Ease of Doing Business for MSMEs: Micro and modest enterprises (MSEs) in Maharashtra reeling beneath the effect of Covid-induced lockdown and post-lockdown phase are hunting at a longer road to recovery regardless of a year immediately after the pandemic struck. The country’s financial powerhouse Maharashtra, which has the fourth-highest concentration of modest enterprises in the nation with an 8 per cent share of India’s 6.3 crore MSME base, is however to see a full turnaround of modest enterprises that have been falling quick of their production targets due to shortage of manpower, capital, and broken provide chain, according to specialists TheSpuzz Online spoke to.
“Business recovery for small businesses in Maharashtra is not more than 35 per cent while the national average would be around 42 per cent. There is a big impact on production while many migrant workers haven’t returned. Due to current Covid restrictions, trading businesses are not operating properly while manufacturing segments are operating but their head office or branch offices aren’t open,” Chandrakant Salunkhe, Founder, Maharashtra Industrial and Economic Development Association (MIEDA) told TheSpuzz Online.
The state has about 47.78 lakh MSEs out of which 47.60 lakh are micro enterprises and 17,000 are modest enterprises, according to the MSME Ministry’s FY21 annual report citing NSS 73rd round survey for the duration of 2015-16. The total employment amongst its modest enterprises stood at 90.77 lakh out of 11 crore persons employed with the sector across India. “At least 50-55 lakh employment has been impacted. The accounting and software systems, which these small enterprises use for orders or supplies, are not available for their employees at home. You cannot manage everything on phone,” added Salunkhe. MIEDA represents 95,000 modest enterprises in Maharashtra.
According to the Economic Survey of Maharashtra, out of Rs 2.48 lakh crore targeted credit disbursement to modest enterprises in FY21, Rs 90,000 crore was disbursed to 8.85 lakh enterprises up to September final year. Under the Package Scheme of Incentives by the state government to encourage the setting up of new industries in the industrially significantly less created places, Rs 473 crore was disbursed to MSMEs up to November up from Rs 258 crore in FY20. Moreover, beneath the Pradhan Mantri Mudra Yojana, which provides up to Rs 10 lakh loan to non-corporate and non-farm modest and micro enterprises, Rs 27,398 crore loan was disbursed to 47.7 lakh accounts in FY20. The information for FY21 wasn’t shared.
“First six months of the year were disturbed as majority labour had gone back to their home town while the return was 40 per cent less. Moreover, the cost of production has also increased even as there has been no relaxation in power cost. The industry was shut for months but the government was still collected power charges. Power is a raw material for multiple sectors like foundry and steel. Rs 8.50 per unit is the charge and 25 per cent is fixed charge irrespective of whether you use it or not. Raw material prices have also increased to a minimum of 30 per cent across categories,” Lalit Gandhi, Sr Vice President, Maharashtra Chamber of Commerce, Industry & Agriculture (MACCIA) told TheSpuzz Online. The chamber has 800 association members representing 4.5 lakh MSMEs.
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Sectors which includes textile, foundry, automotive, tourism, and so forth., have taken a maximum hit in the state although plastics, pharmaceuticals, grocery, healthcare gear, healthcare, and so forth., have witnessed improved client traction. “Non-essential services have been impacted the most like automobile while many units in multiple sectors had to close,” Purushottam Agwan, Vice President at Thane-based Chamber of Small Industry Associations.
Maharashtra has been the most significant beneficiary of the Emergency Credit Line Guarantee Scheme (ECLGS) to give loans to Covid-hit modest enterprises and other enterprises in the state. Maharashtra had availed maximum loans worth Rs 14,364.30 crore disbursed to MSME units as of September 16, 2020, beneath the scheme as of September 16, Minister of State for MSMEs Pratap Chandra Sarangi had mentioned in a written reply to a query in the Rajya Sabha final year. Other major states have been Tamil Nadu (Rs 12,445.58 crore), Gujarat (Rs 12,005.92 crore), and Uttar Pradesh (Rs 8,907.38 crore).
“ECLGS was helpful because MSMEs could pay pending GST and other dues but the size of the problem is so big that it was of help only to an extent. Moratorium too was of help but we would need a similar concession again for survival amid the second wave. The supply chain has also been severely impacted. Unless there are people to lift and load supplies in a truck, how will MSMEs get the raw material? If entities are closed then how will I book my order of supplies?” added Agwan.
As India overtook Brazil on Monday to turn into the second worst-hit nation with Covid instances continuing to surge, Maharashtra led the Covid tally with 5.64 lakh active instances. The state registered 51,751 new infections and 258 associated fatalities on Monday whit its capital city Mumbai contributed one-fifth of the state’s everyday instances. The second wave could possibly have repercussions on modest enterprises that would extend the runway of their recovery additional. According to a report by PTI, state minister Aslam Shaikh had mentioned that the government will challenge fresh restrictions to curb the spread on Tuesday itself. On April 4, the state government had announced everyday evening curfews from 8 pm to 7 am and a full lockdown on weekends till April 30.
“Second covid wave will be detrimental for businesses. The government has already mandated the Covid test for workers. We are seeing labour again going back to home town due to the second wave. Around 25 per cent micro retailers were forced to shut shop so far,” added Gandhi. The state government had extended the deadline for workers to be reported Covid by 5 days to April 15, according to an order dated April 9.