# Around 96% respondents stood tall

against the challenges and doesn’t

believes in closing down their businesses.
# Around 56% respondents have put their
business expansion and growth plan on
hold so that they can better strategize
while waiting the market to recover and
stabilize # Around 27% respondents have
found innovative method of diversifying
into new business activities

Impact of COVID-19
on MSMEs

White paper

Published by: North

Orissa Chamber of
Commerce & Industry

Compiled by:
NOCCi Swayam Chayanika Rath &
Priyanka Das
Research Assistants
 ACKNOWLEDGEMENT

The final shape of this White Paper required a lot of guidance and assistance from many
people. We thank Shri Amit Behera, Shri Chandraprakash Bhartia, and Shri Subrat
Nayak, for giving us an opportunity to develop this white paper and sharing their pearls of
wisdom with us during the course of this research, & report. We must say that we are
extremely fortunate to receive the same.

We are also grateful to the entire NOCCi team for their support and cooperation. This
white paper would not have been completed without the cooperation and quick response
from the surveyed enterprises. We immensely thank them for all their valuable & candid
inputs.

Swayam Chayanika Rath

Priyanka Das
Research Assistants, NOCCi
 TABLE OF CONTENTS

I. INTRODUCTION ................................................................................................................ 1
II. OBJECTIVES & RESEARCH METHODOLOGY .............................................................. 2
III. DATA ANALYSIS & INTERPRETATION ......................................................................... 2
IV. FINDINGS & SUMMARY ................................................................................................. 3
Factors responsible for affecting the MSMEs due to COVID-19...................................... 3
Detailed Insight based on assessment of responses from industry members ................. 4

V. CONCLUSION................................................................................................................ 13

VI. SUGGESTION ............................................................................................................... 14

VII. ANNEXURE.................................................................................................................. 15
Schemes announced by Government under ATMANIRBHAR BHARAT..................... 15
Questionnaire .............................................................................................................. 19

VIII. BIBLIOGRAPHY .........................................................................................................21

I. INTRODUCTION

Mankind is battling with the COVID-19, which has left the entire world muddled and in the lurch as
to how a virus has brought the entire globe to a standstill.

This virus is mounting a very serious threat to the global economy as well, which is already in
grave peril. There is no doubt that the Indian economy, which is already sputtering, is growing at
one of the lowest rates in the last six years. And now, a new set of economic challenges
unleashed by this virus is leaving many sectors in tatters.

The COVID-19 has left its impact on all sectors of the economy but nowhere is the hurt as much
as the Micro, Small and Medium Enterprises (MSMEs) of India. All anecdotal evidence available,
such as the hundreds of thousands of stranded workers, suggests that MSMEs have been the
worst casualty of Covid-19 induced lockdown.

Lockdown in India has led to various issues ranging from shrinkage of exports, cessation of
production, non-availability of manpower, the uncertainty of consumption, and liquidity squeeze in
the market as well.

According to the Confederation of All India Traders (CAIT) which represents 70 million traders in
India and the majority of them are MSME. The trade impact for India is estimated to be around Rs
380 lakh. Micro, small and medium enterprise is the sector which was already reeling under huge
distress because of prolonged economic slowdown, demonization, & GST& now finally, for the
biggest of all COVID-19 which has aggravated the crisis in this specific sector further.

MSME forms the backbone of the Indian economy and is one of the most crucial segments that let
the economy grow by leap and bounds. The sector which provides employment to over 114
million people and contributes to more than 30 per cent to India’s GDP and about half of exports
(data by Directorate General of Commercial Intelligence and Statistics (DGCIS)), MSMEs play a
significant role in the economy and, the majority of which relies on day-to-day business to stay
afloat, continues to be the most vulnerable owing to the lockdown and a decrease in demand.

Reeling under the impact of the (Covid-19) pandemic, 80 per cent of micro, small & medium
enterprises (MSMEs) of Odisha are running under the risk of closure. As a fall-out of the
nationwide lockdown, the small and micro scale industries in the state are facing severe hardship.
In the absence of manufacturing activity, there is no cash flow, while the credit cycle has been
badly affected.

