Digital ledger Khatabook sees 11% drop in MSME business activity amid second wave vis-a-vis 46% last year

Tier I and Tier II cities were relatively less impacted during the second wave as compared to metros, Tier III, and Tier IV cities, said Khatabook,

Ease of Doing Business for MSMEs: Tencent-backed digital ledger app for MSMEs Khatabook on Wednesday reported an 11 per cent drop in business activity among its MSME customers during the second wave of the pandemic in comparison to 46 per cent last year. Khatabook, which analysed data of over 80 lakh monthly active MSME customers, said the improvement in percentage decline of business activity was due to the “phased and localized” restrictions across the country post second wave in contrast to the nationwide lockdown last year.

“Based on platform insights from Khatabook’s over 80 lakh MSME userbase, MSMEs have experienced only an 11 per cent drop as per the median weekly business per merchant indicator across all business categories and regions due to phased lockdowns in 2021 during second Covid wave. This drop was close to 46 per cent in the 2020 national lockdown. Overall, MSMEs seem to be better prepared for Pandemic reality in 2021,” Ravish Naresh, Co-founder and CEO, Khatabook told Financial Express Online.

Throughout the pandemic, Khatabook’s customers across all the tiers experienced more or less the same impact while Tier I and Tier II cities were relatively less impacted during the second wave as compared to metros, Tier III, and Tier IV cities, the company noted in a statement. Among the most impacted business categories were textile/apparel, footwear, automobiles, traders, food, and computer accessories and services this year as well while health, grocery, transportation, and agriculture categories continued to grow in 2021 amid the second wave.

Multiple surveys, studies, analysis have been carried out since last year by associations, trade bodies, and enterprises to gauge the performance of the MSME sector and to suggest measures to accelerate their recovery. While the government and the Reserve Bank of India have undertaken multiple measures to cushion Covid distress, the support had seemingly fallen short to help revive MSMEs, a recent survey by the Consortium of Indian Associations had indicated.  

73 per cent of SMEs, as per the survey of more than 81,000 self-employed individuals and SMEs in India published last month, couldn’t make a profit during FY21 while only 13 per cent broke even amid Covid impact. The CIA survey had also noted that 80 per cent entrepreneurs were insecure “about their future, with the double whammy of the pandemic crisis & economic implosion coupled with the lack of any support base.” 

According to a Parliamentary panel report on Covid impact on MSMEs last month tabled in the Rajya Sabha, the stimulus package announced by the government last year for the economic revival post-Covid, was “found to be inadequate as the measures adopted were more of loan offering and long-term measures instead of improving the cash flow to generate demand as immediate relief.”. The report had noted that in the process of economic recovery post-first wave of the pandemic, the second wave even more vigorously ripped the economy particularly the MSME Sector.