NE BUSINESS BUREAU
CHENNAI, DEC 30
Fifty-seven percent of the Micro enterprises (MSMEs), owned by socially and economically vulnerable entrepreneurs across India, are struggling to get new orders for their merchandise, says a study released on Friday.
An all-India study, conducted by Bhartiya Yuva Shakti Trust (BYST) as a socio-economic initiative has given critical insights into the working of about 5,685 Micro enterprises (MSMEs), owned by socially and economically vulnerable entrepreneurs across India. The average investment of these businesses has been recorded as little more than Rs.6 lakh, highlighting their low capital size, impending distress, and vulnerability to multiple factors, including local demand disruptions during the past two years of COVID-19.
- Digital platforms like Facebook and WhatsApp emerge as alternative marketplaces to buy raw material and sell products, say 40 percent rural entrepreneurs
- The 5,685-sample size were drawn from Faridabad and Gurugram (Haryana), Sikar (Rajasthan), Uddham Singh Nagar (Uttrakhand), Rayagada, Bhubaneshwar and Jajpur (Odisha), Ranchi (Jharkhand), Chennai (Tamil Nadu), Hyderabad (Telangana), Vijayawada (Andhra Pradesh), Pune, Aurangabad, Wardha, Satara, Karad, Sangli Kolhapur (Maharashtra), Dibrugarh (Assam) and the State of New Delhi.
The study, spread across 20 cities in 12 states, conducted by BYST, an initiative that mentors and arrange financial assistance from Banks for budding rural as well as urban entrepreneurs, highlight that though markets have stabilized, at least fifty-seven (57) percent of them, are struggling to get new orders for their merchandise.
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The study concluded in October 2022, with a sample size of over 5,685 grassroot entrepreneurs on similar parameters, to draw on some key assessments on challenges faced by the vulnerable entrepreneurs.
“Lesser purchasing power of consumers lead to reduced demand and increased raw material cost due to higher transportation cost with increase in fuel prices have been cited among key problems faced by entrepreneurs during the last 27 months. This highlights the criticality and urgency to integrate grassroots entrepreneurs and their enterprises in India’s economic value chain,” said Lakshmi Venkataraman Venkatesan, Founding & Managing Trustee, Bhartiya Yuva Shakti Trust (BYST), who lead the initiative along with her research team.
The 5,685-sample size were drawn from Faridabad and Gurugram (Haryana), Sikar (Rajasthan), Uddham Singh Nagar (Uttrakhand), Rayagada, Bhubaneshwar and Jajpur (Odisha), Ranchi (Jharkhand), Chennai (Tamil Nadu), Hyderabad (Telangana), Vijayawada (Andhra Pradesh), Pune, Aurangabad, Wardha, Satara, Karad, Sangli Kolhapur (Maharashtra), Dibrugarh (Assam) and the State of New Delhi.
BYST take pride with its mentoring programme on one-to-one basis for two years after disbursement of loan by the Banks as more than 97% of loan of the assisted entrepreneurs are regular in repayment, 1.5% repaying with some delay and only 1.5% only are NPA against the industry average of more than 10% in similar category.
While the impact of COVID-19 has been slowly receding, the economic situation is yet to completely stabilize due to multiple factors, including slow economic recovery, and fresh local supply chain disruptions among others. About 27% of the entrepreneurs say that they find difficulty in repaying their loan instalments on time while another 20% are finding it difficult in arranging raw materials for production. An increased cost of production has also emerged as a source of concern for at least 9% of them.
On the other hand, Venkatesan highlighted that entrepreneur mobilized after the lifting of the lockdown, have echoed a positive sentiment on business growth as 53 percent said they are doing better in some aspects of in comparison to the pre-pandemic phase.
The study also highlighted that 14% of the women entrepreneurs are finding it difficult in operating their business being women, out of which 72% quoted in marketing of their products and 26% in the timely realization of book-debts.
“Women entrepreneurs need special mentoring and upskilling. Their inability to move around during odd hours, travel to other cities and lack of skilling in using digital marketing tools restrict them in growth of their business.” she said, adding that women have bias and barriers to overcome, such as conflict between work and personal responsibilities at home front, community restrictions and lack of support from society in general.
The biggest positive impact of the pandemic has been the digitization of supply chain management. About 40% of entrepreneurs said they started using digital platforms mainly Facebook and WhatsApp to arrange raw materials and market their products. Researchers feel that it is an indication that traditional supply chains are gradually getting disrupted, and a new supply chain has been simultaneously emerging with the help of social media and other digital platforms, which are now marketplaces in their own right.