There are over 50,158 MSME units in the state of Odisha with an investment of over Rs 2,324.46
crore, according to Economic Survey 2018-19.These units employ roughly around 5 million people
directly & indirectly. Odisha government estimates a revenue loss of Rs 10,000 -15,000 crore in
the current financial year as the state faces a severe disruption in industrial activities due to
coronavirus lockdown.

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II. OBJECTIVES &RESEARCH METHODOLOGY

Research Objectives:

The objectives of the research are as follows:

i. To explore the impact of COVID 19 on MSMEs in Odisha.

ii. To explore whether the Government Schemes related to Industries have been effective or not,
and also to create awareness among the industries.

Research Design:

It is a Diagnostic Research Design. Both quantitative and qualitative data have been analyzed for
the research. Both Primary and Secondary sources of data have been collected. A survey of
MSMEs in North Odisha has been conducted. The primary sources of data were collected over
telephone, via e-mail and by visiting the enterprises. The secondary sources of data have been
collected from Ministry of Finance and from various relevant articles, journals, magazines etc.

Sampling Design:

The target sample for the survey consists of 100 MSMEs of Balasore district. Out of which6 are
medium, 17 are small and 77 are micro enterprises. A questionnaire was prepared & accordingly
survey was conducted based on the questionnaire.

III. DATA ANALYSIS & INTERPRETATION

The data analysis has been conducted by getting information from the survey, which was done by
administering questionnaires among the MSMEs.

Respondents’ Profile

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IV. FINDINGS & SUMMARY

1. Impact of the Covid-19 pandemic on MSMEs

NOCCi a leading industry association surveyed 100 MSMEs (Micro Small & Medium Enterprises)
comprising 6 Medium, 17 Small and 77 Micro enterprises of Balasore district. The objective of the
study was i) to explore the impact of COVID 19 on MSMEs in North Odisha ii) to explore whether
the Government Schemes related to Industries have been effective or not, and also to create
awareness among the industries.

INTERIM BRIEF - CHALLENGES FACED BY MSMEs DUE TO COVID-19

Out of the many challenges faced by MSMEs due to COVID-19, here are few of the major
challenges that are being faced by MSMEs:

1. Collapsing demand and access to liquidity- Demand has plunged for the businesses and
entrepreneurs, even in commodity sectors and some buyers are slowing payments for orders
already received. MSMEs have small cash reserves, and therefore go out of business first in
liquidity shock.

2. Accessing inputs and managing inventory- MSMEs frequently source inputs from other
states & even from abroad, so as a result of COVID19 supply chains have become longer and
more complex.

3. Managing the work environment- For manufacturing MSMEs in lockdown situations,

remaining open is challenging as factory floors are not designed for social distancing.

Factors responsible for affecting the MSMEs due to COVID-19

 Shortage of Manpower

Organizations across the State have experienced unprecedented workforce disruption.

Virtually all companies are still determining how they will work in the short- and long-term,
as shortage of manpower exists, which has affected the MSMEs to a greater extent.

 Market Demand

Consumer demand patterns have shifted; supply chains are disrupted and have been
under pressure, due to a stagnating economy and reduction in market demand. With the
COVID-19 crisis, fundamental changes in consumer behaviour and routes to market have
knocked MSMEs off balance in the State.

 Shortage of supplies/input materials

Small industries in the State have faced a shortage of raw material due to the ongoing
nationwide lockdown. As a result there was a halt in the production which ultimately

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 affected the entire supply chain. So, shortage of raw material has been a factor which
adversely affected the MSMEs during the pandemic.

 Logistics

Due to lockdown, the supply chain has virtually come to a standstill. As a result, shipments
lie pending as factories and warehouses were shut in a prompt response to the global
health emergency. The crisis has severely affected transport services, both in terms of
supply and demand. And because freight transport operations, logistics, and the
production of goods were so tightly synchronized, these disruptions have quickly had a
ripple effect on commerce, exposing the fragility of the entire supply chain.

