Impact of covid-19 on Micro, Small and Medium Enterprises - The emerging scenario

The liberalised financial package and the revised definitions of the Micro, Small and Medium Enterprises (MSME) with a hike in the limits of investment in Plant and Machinery and turnover, are primarily inducted to revive/nurse these entities, in the wake of financial problems faced by them, in the aftermath of Covid-19 pandemic; the hike in the limits is substantial in the case of Medium enterprises, relative to Micro and Small enterprises. The impact of these measures on commercial banks and the likely influx of companies in the Private Corporate Sector into the fold of MSMEs with the revised definition, are discussed in this article, mainly based on the results of the Surveys of the National Sample Survey Organisation (NSSO), the Reserve Bank of India (RBI) studies on company finances and the RBI Basic Statistical Returns (BSR) on banking statistics of scheduled commercial banks. As many enterprises belong to the Micro/Small categories with relatively low credit requirements, the need for a separate credit budget for these entities is spelt out. Taking into consideration the problem areas of these enterprises, it is suggested that the database of these enterprises is to be revamped further, by generating additional tabulations with the garnered data, and also collection of additional data, which could be of use in formulating or modifying schemes of financial assistance to the MSME)