MSMEs prove to be resilient, weather Covid-19 meltdown in style

HYDERABAD: When the going gets tough, only the tough get going, so says the old saw. A majority of the MSMEs, who had taken a serious beating by the meltdown of the economy on account of Covid-19, have shown extraordinary resilience in bouncing back.

According to the MSME Insight Report 2022 - Rising in the face of adversity - by NeoGrowth, despite being the first ones to be impacted by the pandemic, MSMEs showed grit in reinventing themselves by adopting digital solutions for their business, acquiring new skills, diversifying customer base, and adopting digital lending for their financing needs.

The report is based on a comprehensive assessment of a base of over 40,000 MSMEs from over 25 cities across 88 unique industries, analysed by the company from March 2020 to March 2022.While 65 per cent of MSMEs were confident of business recovery within three months, 93 per cent of MSMEs planned to reduce operations costs to manage liquidity and only one per cent expected a complete shutdown of their business operations.

The lockdown resulted in restrictions on movement, inability to manage cash flows due to reduced consumer demand, and uncertainty around business recovery post easing of curbs.However, in the second wave, MSMEs were well prepared and adjusted to the new business environment and only 30 per cent required support in the second wave. The support extended to MSMEs not only helped them manage their cash flow but also resulted in increased collections efficiency for those who availed it.

The report said that the collection efficiency of those who availed support from May to August 2020 (during the lockdown) went up from 11 per cent during the pandemic to 88 per cent in this period. MSMEs in metros recovered faster than those in non-metros.

New opportunities have been discovered for the MSME ecosystem in these last two years. Traditional ways of borrowing and conducting business had to make way for the new-age digital channels and digital lending which became increasingly important to infuse the required funds into the MSME ecosystem, it said.