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2020: A year of challenges and what lies ahead for the SMEs

The buzz around Covid-19 was growing from late February with reports of Coronavirus making it into the daily news cycle.

The government'sunlocking phase started slowly from May 17. Some factory owners decided to open but had no workers. To encourage reverse migration, factory owners decided to give incentives which included hiring people from nearby villages, offering extra wages, bonus, food, transportation and providing 15-day mandatory isolation quarantine. While some workers started returning to cities slowly the factories had to contend with a new kind of challenge, that of training the new people who had joined.

e expected this virus to become a pandemic and make the whole world come to a halt. The seriousness of the situation became clear when India went into a lockdown from March 25. People were asked to remain indoors under all circumstances. In all this, the worst affected were the poor migrant workers who were suddenly left jobless and some without food or money for more than a couple of days. As the lockdown period kept extending these workers had no other option but to head back to their villages. Most worked in micro, small and medium businesses, which had shut down and no one knew when things would start looking up.

The MSME sector had been under stress even before the pandemic. There were the challenges of payments not coming on time, lack of skill set and limited technology. Covid-19 wreaked havoc on this sector and most factory owners were finding it impossible to keep their businesses running. In India, SMEs are usually dependent on NBFCs as they have better coverage and last mile connectivity.

The government took several measures to help SMEs get back on their feet. Prime Minister Narendra Modi announced a package of Rs 20-lakh crore. The government revised the definition of MSMEs, bringing it in line with global standards. This was done with the hope that it will help MSMEs to scale up and generate more employment.