Lok Sabha Question No. 2467 (UNSTARRED), answered on 2021-12-13
Subject: Covid-19 Impact on Small Businesses
Ministry: CORPORATE AFFAIRS
Asked by: Prathap Simha, D. M. Kathir Anand

## GOVERNMENT OF INDIA

## MINISTRY OF CORPORATE AFFAIRS

## LOK SABHA UN-STARRED QUESTION NO. 2467 ANSWERED ON MONDAY, DECEMBER 13, 2021/ AGRAHAYANA 22, 1943 (SAKA)

COVID-19 IMPACT ON SMALL BUSINESSES

## QUESTION

2467. SHRI PRATHAP SIMHA: SHRI D.M. KATHIR ANAND:

Will the Minister of CORPORATE AFFAIRS

## be pleased to state:

- (a)  whether  over  82  per  cent  of  small  businesses  in  India  have experienced a negative impact and it will take them nearly a year to recover demand levels prior to Covid-19;
- (b)  if  so,  the  pro-active measures taken by the Government in this regard, particularly in Karnataka; and
- (c)  the  effective  steps  taken  by  the  Government  to  rectify  and rehabilitate  small  businesses  from  major  three  hinderences  viz, market  access,  improving  the  productivity  and  access  to  more finance?

## ANSWER

MINISTER OF STATE (INDEPENDENT CHARGE) OF THE MINISTRY OF STATISTICS  AND  PROGRAMME  IMPLEMENTATION;  MINISTER  OF STATE (INDEPENDENT CHARGE) OF THE MINISTRY OF PLANNING; AND MINISTER OF STATE IN THE MINISTRY OF CORPORATE AFFAIRS

[RAO INDERJIT SINGH]

सांख्यर्की और कार्यक्रम कार्ायन्वर्न मंत्रालर् के राज्र् मंत्री ( स्वतंत्र प्रभार ) ; र्ोजना मंत्रालर् के राज्र् मंत्री ( स्वतंत्र प्रभार ) और कारपोरेट कार्य राज्र् मंत्री

(

राव इंदरजीत ससंह )

कारपोरेट कार्य मंत्री

- (a)  to  (c):  Ministry  of  Corporate  Affairs  (MCA)  administers  the provisions of the Companies Act, 2013 (the Act), The Limited Liability Partnership  Act,  2008  and  The  Insolvency  and  Bankruptcy  Code, 2016. Ministry of Micro, Small and Medium Enterprises (MSME) has informed that:
1.  COVID-19  epidemic  has  temporarily  affected  various  sectors including  Micro,  Small  and  Medium  Enterprises  in  the  country. Economic activity contracted due to the strict lockdown measures imposed by the Government. This contraction has also had impact on the MSME sector.
2.  Studies  have  been  conducted  by  National  Small  Industries Corporation  (NSIC)  and  Khadi  and  Village  Industries  Commission (KVIC)  to  assess  the  impact  of  COVID-19  Pandemic  on  MSMEs including units set up under Prime Minister's Employment Generation Programme (PMEGP).
- A. The  main  findings  of  the  online  study  conducted  by  NSIC  to understand the operational capabilities and difficulties faced by the beneficiaries  of  NSIC  schemes  amid  Covid-19  pandemic  are  as follows:
- i. 91% MSMEs were found to be functional.
- Five most critical problems faced by MSMEs were identified as Liquidity  (55%  units),  Fresh  Orders  (17%  units),  Labour  (9% units), Logistics (12% units) and availability of Raw Material
- ii. (8% units).
- B. The findings of the study conducted by KVIC are as under:
- i. 88% of the beneficiaries of PMEGP scheme reported that they were negatively affected due to Covid-19 while the remaining 12%  stated that they were benefitted during Covid-19 Pandemic.
- ii. Among the 88% who were affected, 57% stated that their units were shut down for some time during this period, while 30% reported drop in production and revenue.
- iii. Among  the  12%  who  had  benefitted,  65%  stated  that  their business  increased  as  they  had  units  in  retail  and  health sector and around 25% stated that their units benefitted as they were dealing with essential commodities or services.
- iv. On  the  question  of  regular payment  of  salaries  to the employees, around 46.60% respondents stated that they had paid the salaries in full, 42.54% reported to have partially paid and 10.86% reported to have not paid salary for some time during this period.
- v. Majority of the beneficiaries expressed the need for additional financial support, relaxation of waiver of interest and marketing support for their products.
3. The  Ministry  of  MSME  implements  various  schemes  and programmes  for  growth  and  development  of  MSME  Sector  in  the country including State of Karnataka. These schemes and programmes include Prime Minister's Employment Generation programme (PMEGP), Scheme of Fund for Regeneration of Traditional Industries  (SFURTI),  A  Scheme  for  Promoting  Innovation,  Rural Industry & Entrepreneurship (ASPIRE), Credit Guarantee Scheme for Micro  and  Small  Enterprises,  Micro  and  Small  Enterprises  Cluster Development Programme (MSE-CDP).
4. Post Covid-19, Government has taken a number of initiatives under Aatma Nirbhar Bharat Abhiyan to support the MSME Sector in the country especially in Covid-19 pandemic. Some of them are:
- i) Rs. 20,000 crore Subordinate Debt for MSMEs.
- ii)  Rs.  3  lakh  crores  Collateral  free  Automatic  Loans  for business,  including  MSMEs  (existing  overall  guarantee  limit under ECGLS has been enhanced from Rs.3 lakh crore to Rs. 4.5 lakh crore).
- iii)  Rs.  50,000  crore  equity  infusion  through  MSME  Fund  of Funds.
- iv) New revised criteria for classification of MSMEs.
- v) New Registration of MSMEs through 'Udyam Registration' for Ease of Doing Business.
- vi) No global tenders for procurement up to Rs. 200 crores, this will help MSME.
5. To provide further relief to the MSME sector especially during Covid-19, Government has taken following measures recently:
- The  validity  of  Udyog  Aadhar  Memorandum  (UAM)  has  been extended  up  to  31.12.2021  vide  notification  no.  S.O.  2347(E) dated 16.06.2021.
- On 02.07.2021, the Government has included retail and whole sale trades as MSMEs and they are allowed to be registered on Udyam Registration Portal. However, the benefits to Retail and Wholesale trade MSMEs are to be restricted to Priority Sector Lending only.
- Now,  street  Vendors  can  also  register  as  retail  traders  on Udyam Registration (UR) portal and avail the benefit of Priority Sector Lending.
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