Covid-19 has an unforeseen impact on the economic condition of the country. Most of the small and medium enterprises have undergone a drastic change. The pandemic situation affected every kind of firm. Particularly the smaller firms are fragile. They suffered from reduced orders that resulted in the loss of business. The Government of India introduced Central Bank schemes in the state and Central zone, which target financial assistance to medium and small enterprises. But still, taking credit from the bank remains one of the pain points of every small and medium enterprise. The covid-19 scenario made it more difficult for the industries to sustain in the global market.
Various companies have different approaches to the economic fallout due to the covid-19 scenario. Half of the enterprises reduced their production of services and goods. It helps them to match the reduced demands and constraints that formed on their production. Some of the small and medium enterprises are negotiating with the various modifications of wages.
Affecting the continuity of the business
The global pandemic has affected the continuity of business enterprises. Nearly 70% of the business organization experiences shut down operations. Half of them are temporarily closed after following the direct instructions from the governmental authorities. The other half is permanently closed due to reduced orders. It affected the continuity of the business while leaving most of them permanently or temporarily closed. The concern of what is MSME business remains in the dark when looking at the picture in totality.
Lowering the revenues
During the pandemic scenario, 75% or more business enterprises experience a reduction in the revenue system. In some cases, the reduction rate is quite high. More than 33% of business organizations anticipate losing half of their revenues. This situation would not improve unless the business organization takes up MSME loans. In some countries, the relative optimism about the future gets balanced with a healthy dose of uncertainty.
Reduction in orders
The situation is quite similar in the case of the customer orders. More than 75% of the companies suffer from reduced demands, and the experience is more than 50% of the drop. The majority of these enterprises experience a reduction between 25% to 50%. It somehow curbed the growth of the business organization.
Shortage of cash flow
To understand the challenges faced by the medium and small enterprises during the covid-19 scenario, one must understand what MSME is. The situation becomes critical in the case of the cash flow of the business. Most of these business experiences shortages in the process of their cash flow. One can somehow put it into a stable condition with the help of MSME loans. According to the survey, this situation is going to remain in this condition throughout the pandemic situation.
The effect of the pandemic situation is quite dramatic on small and medium enterprises. The labor force also decreased due to familial responsibility and containment measures. All this together somehow left the medium and small enterprises in a split.
Businesses having easy access to short-term liquidity can make their way to the global economy. Sticking to the right policies becomes extremely important to ensure the survival strategy of small and medium enterprises. Despite all the struggles these enterprises face, the Government of India responds effectively to the pandemic scenario that helps create a resilient, positive, and sustainable future for every small and medium business around the world.