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In India, Small Industries & Businesses are termed as the backbone of the country’s economy. It is these units which act as robust pillars at the grassroots in providing support to the nation’s economy. Besides, being low-budget, high-productivity units, these also employ the greater number which in turn helps bring down pressure on other sectors.

The Present Scenario

In the light of the recent COVID-19 pandemic that has hit countries worldwide, it has become highly imperative for economies to assess their most vulnerable sectors and provide them with sufficient support and help. In the absence of help, the Micro, Small & Medium Enterprises (MSME) might succumb and ultimately die down which could be detrimental for the economy.

Besides, providing help to the MSMEs is the first measure that world economies have adopted in order to shield their economies from getting hit by the standstill in the demand and supply of goods and services due to the pandemic.

Industries bodies in India had also stressed on financial support to the small units acutely impacted by the aftermaths of the coronavirus pandemic. In March this year, they had proposed immediate fiscal relief for SMEs and credit flow so that the small units could retain their workforce and keep production of goods or services running.

Why Indian government schemes target MSMEs?

So, what is it that has inspired world economies and India to come to the rescue of small units? Is it just their small nature or less investment or it is something big? Well, the most important thing about MSMEs is that these are the primary units after the agriculture sector and taking good care of them or at least keeping them alive in these troubled times would ensure that economies do not collapse.

SMEs are the most vulnerable

Just like the youngest kid in the family, the MSMEs are the most vulnerable to crisis. As they lack sufficient resources, they often have to shut down prematurely following one or the other drastic reasons. This severely impacts the economy as they form an integral part. Small industries often supply necessary raw material, finished or semi-finished goods to big players and without them big enterprises fail to keep up with production. Thus, in order to keep things in motion, the small businesses must remain energized.

Also Check: What is the Economic Impact of Corona Virus in India?

MSMEs Are the Most Crisis Prone

Since small businesses do not have large capital or assets and they highly rely on working capital. If in any case, their money is stuck, they have only one option which is to shut down operations. This is because they lack fiscal assets and in the event of a financial crisis their resources fall short, ultimately leading them to have no other option but to stop.

They Have Limited Funds, Resources at Hand

Most of the MSMEs depend largely on finances arranged either personally or through unconventional channels. This is because, SMEs lack big assets and solid collaterals and thus their banks too fail to provide them with much-needed help in times of crisis. As per an estimate most of the SMEs have to arrange funds on their own as banks and NBFCs often deny them loans following their low working capital and lack of assets.

High Competition Drives Them Out of Market

Another reason why government schemes targets MSMEs and extends help to them is that they are the most affected ones due to competition. Large companies and big enterprises have separate funds and money for popularizing their products and services but the small companies fail to focus on advertising as their resources are utilized mostly on operations and other expenses to keep their firm alive and running.

Low Demand Due to Pandemic & No Sign of Recovery in Near Future

The recent pandemic has shaken economies worldwide and India is among those which has also received a severe blow. Thus, if the whole economy is in the downturn, how its most critical units – the small industries and businesses could remain unaffected. The pandemic has severely impacted demand and supply in almost every sector and as per experts, there is no sign of recovery in demand in a majority of sectors for the next couple of years. It is said that the whole economy is under a depression sentiment and thus the buyer is not enthusiastic on spending money except on necessary items like food and essential services.

Also Read: What are the significant factors of slowing down the Indian economy?

Diminishing Business Opportunities

The current pandemic has diminished the present business opportunities and it seems that there would be lesser ones in the near future as well. As per recent estimates, it is believed that that market could take years to settle and come back to its previous state. Thus, in this period it would be highly challenging for businesses specially the small ones to keep themselves in the market and wait for the market to gain its lost sheen.

Reason why the government has targeted small businesses is that helping them could be practically possible instantly and extending help to this pillar of Indian economy would be worth in saving the economy. The governments of the world have also realized that if small businesses come crashing then the whole economy could collapse.

Atmanirbhar Bharat Abhiyan & MSMEs

Small measures could bring big wonders for the MSMEs as their demands and their needs are limited. Even a small help of a few lakh rupees at the right time could bring drastic change for a small business and bring it back on track. Compared to help needed by big industries, small businesses expect less and they can do well even with a little funding. This is what the Atmanirbhar Bharat Abhiyan targets.

MSME Schemes focuses small enterprises and thrusts measures in the form of government schemes for MSMEs to keep them alive by extending government guarantee for their small loans. Besides, the small enterprises are the ones which could really realize the dream of building a self-reliant, self-sufficient, self-dependent Bharat. These are the ones which could really build India again amidst this crisis and help India achieve self-sufficiency in every sector.