Lok Sabha Question No. 1788 (UNSTARRED), answered on 2021-07-29
Subject: Startups and Small Companies Shutdown during Covid
Ministry: MICRO,SMALL AND MEDIUM ENTERPRISES
Asked by: Kalyan Banerjee

## GOVERNMENT OF INDIA

## MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES

## LOK SABHA UNSTARRED QUESTION NO. 1788 TO BE ANSWERED ON 29.07.2021

## Startups and Small Companies Shutdown during Covid

1788.   SHRI KALYAN BANERJEE:

Will the Minister of MICRO, SMALL AND MEDIUM ENTERPRISES be pleased to state:

- (a) whether  the  Government  is  aware  of  any  report  that  more  than  sixty  percent  of  the existing startups and small companies could shut down shops or sell off their companies by the  end  of  the  year  as  a  result  of  Covid  pandemic    and    if    so,    the    reaction    of    the Government thereto;
- (b) whether only 22 percent startups and MSMEs have more than 3-months runway and 41 percent  are  out  of  funds  or  have  less  than  one  month  of  funds  left  and  49    percent    has planned  to  reduce  employees' compensation and benefits costs within a month or two; and
- (c) if so,  the detail  thereof  along  with the  action proposed  by  the  Government  and measures  taken  to address  such  problems?

## ANSWER

## MINISTER OF MICRO, SMALL AND MEDIUM ENTERPRISES (SHRI NARAYAN RANE)

(a) & (b): 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.

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.
- ii. 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 (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.

(c): The  Ministry  of  MSME  implements  various  schemes  and  programmes  for  growth and development of MSME Sector in the country. 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), Interest Subvention Scheme for Incremental Credit to  MSMEs,  Credit  Guarantee  Scheme  for  Micro  and  Small  Enterprises,  Micro  and  Small Enterprises  Cluster  Development  Programme  (MSE-CDP),  Credit  Linked  Capital  Subsidy and Technology Upgradation Scheme (CLCS-TUS).

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.
2. ii)   Rs.  3  lakh  crores  Collateral  free  Automatic  Loans  for  business,  including MSMEs.
3. iii)   Rs. 50,000 crore equity infusion through MSME Fund of Funds.
4. iv)   New revised criteria for classification of MSMEs.
- v) New Registration  of  MSMEs  through  'Udyam  Registration'  for  Ease  of  Doing Business.
6. vi)   No global tenders for procurement up to Rs. 200 crores, this will help MSME.

An online Portal 'Champions' has been launched on 01.06.2020 by Hon'ble Prime Minister.  This  covers  many  aspects  of  e-governance  including  grievance  redressal  and handholding  of  MSMEs.  Through  the  portal,  total  35,983  grievances  have  been  redressed upto 25.07.2021.

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