Revenue Loss of MSMEs
The All India Manufacturers’ Organisation, (AIMO) has estimated a loss of around Rs 40,000 crore a day to MSME sector. Further, it stated that the industry has already lost more than 12 lakh crore since the lockdown. AIMO national general-secretary Kenny Ramanand noted that the government needs to provide incentives to the MSMEs to avoid their shutdown.
Further, he revealed that the small industrial units, either directly or indirectly dependent on the worst-hit sectors, are on the verge to collapse. The AIMO has asked the government to introduce a citizen risk assessment module and allow 55.1% of the population to return to work to avoid a further loss to the economy.
Cash Exhausts with MSMEs
A report submitted by Consortium for Technology Research Entrepreneurship and Employment revealed that the revenue of MSMEs in Tamil Nadu dropped 47.7%. They already started seeing losses two weeks before the lockdown. Further, the revenue declined to 61.3%, making an average loss for two months at 54.5%.
Among the worst-hit sectors, building and construction, chemical, furniture and textile garments, registered zero revenue in the past two months. The study included 15 significant industries in Madurai as the area consists of a variety of industries. Also, the study revealed that the shutdown has exhausted the cash and companies have monthly payables exceeding 40% their average monthly revenues.
Increases in Inventories of Finished and Raw Materials
Another survey conducted on MSMEs revealed lower order books, an increase in inventories of finished goods and raw materials. Besides, around 50% of MSMEs surveyed reported a decrease in booked orders. Further, 25% reported a 20% increase in finished goods and raw material inventories each in Q4 due to the pandemic. Consequently, employment in these industries felt the major brunt of the Coronavirus pandemic.
In all, the lockdown has affected production, supply chain and employability across MSMEs. Therefore, a 20 lakh package by the government would not meet the losses already registered by MSMEs.