovers ranging from less than Rs 1 crore to up to Rs 25 crore out of which 36 per cent were companies and 64 per cent were firms including proprietorships and partnerships.

27 per cent MSEs in manufacturing reported a ‘good’ quarter though the percentage is lower than 45 per cent in the same quarter last year. A similar share (28 per cent) of services MSEs reported a good quarter — lower than 44 per cent in the same quarter a year ago. Nonetheless, MSEs remained more positive for the next quarter as the increase in the overall next quarter index ending September 30, 2019, at 129 score in comparison to 126 for April-June 2019 likely indicates that MSEs view the current quarter as just a blip.

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The fall in the sentiment comes amid the overall gloomy economic situation as India’s Q1 GDP fell to a six-year low at 5 per cent. “MSMEs can’t decouple from the broader economic trends,” Mohammad Mustafa, Chairman and Managing Director, SIDBI said in a statement. However, the positive sentiment has increased on an annual basis in few categories including healthcare providers and services, commercial services and supplies, and human resources even as the ones that saw a relatively subdued sentiment were gems and jewellery, chemicals, and auto components.

Here are the other key findings from the survey:

  • 43 per cent MSEs with over 25 employees expects a good next quarter in comparison to 34 per cent MSEs with less than 10 employees.
  • 35 per cent MSEs in exports reported an increase in order book vis-a-vis 45 per cent in the previous quarter and 39 per cent a year ago.
  • With respect importers, only 13 per cent MSEs saw higher procurement in April-June 2019 down from 17 per cent in the previous quarter.
  • 39 per cent manufacturing MSEs expected an increase in production for the next quarter while 54 per cent believed it to be unchanged and 7% expected it to be lower.
  • Surprisingly 16 per cent MSEs reported hiring compared to 11 per cent MSEs in the previous quarter.
  • Importantly, lenders had a moderate outlook on the overall business environment as four out of 10 had a positive outlook on MSEs, 5 out of 10 expected it to be satisfactory while only 1 out of 10 thought it to be below satisfactory levels.

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