Topic 08

Answer

Introduction

Disruptions caused by the Covid-19 pandemic and subsequent lockdown reduced MSMEs earnings by 20-50 percent, with micro and small enterprises bearing the brunt of the blow, owing to a liquidity crunch. The entrepreneurs found difficulty during the lockdown period in procurement of raw material, disruption of supply chain, difficulty in marketing, transportation, and moreover the fall in aggregate demand, which is yet to take up even a year into the pandemic.

Measures the state can take for reviving the MSME sector

• Need of access to credit, training, marketing support is as intervention from state is an immediate demand from the sector. Entrepreneurs and workers look up to the training that re-skills them with vital stipend.
• Training the entrepreneurs in social media marketing and e-commerce operations, is necessary to meet with any further lockdowns as newer variants of pandemic is spreading havoc.
• Training the workers in entrepreneurs in recycling methods and technology, will not just yield environmental benefits, but also caters to the demand of an increasingly environment conscious market. For the example, the waste clothes of textile sectors was absorbed by coir industry to produce carpets and mats in Kerala.
• Creating an export infrastructure for the MSMEs is vital as they will not be wholly dependent on the domestic market alone. Moreover it will improve the products to be internationally competitive and increase the income of the sector. The coir based MSMEs with solely export market had almost negligible losses due to the pandemic.
• Attracting the participation of youth into running and starting new MSMEs, is essential for incorporation of new technology, social-media marketing or recycling practices.
• The RBI should inject more funds into the banking sector, deferring or exempting MSMEs from loan repayments.
• Budgetary and policy support that is effective
• Statutory grievance redressal mechanism, where a government functionary can be penalised for unnecessary delay in clearance of application.
• Digital adoption should be promoted in the SME sector, through incentives, etc
• Technology up-gradation and quality certification should be ensured, as it will aid in the promotion of exports and potential for Indian products.
• The MSME products are to be assisted with proper marketing techniques, like using government communication spaces for promoting MSME products and services.
• The delivery of products should be accelerated with the support of railway and postal department, which has deep penetration across the length and breadth of India.
• For the employees, minimum wages should be fixed, Temporary workers are to be legally protected and Wage delay should be reduced and proper payments are to be done.
• Tax reduction for raw materials and other necessary input services, should be coupled with proper public participated auditing of MSME revenues and expenditures.
• Special scholarships and grants are can be introduced by union government to support the children of MSME dependents.

Conclusion

The MSME sector in India is the second-largest employer after agriculture, and functions as a breeding ground for entrepreneurs and innovators with substantial assistance in developing the business environment. A comprehensive analysis of the impact of Covid on the MSME sector, should be followed by effective budgetary and policy support, to revive the sector to continue it as the engine of sustainable growth in India.