Micro enterprises in Pune still bear the brunt of Covid-19 pandemic

The trends revealed in surveys by the Mahratta Chamber of Commerce Industries and Agriculture (MCCIA) point to deep distress in the sector. While large, medium and small scale industries have reported almost pre-Covid levels of production, the micro enterprises still have a long way to go.

A micro enterprise is an enterprise where investment in plant and machinery does not exceed Rs 25 lakh. Of the 14.90 lakh units in Pune region (Pune, Satara, Sangli, Kolhapur and Solapur), 13.10 lakh units are classified as micro enterprises. At the base of the industrial pyramid, these units help in employment generation. Most of them serve as second or third vendors to enterprises who in turn are vendors to larger units.

Since the start of the pandemic, the industrial ecosystem has faced multiple problems in terms of manpower and capital. The central government’s Emergency Credit Line Guarantee Scheme (ECLGS) was meant to provide help to units in distress. The scheme aimed to provide 100 per cent guarantee coverage to banks and Non-Banking Financial Companies (NBFCs) to enable them to help MSMEs tide over Covid-19 emergencies. Till September 30, 2021 banks in Maharashtra had received 5.22 lakh applications under ECLGS, of which only 3.22 lakh were sanctioned. Of the Rs 31,157.08 crore sanctioned, Rs 22,148.36 crore was disbursed.

But even as Maharashtra is returning to pre-Covid normalcy, micro units still suffer from constraints. The 23rd survey of MCCIA showed that micro units have reported 78 per cent production levels. This is in contrast to 92 per cent, 97 per cent and 100 per cent production levels of small, medium and large enterprises in the district.

Prashant Girbane, director general, MCCIA said one of the main reasons for distress of micro units was the failure to avail credit to salvage their condition.

“ECLGS was for units which already are in the net of institutional credit. However, many of the micro units are outside the gambit of institutional credit and thus have failed to get benefit of the same,” he said.

Many units in the manufacturing or services sector are part of the informal sector and their recovery is delayed. Vendor consolidation – a strategy where companies reduce supplier base and consolidate their operations – is another reason which has impacted micro enterprises.