 Export Issues

Merchandise exports have collapsed by over 60% and imports contracted only slightly
less. The trade collapse was not surprising as the spate of regional, national as well as
lockdowns around the world have not only dented demand and investment, but also
severely disrupted supply chains and shipping routes.

 Shortage of Funds

The MSMEs stare at a lack of capital. Small enterprises are hit by zero cash flow due to
the national lockdown. As there was a halt in the production and slump in demand,
MSMEs are unable to pay their creditors. While the revenue generation remains on hold,
there are several expenses that the MSMEs can’t get their hands off such as salaries of
employees, tax deposit, rent of warehouses and office spaces, among many others.

 Temporary Shutdown

Workplace shutdown has been a major factor in hitting MSMEs hard during the COVID
crisis as operations get ceased due to unavailability of raw materials and leave the
enterprises at a high risk of insolvency. So, it is indicative that the slowdown or the
temporary shutdown is one of the major factors that have affected the MSMEs in North
Odisha.

 Shortage of Market Credit

The nation-wide lockdown has badly hit business sustainability for the MSME segment due
to the lack of cash-flows to meet their fixed cost. Business credits were first hit by the
sudden stop in economic activities, affecting the industries disproportionately.

Detailed Insight based on assessment of responses from industry

members

A majority of the participating MSMEs said that the coronavirus pandemic has had an adverse
impact on their business.

Out of the total sample size, around 6% of the respondents said that their businesses have not
been impacted due to the pandemic outbreak.

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Impact on Revenues: Nearly 27% of the respondents reported that their revenues were not
affected, around 9% reported that they bore a revenue loss in the range (0%-25%), nearly 16% of
the respondents said that they suffered a loss of revenues in the range (25%-50%) and around
47% of the respondents reported a loss of revenues in the range (50%-100%).

Impact on Orders: Around 42% of the respondents reported that their orders were not affected
during the pandemic, nearly 11% said that they suffered a loss in orders in the range (0%-25%),

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around 17% reported that they bore a loss in orders in the range (25%-50%) and 29% of the
respondents reported a loss in orders in the range (50%-100%).

Impact on Employees’ Absence: Nearly 49% of the respondents reported that there was no
employee absence during the pandemic, around 19% said that there was employee absence in
the range (0%-25%), 8% of the respondents reported employee absence in the range (25%-50%),
and nearly 23% said that there was employee absence in the range (50%-100%).

2. Factors Affecting MSMEs due to Covid 19

It’s interesting to get insight of what is affecting the industry and its associated variables.

Temporary shutdown 84%

One-third employment 29%

Market demand 61%

Export issues 31%

Administrative reasons 2%

Shortage of market credit 57%

Shortage of manpower 61%

Shortage of funds 63%

Logistics problem 61%

Shortage of supplies 63%

0 10 20 30 40 50 60 70 80 90 100

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Despite several government schemes, it is reported that 57% of the respondents are facing
problem of access to credit market. 61% of the respondents are facing unavailability of skilled
manpower at their workplaces to resume their businesses. It could be due to mix of reasons –
migration of unskilled workers or reluctance of people to resume the work. Due to Covid 19 forced
reasons where transport sector has hit a greater toll due to lockdown, around 63% respondents
faced shortage of supplies and shortage of funds, this is verified further when the 61%
respondent’s reported logistics issues in ferrying either supplies or finished goods.

While unlocking is slowly swinging the business gearing back to normalcy, around 84%
respondents reported that their businesses were on pause. There is silver lining of remaining 16%
who were still up and on without facing situation of temporary shutdown. Due to the lockdown
where end customers or interim customers were in shutdown stage, around 61% respondents
faced poor demand from market. This is further tightened by dismal responses on export which is
reported by around 31% respondents.

It’s worth to highlight a supportive regulation where merely 2% of the respondents reported any
administrative issues during Covid 19. Lockdown has obvious impact on jobs, around 29%
respondents reported cut in one third of employment during the business dismal performance
resulted by Covid 19 shutdown.

