Samar Verma Program Officer, Ford Foundation; Founding Director, Consortium of Trade and Development; Diplo alumnus
Small enterprises, large roles: Digital adoption critical to post-COVID-19 business revival First published on Diplo Blog, 23 June ‘Locked units, dead stock, no sales, demanding vendors, uncollected payments and mounting expenses – COVID-19 has been the last nail in the coffin for a host of MSMEs.’ 111 million people in India are employed in 63 million micro, small, and medium enterprises (MSMEs) which account for 48% of India’s exports and 29% of India’s gross domestic product (GDP). In India, MSMEs are defined on the basis of the fixed investment in a plant, machinery, or equipment. Over 99% of these are micro enterprises (which include investments of up to ₹2.5 million in the manufacturing sector, and ₹1 million in the services sector). Nearly half of MSME jobs are generated in rural areas, and two-thirds of all MSMEs are owned by marginalised communities of the Scheduled Caste, Scheduled Tribes and Other Backward Castes. 47% of the workforce is younger than 30, and 87% is under 40 years of age, as stated in Intellecap’s report Future of Workers, Voices from the Ground. Decent work generated in MSMEs is therefore critical for the livelihoods of millions, especially those from young, vulnerable, and marginalised groups living in rural areas. Adversity, on the other hand, in MSME sector spells disaster for largest segment of India’s population, most of who are from the poorest and most marginalised communities. All available anecdotal evidence suggests that MSMEs have been the worst casualty of COVID-19-induced lockdowns. Survey reports have shown that disruptions caused by the COVID-19 pandemic have impacted MSME earnings by 20–50%, with up to 78% jobs lost compared to 2017. During COVID-19, many enterprises halted their production, laid off their workers because of the inability to pay salaries, and have vacated their offices to save rental expenses. In view of their critical role in Indian economy and employment, many stimulus measures have been undertaken by the government to support MSMEs, but they all included financial support, with very little focus and emphasis on building resilience through strategic capacity enhancement, technology infusion, and an improved connection to value chains. This data was published in Intellecap’s survey (conducted in December 2020 with both workers and employers) on the impact of technology on small businesses.
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