Second Covid wave is creating extreme discomfort to small businesses
Compassionate capitalism by the big industries along with government measures can help MSMEs overcome the pandemic-induced crisis, point out industry experts.
Entrepreneurs and small business owners are generally self-motivated and fight till the end. They try to pump in financial resources from savings, by pledging spouses’ gold etc. Private sourcing, borrowing from friends and relatives have prolonged their existence during the Covid-hit quarters.
While the consumption started to pick up since the last quarter of financial year 2021, the second Covid wave is creating extreme discomfort to small businesses. MSMEs are at the crossroads again, burdened with heavy borrowings while staring at loan repayments. Livelihoods of tens of thousands of families are at stake again.
“MSME will require unprecedented support not only from the government, but also from large industries. While Central and State governments can look at the range of possible solutions, big corporates can look at compassionate capitalism to help MSMEs survive, stabilise and surge ahead into the future,” says MK Anand, Strategic Business Advisor – MSMEs & Founder, SEE CHANGE Consulting & Chairman, MSME Sub-Committee, Andhra Chamber of Commerce.
Diversion of CSR funds
Large industries can look at diverting their annual CSR funds for the survival of micro and small units. Several of them could be turned into their suppliers and can be funded to overcome the crisis, he said.
Telecom giants and internet providers could offer fee-waivers to MSMEs for a couple of quarters as it will help them adapt technology or take up digital path towards resilience. Also, small entrepreneurs could be offered free health insurance policies by private insurance companies.
“A major help from big brothers during this crisis period will be to clear the payment dues of MSMEs on a war footing. The move will improve their liquidity and fund flow positions. Big companies should also handhold MSMEs with some waivers and other support measures,” said an analyst at a leading brokerage house.
Anand said that given the current challenging period, bank interest could be waived, and GST payments should be deferred for six months for MSMEs.
“Fuel charges must be reduced substantially with a slab-based approach based on their turnover if they show MSME Certificate. It will also trigger them to register with Udyam Portal,” he added.
Also, the Credit Guarantee Fund Trust for Micro and Small Enterprises scheme must be open for all MSMEs by all branches of nationalised banks. Collateral-free loan should be extended based on the number of invoices, client list and clients’ payment-linked assurance.