3. Risk for permanent closure of business

Despite the odd business challenges and unfavorable market triggers resulted by Covid 19, the
business community doesn’t seems to lose its focus from the sight and appears even more
confident of not just unlocking, resuming but to the turn this pandemic into a business opportunity.

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Around 96% respondents stood tall against the challenges and are unmoved by Covid 19. These
96% respondents asserted no threat and risk of shutting the businesses due to Covid 19.

4. Strategies adopted by MSMES to cope with the COVID 19 crisis

While it’s encouraging to see that whopping 96% of the respondents asserted no threats for
permanent shutdown of their businesses, the whitepaper also uncovers the strategies the
business community have in consideration to fight and come back.

TEMPORARY REDUCTION OF EMPLOYEES 48%

DEFERRING REPAYMENTS/EMIS OF BANK LOANS 37%

SOURCING FROM NEW SUPPLIERS 7%

CUSTOMIZED / NEW PRODUCTS 19%

LOANED EMPLOYEES TO OTHER ENTERPRISES 3%

ADDITIONAL LOAN FROM EXTERNAL SOURCES 17%

HOLD THE EXPANSION OR GROWTH PLANS 56%

DIVERSIFYING IN TO ANY NEW ACTIVITIES 27%

NO STRATEGY ADOPTED 8%

Around 56% respondents have put their business expansion and growth plan on hold so that they
can better strategize while waiting the market to recover and stabilize. Around 27% respondents
have found innovative method of diversifying into new business activities which were earlier not
planned. On the same tangent, around 7% respondents have ventured with new suppliers
considering logistics and transportation problem thus ensuring consistent and unaffected
deliveries of supplies. Further, around 19% respondents brought changes in the product line due
to changing market dynamics. With regard to finance and credit – around 37% of the respondents
have opted moratorium facility provided by the RBI. To further strengthen the funding liquidity,
around 17% respondents have identified new additional access points for credit.

Jobs is an important production factor and as MSMEs managing twin variables of aligning
expenditure with unfavorable market situations is a critical survival point. Its welcoming to see that
business community understands its people as an essential success factor despite business
challenges. On the job front, around 48% respondents are considering for temporary reduction of
employees; around 3% of the respondents found creating alternative business opportunity for its
staff with other enterprises by loaning its staff so that they can be retained and kept supported till
the source enterprise stands on its feet.

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5. Current actions by respondents

Just to apprise readers that section 4 was just planned strategies by respondents to matchup with
the business loss, this section dwell into detailing of activities currently being exercised by the
MSME community.

OTHERS 3%

USING DOWNTIME TO RETAIN WORKERS 45%

NEGOTIATING WITH WORKERS 52%

NEGOTIATING PAYMENT TERMS WITH BANKS

AND SUPPLIERS 51%

DIVERSIFYING SALES CHANNELS 18%

DIVERSIFYING OF PRODUCTS 16%

INCREASING PRODUCTION DUE TO INCREASED

6%
DEMAND

REDUCING PRODUCTION OF GOODS/SERVICES 58%

NO ACTIONS TAKEN 4%

On the production activity:

 18% respondents have diversified into new sales channels. This could be due to closure of
direct retail outlets or transaction points may be through technology or indirect sales
channels.
 16% respondents have already diversified into new products.
 Around 58% respondents have considerably reduced the production update to match with
poor demand signals.
 While almost half of respondents have reduced production activity; Some unlocking
signals have started coming in from MSMEs, around 6% respondents have started to
increase the production capacity to match up increased demand which might be
cumulative demand caused due to piled up business enquires and sudden opening of
outlets. This may be product or service centric.

On the Finance and access to credit:

 Around 51% respondents emphasized need of negotiating credit terms with Banks and
suppliers to restore the business momentum. These respondents are currently pursuing
the negotiations or have already done it as part of the restructure exercise.

