Ease of Doing Business for MSMEs: A staggering 88 per cent of micro beneficiaries below the Prime Minister’s Employment Generation Programme (PMEGP) have been ‘negatively affected’ due to the Covid pandemic, according to a current study carried out by the programme’s implementing agency Khadi and Village Industries Commission (KVIC). Among the impacted 88 per cent, 57 per cent stated that their units have been shut down temporarily in the course of the Covid period, whilst 30 per cent reported a drop in production and income. Under PMEGP, about 2.37 lakh micro-enterprises have been supported with a margin funds subsidy of Rs 6,833.32 crore from FY18 till February 28, 2021. The programme aimed at creating self-employment by way of the establishment of micro-enterprises in the non-farm sector.
KVIC Chairman Vinai Kumar Saxena wasn’t instantly obtainable for comments on the survey benefits.
“While Covid is among the key reasons for the impact on enterprises but isn’t the only one. Impact on small businesses is a case of multi-organ failure. Demonetisation, GST complexities, etc., were other reasons continuing to haunt MSMEs. Covid must have impacted around 20-25 per cent MSMEs who either reduced their production or shut their operations but issues around GST compliance and demonetisation have been other major reasons,” Vishwanath, Co-Chairman, Industry Committee, PHD Chamber of Commerce and Industry told TheSpuzz Online.
MSME Minister Nitin Gadkari sharing the KVIC information about Covid influence on MSMEs in a written reply to a query in the Rajya Sabha on Monday also noted that the remaining 12 per cent of PMEGP beneficiaries benefitted in the course of the Covid-19 pandemic. Among these beneficiaries, 65 per cent stated that their company improved as they had units in the retail and overall health sector whilst about 25 per cent stated that their units benefitted as they have been dealing with crucial commodities or services.
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However, there was no government information obtainable about the all round quantity of MSMEs that have been shut down in the previous year due to Covid. “As MSMEs are there in both formal and informal sector, data regarding temporary or permanent closure of the units are not maintained by the Government of India in Ministry of Micro, Small and Medium Enterprises,” stated Gadkari.
Meanwhile, gross bank credit deployed to micro and smaller enterprises in December 2020 has jumped 6.6 per cent to Rs 11.31 lakh crore from Rs 10.61 lakh crore in the course of the year-ago period, according to the RBI information. MSME sector accounted for a share of about 18 per cent in the total credit to the sector and about 5 per cent in the total non-meals credit extended by the scheduled industrial banks in November 2020, as per RBI information.