Over 82% small businesses had negative Covid impact; lack of market access top challenge: Survey

Around 95 per cent respondents said that they were impacted in April 2020 when the national lockdown was imposed.

Covid impact on MSMEs: Over 82 per cent of more than 250 small businesses in India said that they had a negative Covid impact while 70 per cent believed their pre-Covid level recovery to take nearly a year, according to a survey by Dun & Bradstreet. Moreover, around 60 per cent survey respondents expected more measures and support from the government even as lack of market access (42 per cent), overall productivity improvement (37 per cent), and access to more finance (37 per cent) were the top three challenges cited by MSMEs in the survey titled Impact of COVID-19 on Small Businesses in India and the Way Ahead. The surveyed businesses in seven major cities belonged to the manufacturing and services sectors with annual revenue between Rs 100 crore and Rs 300 crore.

Moreover, around 95 per cent respondents said that they were impacted in April 2020 when the national lockdown was imposed. Even with progressive unlocking, 70 per cent businesses remained disrupted till August 2020 and 40 per cent till the end of February 2021. “The pandemic has speed up the pace of digitization across sectors and businesses have reaped advantages like cost reduction and increased productivity. Globally, digital adoption has accelerated by seven years due to the Covid-19 crisis. Our survey points out that 82% of surveyed Small Businesses have digitized their daily operations during this pandemic, which helped them in Reduction in Cost (54%) and Enhancing Competitiveness (51%),” Avinash Gupta, Managing Director, Dun & Bradstreet India in a statement.

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India has a base of around 6.33 crore MSMEs out of which 6.30 crore (over 99 per cent) are micro-enterprises, according to the MSME Ministry’s annual report 2020-21. Small enterprises are 3.31 lakh and 0.05 lakh are medium enterprises accounting for 0.52 per cent and 0.01 per cent of total estimated MSMEs, respectively. Ever since Covid struck India, there have been multiple surveys looking to ascertain the impact of the pandemic on MSMEs. According to an RBI survey last year, the MSME segment struggling to survive and scale amid Covid has been among the five sectors adversely affected by the pandemic. 60 per cent respondents had claimed recovery in the MSME sector, which suffered from massive labour migration, production halt, and cash flow crunch during the lockdown. Moreover, according to a Crisil survey published in December last year, the adoption of digital channels such as online aggregators or marketplaces, social media, and mobile marketing has increased from 29 per cent micro-enterprises using them before Covid to 47 per cent as of November. The jump was marginally higher among small enterprises from 29 per cent before Covid to 53 per cent during the said period for revenue generation.