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08/07/2020 01:44pm

68 per cent MSMEs in TN on the verge of closure: IIT-Madras survey

image 68 per cent MSMEs in TN on the verge of closure: IIT-Madras survey

Chennai, July 8 (KNN) The Covid-19 pandemic has severely impacted Micro, Small and Medium Enterprises (MSME) across the country following which like any other states, MSMEs in Tamil Nadu are under severe stress due to revenue loss, insufficient liquidity, delayed payments and reduced logistics services.

A recent survey by IIT-madras has found that around 68 per cent of MSMEs have less than a month’s cash flow to function and if corrective measures are not taken, it may result in layoffs and closure.

The survey which was conducted with ConsoTree, a research body, further revealed the 27 per cent MSMEs can manage up to three months, nearly 5 per cent can sustain operations from four to six months, and more.

''More than 50 per cent of enterprises were affected by cancellation of orders while 74 per cent reported revenue loss in excess of 80 per cent compared to last year,'' said the survey.

The survey also revealed that around 78 per cent of MSMEs were shut down during the lockdown.

“The day to day functioning of MSMEs is crippled due to non-availability of workers and cancellation of orders. It is directly linked with lack of demand which is a serious obstacle,” said Subash Sasidharan from the department of humanities and social sciences, IIT Madras, and one of the researchers.

“While transportation, financial services, communication, construction, manufacturing, education, hotels and restaurants, services, wholesales and retails reported heavy revenue loss, poultry, logistics and rent stated their revenue has no difference compared to last year,” he added.

Amid the losses across the country, a few industries like advertising, health and social sector have reported increase in revenue by 10% to 20%.

Santosh Kumar Sahu, an IIT-M researcher and co-author of the survey asserted that around 45 per cent of MSMEs said they will not lay off workers despite revenue loss while 18.32 per cent said they will terminate more than 50 per cent of the workforce.

As per the survey, around 91 per cent sought government's support to tide over the crisis.

''The firms suggested interest subvention (62.78%), GST exemption (60.12%), debt relief (53.79%), rent and electricity tariff reduction (48.63%) for the recovery of micro small medium enterprises,'' the survey said.

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