84 percent MSMEs believe COVID-19 2.0 has escalated business uncertainty: Survey

The MSME sector, which was recuperating from the impact of the first COVID-19 wave that brought production activities to a halt and disrupted supply chains, is again facing an uncertain future.
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As many as 84 percent of respondents in a survey said the deadly second wave of COVID-19 has escalated business uncertainty, according to credit rating agency Care Ratings.

The survey was conducted between April 27 and May 11 with a set of 305 respondents, which included small and medium businesses.

The results derived from the survey indicated some grim trends and low expectations in the sector. A large set of respondents (almost 75 percent) believe that the turnover of the non-manufacturing essential segment is the most impacted, followed by non-essential services (47 percent).

The second wave of coronavirus has left the micro, small, and medium enterprises (MSMEs) in the lurch. While the sector was recuperating from the impact of the first wave including the lockdown that brought production activities to a halt and disrupted supply chains, the second wave has once again brought the entire sector to a standstill.

Furthermore, 54 percent of the respondents believed that the condition is set to worsen over the next six months. Only 12 percent are anticipating any positive change/ improvement in their business activities.

Labour shortage is another problem that the sector is anticipating. According to the survey, 72 percent felt that the restrictions would cause labour supply shortages, 16 percent respondents do not foresee labour shortages, and 11 percent were unsure of the outcome.

The MSME industry is suffering and being weighed down by loans, taxes, electricity bills, and other daily operating expenses. They survey indicated that over 40 percent of the MSMEs were likely to borrow  in the coming six months whereas 41 percent said they didn't want to resort to lending.

SMBStory recently did an analysis of what needed to be done for this sector. Experts highlighted that waivers on bills, income tax, and GST, as well as other incentives such as a collateral-free credit line, would be needed to ease the burden on MSMEs and help them survive the second wave of the pandemic.

Edited by Teja Lele Desai

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