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On the jobs:

 Skilled workers are asset to any enterprise; no one would ever want to shred the skilled
capital however for MSMEs the human capital becomes the hard paid capital in
unfavorable situations. Still, the MSME community acknowledges the need and
importance of skilled workers; this is not driven on Humanitarian ground but based on a
strong business sense that finding competent people again would require additional
investment and it might be unaffordable. Around 52% cases, respondents are negotiating
with workers on the terms (may be wages, may be work roster based schedule etc.). 45 %
of the respondents are trying to retain their existing workers who might be reluctant to join
back.

6. Awareness about Government schemes among the MSMEs

While there are several initiatives taken by the government, it appears that almost half of the
respondents are not aware of the schemes.

No (46)
46% Yes (54) Yes (54)
54%
No (46)

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7. Whether Government schemes availed by MSMEs or not

Much on the spirit of earlier argument; a good 58% of the MSME respondents have not yet
availed any scheme.

42%

58% Availed (42)

Not Availed (58)

8. Whether Government schemes are beneficial for MSMEs or not

While many enterprises have not yet availed the scheme but largely around 63% respondents find
the several government schemes beneficial

No (37)
37%

Yes (63) Yes (63)

63%
No (37)

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9. Respondents perspective on government schemes

There is a sizeable number of respondents who have not yet availed any scheme yet they are so
positive about them. This section uncovers their perspective and expectations from the schemes.

76.2 %
67.2%

42.8% 39.4% 37.8% 35.8%

30.4% 33%

19% 22%
COLLATERAL FREE AUTOMATIC

EQUITY INFUSION FOR MSMES

LIQUIDITY INJECTION FOR DISCOMS

PARTIAL CREDIT GUARANTEE

LIQUIDITY FACILITY FOR

INTEREST SUBVENTION FOR

SUBORDINATE DEBT FOR STRESSED

LIQUIDITY THROUGH TDS/TCS RATE

REVISED DEFINITION OF MSMES

OTHER INTERVENTIONS FOR MSMES

THROUGH FUND OF FUNDS

MUDRA-SHISHU LOANS
SCHEME 2.0 FOR NBFCS

NBFC/HCS/MFIS
LOANS FOR MSMES

REDUCTION
MSMES

Collateral free loan is highly appreciated by MSME community, around 76% respondents’ feels
that it’s a game changer. Government of India had recently also widen the eligibility of MSME;
around 67% respondents have endorsed this move. Otherwise, Subordinate debt for stressed
MSMEs is preferred by 43% respondents. Likewise, Equity infusion for MSMEs through fund of
funds got a thumping acknowledgement by about 39% respondents. Taxes have played a key role
in the businesses; around 38% respondents give a very positive outlook on the Liquidity through
TDS/TCS rate reduction scheme. Likewise Interest subvention for MUDRA-Shishu loans is
acknowledged by 36% of respondents. There are 30% respondents who appreciates that Partial
credit guarantee scheme 2.0 for NBFCs scheme can be beneficial. Around 33% respondents
affirm their endorsement on Liquidity facility for NBFC/HCs/MFIs scheme. Scheme of Liquidity
injection for DISCOMs did not excite much of the MSME community; around 19% respondents
have underlined positive appreciation on this scheme.

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10. Government schemes preferred by MSMEs

MSME community appreciates, acknowledges and thanks the efforts and initiatives of Central
Government and State Government in working out array of schemes for the MSMEs. Certainly,
business community appreciates making preferences and opting one over the other based on the
scope, benefits, flexibilities it offers.

Other Interventions for MSMEs

Revised definition of MSMEs

Interest subvention for MUDRA-Shishu loans

Liquidity through TDS/TCS rate reduction

Liquidity facility for NBFC/HCs/MFIs

Partial credit guarantee scheme 2.0 for NBFCs

Liquidity injection for DISCOMs

Equity infusion for MSMEs through fund of
funds
Subordinate debt for stressed MSMEs

Collateral free automatic loans for MSMEs

0 5 10 15 20 25 30 35 40 45 50

1st Preference 2nd Preference

As reported by respondents, Collateral free automatic loan and revised definition of MSME has
received greater preference over peer schemes.

