SMBs Long for Govt Intervention, Stimulus Evades Industry Finds Report

A nationwide survey by the Consortium of Indian Associations (CIA) on the status of Self Employed and Micro/Small Businesses (SMB) has made shocking revelations. With 88% of the respondents having not received any stimulus from the three different packages announced by the Union government and 77% not making profit in the last financial year, the industry is longing for attention.

The SMBs have sacked or reduced 59% of its workforce since the lockdown began in March 2020.With the lockdowns of different magnitudes due to the COVID-19 pandemic continuing across the country, the SMBs and the workers in the industry continue to suffer. 

The survey held during the second week of June, attracted responses from more than 81,000 industries and organisations across the country. Considering the ongoing pandemic, the CIA has requested for certain exemptions, protections and support from the governments.

STIMULUS PACKAGES EVADES SMBs

The survey was carried out across the country, along with 40 trade associations, with 81,017 respondents.

K.E. Raghunathan, convenor of CIA and former national president of All India Manufacturers' Organisation, said, “We realised that a data-backed survey would help consolidate the feedback from this sector, to bring out the pain points, and provide solutions and a way forward to revive the sector."

The Union government announced three major stimulus packages after the lockdown was imposed during March 2020. But, the SMBs have hardly received any support from the announcements, the survey has found.

“Almost 88% of the respondents have not availed any benefits from the stimulus so far, whether due to ineligibility or inability to fulfill strict conditions,” the report said. 

Also read: New Pre-Packaged Resolution Process Not Beneficial for Micro, Small MSMEs: Claim Experts

Considering the complications in receiving the support from the governments, the CIA said, “Though the government talks about ‘Ease of doing business’ and has simplified and scrapped a few outdated laws, the MSMEs largely continue to be governed by complicated and outdated laws and dispensable compliances.”

Responding to the support extended by the Union and respective state governments, the survey found that 80% are dissatisfied with the governments, while a paltry 8% are satisfied.

Response to the question on ‘How many are satisfied with what the central and state governments are doing their best for SMB? (Source: The CIA Survey)

WORKERS GO FOR A TOSS

The sharp decline in the income and the profit to the industries have led to the workers losing jobs, even during the pandemic. Only 14% have made profit during the last financial year, while 73% responded of not having made profit. The retention of the existing employees in the industry also remains a major question.

Response to the question of ‘How many made profit in FY 2020-21? (Source: The CIA Survey)

With the respondents accepting to have sacked/reduced or removed 59% of the staff compared to the pre-COVID 19 period, 42% say they are unable to decide on retention of employees.  

“During the first wave of COVID-19, we lost 37% of the workers and in the second wave 22% were lost,” the report said.

How many reduced/added/can't say on staff strength now, as compared to pre-COVID period? (Source: The CIA Survey)

Another 22% of the respondents have not given the exact situation of the reduction/sacking of workers in the survey.

WAY FORWARD?

The CIA has put forward a charter of demands, considering the pandemic and the loss of earnings to 52 different sectors identified through the survey. The report calls for a three-pronged approach of Exempt, Protect and Support for the SMBs to overcome the present crisis.

The CIA has listed ‘pain points’ on money including loans, pending payment, material including prices of raw materials, and human resources including internship for students and government intervention on migrant labourers.

Also read: 35% MSMEs Have Begun Shutting Shop Due to COVID-19 Situation: Survey

Currently, the enterprises pay more to the government than the profit they make, the report said. "The revenue-sharing pattern between the enterprises and government should be fixed again based on the turnover and profits to enable entrepreneurs to benefit and stay within the legal framework," said Raghunathan.

Ravi Sood, general secretary of Badli Industrial Estate Association, has requested the government to make changes in the GST Act to make it SMB friendly.

The huge announcement of the Union government on providing stimulus to the small and medium industries, including the SMBs seems to have made hardly any positive impact on the ground. The SMB industry, with reportedly more than four crore organisations, continues to languish due to the lack of attention of the Union and respective state governments.