V. CONCLUSION
The ongoing COVID-19 pandemic has caused the Micro Small and Medium Enterprise (MSME)
sector to face unusual challenges since this sector have much lower reserves of liquidity and less
access to credit. The nationwide lock down since 24th March 2020 is therefore, certainly bound to
break the back of MSME sector. But as per the survey report we can conclude that the MSME
sector of North Odisha proved to be resilient enough &stood tall against the challenges faced by
the pandemic and has been affected to a lesser extent as majority of the participants does not
have the risk of permanent closure of their business. The major factor that has affected the
business of the MSME sector is temporary shutdown of their enterprises, ultimately affecting the
revenues. Many enterprises have put their business expansion and growth plan on hold to better
strategize and many have found innovative methods of diversifying into new business activities to

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cope with the crisis. A large number of respondents are hopeful that reducing the production of
goods and services as their current action plan will help them to overcome the crisis. Though the
Government has taken various initiatives to help the MSMEs to cope with the crisis it is found that
almost half of the respondents are not aware of it and majority of the participants have not yet
availed the schemes.

This means less dependence of the enterprise on the Government, a philosophy, which NOCCi
believes in.

A large number of participating enterprises found the schemes announced by the Government
under “ATMANIRBHAR BHARAT” for MSME sector beneficial even without availing the same,
and have highly appreciated the collateral free automatic loans & revised definition of MSMEs
schemes.

VI. SUGGESTION

At the outset, we appreciate the economic packages for MSME sector under ATMANIRBHAR
BHARAT announced by the Government to kick start the economy. We believe this scheme will
act as a pioneering reform for the Stressed MSME sector in particular with reference to the 20,000
cr package for the operational but stressed & NPA units.

MSME sector is facing untold miseries and many of them are under the scourge of complete
extinction, so simply introducing different policy measures and schemes will not help in solving the
problems of MSME entrepreneurs and thus constant attempts for assessing the ground reality &
course correction in the policy is certainly a welcome move.

Besides that, there is a need for using more of user experience of entrepreneurs & innovative use
of manpower, technology, diversification of products for the sustainable development of MSME
sector.

Creation of better awareness about the schemes could help the Government to achieve better
result. DICs should be revamped to play proactive &effective role. With the digitised platform for
Udyog Adhaar & Entrepreneurs Memorandum registration, where the mail ids and cell phone
numbers of each entrepreneurs are with the ministry, for directly reaching them for awareness
creation.

Entrepreneurs should be motivated to continue their business& use the crisis as an opportunity for
resurgence. Better #EODB & proactive by Government officials to promote entrepreneurship &
enterprises.

The Rs. 3.00 lakh cr. automatic SME finance is a welcome move and enabler for majority of the
MSME to access adequate capital. However, the scheme should have included the below sectors
as well;

a. MSMEs without any borrowing so far, but requiring fresh borrowing to stay afloat &
grow.
b. Large industry, on whose cash flow many MSMEs depend.

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The Scheme should consider reduction or waiver of payment of Customs duty on imported capital
goods to India, so that the country would create domestic manufacturing facility faster for
substituting imports.

VII. ANNEXURE

Schemes announced by the Government for MSMEs: (Some of the key points)

In a move to curb the economic impact of the virus, the government has announced a series of
measures in assistance to micro- and small businesses that are facing shortage of cash/ credit, &
steps to boost liquidity for non-banking financial companies (NBFCs) and offering tax measures
for individuals and corporates.

Finance Minister had announced few economic measures under the Rs 20 lakh crore
ATMANIRBHAR BHARAT Abhiyaan to revive the economy of India amid the COVID-19
pandemic. The package involves bold reforms to boost businesses with the major focus on the
Micro Small and Medium Enterprises (MSME) sector.

Rs 3 lakh crores Collateral free automatic loans for businesses including MSMEs:

Emergency Credit line to Businesses/ MSME from Banks and NBFCs up to 20% of entire
outstanding credit as on 29.02.2020

 Borrowers with up to Rs. 25 crore outstanding and Rs. 100 crore turnover eligible.
 Loans to have 4 year tenor with moratorium of 12 months on Principal repayment.
 Interest to be capped.
 100% credit guarantee cover to Banks and NBFCs on principal and interest.
 Scheme can be availed till 31st October 2020.
 No guarantee fee, no fresh collateral.

Subordinate debt for stressed MSMEs

 Stressed MSMEs need equity support.

 GoI will facilitate provision of Rs. 20,000 cr as subordinate debt.
 Functioning MSMEs which are NPA or are stressed will be eligible.
 Govt. Will provide a support of Rs. 4,000 Cr. to CGTMSE.
 CGTMSE will provide partial Credit Guarantee support to Banks.
 Promoters of the MSME will be given debt by banks, which will then be infused by
promoter as equity in the unit.

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Equity infusion for MSMEs through fund of funds:

 Fund of Funds with Corpus of Rs 10,000 crore will be set up.

 Govt. Will provide equity funding for MSMEs with growth potential and viability.
 Fund structure will help leverage Rs. 50,000 cr of funds at daughter funds level.
 It will help to expand MSME size as well as capacity.
 It will encourage MSMEs to get listed on main board of Stock Exchanges.

Liquidity injection for DISCOMs:

 Revenues of Power Distribution Companies (DISCOMs) have plummeted.

 Unprecedented cash flow problem accentuated by demand reduction.
 DISCOM payables to Power Generation and Transmission Companies are currently- Rs
94,000 cr.
 PFC/ REC to infuse liquidity of Rs. 90,000 cr to DISCOMs against receivables.
 Loans to be given against State guarantees for exclusive purpose of discharging liabilities
of Discoms to Gencos.
 Linkage to specific activities/ reforms: Digital payments facility by Discoms for consumers,
liquidation of outstanding dues of State Governments, plan to reduce financial and
operational losses.
 Central Public Sector Generation Companies shall give rebate to Discoms which shall be
passed on the Final Consumers. (Industries)

Partial Credit guarantee scheme 2.0 for NBFCs

 NBFCs, HFCs and MFIs with low credit rating require liquidity to do fresh lending to MSME
and individuals.
 Existing PCGS scheme to be extended to over borrowings such as primary issuance of
Bonds/ CPs (liability side of balance sheets) of such entities.
 First 20% of loss will be borne by the Guarantor i.e. Government of India.
 AA paper and below including unrated paper eligible for investment (relevant for many
MFIs).
 This scheme results in liquidity of Rs 45,000 crores.

Liquidity Facility for NBFCs/ HCs/ MFIs

 NBFCs/ HFCs/ MFIs are finding it difficult to raise money in debt markets.
 Government will launch a Rs 30,000 crore Special Liquidity Scheme.

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  Under this scheme investment will be made in both primary and secondary market
transactions in investment grade debt paper of NBFCs/ HFCs/ MFIs
 Will Supplement RBI/ Government measures to augment liquidity.
 Securities will be fully guaranteed by GoI.
 This will provide liquidity support for NBFCs/ HFCS/ MFIs and mutual funds and create
confidence in the market.

Liquidity through TDS/ TCS rate reduction

 In order to provide more funds at disposal of the taxpayers, the rates of Tax Deduction at
Source (TDS) for non-salaried specified payments made to residents and rates of Tax
Collection at Source (TCS) for the specified receipts shall be reduce by 25% of the
existing rates.
 Payment for contract, professional fees, interest, rent, dividend, commission, brokerage,
etc shall be eligible for this reduce rate of TDS.
 This reduction shall be applicable for the remaining part of the FY 2020-21 i.e. from 15th
May to 31st March, 2021.
 This measure will release liquidity of Rs. 50,000 crore.

Interest Subvention for MUDRA-Shishu loans

 Small businesses under MUDRA have been disrupted the most & have also impacted their
capacity to pay EMIs.
 Loan moratorium has already been granted by RBI.
 The current portfolio of MUDRA-Shishu loan is Rs 1.62 Lakh crore (Maximum loan amount
of 50,000 Rs).
 Government of India will provide interest subvention of 2% for prompt payees for a period
of 12 months.
 Relief of Rs 1500 cr to MUDRA-Shishu loanees.

Revised Definition of MSMEs

Union Cabinet has approved the revised new definition of the MSMEs. The recent changes in the
definition of micro, small, and medium-sized enterprises made as a part of the ATMANIRBHAR
BHARAT Abhiyaan relief package were approved. The MSMEs have been redefined on the basis
of investment limit and turnover size.

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Updated MSME Definition

Type of Enterprise Investment Turnover

Micro Rs 1 Crore Rs 5 Crore
Small Rs 10 Crore Rs 50 Crore
Medium Rs 50 Crore Rs 250 Crore

Other Interventions for MSMEs

 E-market linkage for MSMEs to be promoted to act as a replacement for trade fairs and
exhibitions.
 Fintech will be used to enhance transaction based lending using the data generated by the
e-marketplace.
 MSME receivables from Government and CPSEs to be released in 45 days.

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 Questionnaire

1) Organisation Name:

2) Address:

2A) Tel No. | Email id

2B) Respondent’s Name | Cell No. | Email id

3) Type of Organisation/ Size of the enterprise?

I. Large enterprise ( 250 cr sales)

II. Medium enterprise (51-250 cr sales)
III. Small enterprise ( 5-50 cr sales)
IV. Micro enterprise ( < 5 cr sales)

4) How have your business operations been affected by the COVID-19 (during Apr-May)?

I. Not affected
II. Sales affected (% of usual expected monthly sales)

5) What are the factors that you think have affected your business?

I. Shortage of supplies/input materials

II. Logistics Problem
III. Shortage of Funds (cash flow)
IV. Shortage of Manpower
V. Shortage of Market Credit
VI. Administrative reasons
VII. Export issues
VIII. Market Demand
IX. For 1/3rd employment due to COVID-19
X. Temporary Shutdown

6) Do you think that your business has a risk for permanent closure because of the crisis? If yes please
state the reasons briefly?

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7) What has been the impact of Covid-19 on your business until now?

None 0 to None - -25% to - -50% to - Increase

25% 50% 100%

Revenues

Orders

Absence

8) Have you adopted any of the following strategies to cope with the crisis?

I. Temporary reduction of employees

II. Deferring repayments/EMIs of bank loans
III. Sourcing from new suppliers/revisiting the vendors from cost perspective
IV. Customized / new products
V. Loaned employees to other enterprises
VI. Additional loan from external sources
VII. Hold the expansion or growth plans
VIII. Diversify in to any new activities

9) What actions are you currently taking?

I. Reducing production of goods or services

II. Increasing production due to increased demand
III. Diversifying in to products to respond to new demands
IV. Diversifying sales channels – online marketing, sales, delivery
V. Negotiating payment terms with banks and suppliers
VI. Negotiating with workers
VII. Using downtime to retrain workers
VIII. Other (Please specify)

10) Have you availed any of the Government Schemes? (Please specify)

11) Do you believe that the schemes announced by the Government are actually beneficial to
cope with COVID 19 crisis?

12) Are you aware of the government schemes related to MSMEs? (Below list)

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13) Please select government schemes that in your view would be beneficial for dealing with
the COVID crisis.

Schemes Ratings (1-10)

Collateral free automatic loans for businesses including MSMEs

Subordinate debt for stressed MSMEs

Equity infusion for MSMEs through fund of funds

Liquidity injection for DISCOMs

Partial credit guarantee scheme 2.0 for NBFCs

Liquidity facility for NBFC/HCs/MFIs

Liquidity through TDS/TCS rate reduction

Interest Subvention for MUDRA-Shishu loans

Revised definition of MSME

Other Interventions for MSMEs

VIII. BIBLIOGRAPHY
https://www.outlookindia.com/outlookmoney/talking-money/covid-19-and-its-impact-on-msme-in-india-
4683

https://www.business-standard.com/article/economy-policy/80-of-odisha-s-msmes-facing-closure-seek-
pm-s-help-amid-covid-19-crisis-120042401050_1.html

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