This is the Covid-19 impact. India’s startups and small traders are facing a major cash crunch. People who belong to these sectors are either unsure or pessimistic about the Centre’s Rs 3 lakh crore stimulus plan to boost business.
A survey by LocalCircles depicted a clear picture of the Indian startups and SMEs that are gasping for breath. The Centre’s assurance to bail them out doesn’t alleviate their pain.
Here are 10 problems that our small traders are facing
1. The survey covered 8,400 small traders across the country and collected 28,000 responses. Of total, 38% of startups have already gone out of cash. They either are mooting closing down their trades or scrambling to arrange for capital.
2. Four per cent of small traders had to shutdown their businesses owing to lockdown troubles. They couldn’t even survive the first two phases of nationwide lockdown. Even we have seen many such small businesses in our vicinity to switch jobs or work as fruit sellers and vegetable vendors among others.
3. About 30% of them said they have cash to continue their businesses for another one to three months. Only 16% traders said they have money to continue for another three to six months. Now this 16% traders believe that they have the money only to manage the daily operating costs, which is the basic.
🚨About 38% of startups & SMEs have run out of funds, minus a specific government bailout package, two months after their businesses took a hit because of the Covid-19 pandemic induced lockdown, according to a @LocalCircles survey https://t.co/kkYqhj3hKI @Alnoor_ET pic.twitter.com/sooQAlRNSs
— ETtech (@ETtech) June 15, 2020
4. The survey findings show that the impact of lockdown was so big that around 80% to 90% small traders wrapped up their businesses. Now you may say what about the “unlocking” measures then? Aren’t they helping economic activities to resume? Yes, they are. But here the recovery is marginal so far. From April to June, the funds of SMEs or startups have increased from 27% to 42%. The sector needs more time to get back the pre-Covid-19 momentum.
5. Here comes the most interesting aspect of the survey. Around 57% of India’s startups have clearly declared that they believe that the Centre’s Rs 3 lakh crore Atma Nirbhar package will not bail small biz owners out of this crisis. Though 29% remained unsure about the package’s potential, 14% felt that the government package will help them.
6. But as per the terms and conditions of the Centre’s scheme, a startup must show existing debt/loan on their books to qualify for the package. Since most startups opt for venture capital finding, they are considered “ineligible” in this case.
7. The survey found that the startups and small biz houses had initiated several measures to cut down their costs to minimize their losses owing to lockdown. Around 64% of SMEs and startups cut or deferred operating costs, marketing costs and human resources. These steps by the businesses only reflect their lack of faith on the central government measures.
8. Many startups feel that things will improve from here. Since the lockdown began to this far the growth in this sector has reached 35% from 13%. But the uncertainty and fear among small traders are still there. Is the Atma Nirbhar plan all just an ornate facade of a dilapidated house? Well, it seems so.
9. The SMEs are also facing dearth of workers. We know that hundreds of millions of migrants were involved in different industries, be it big or small, across the country. Since they left for their native villages following nationwide lockdown, the lack of adequate staff hampers the functioning of these industries. One of the huge mistakes by the Centre in this crisis was shuffling of migrants.
10. Participants of the survey expressed their dissatisfaction over the Centre’s plan. They said the pleas to the government to make the startups flourish fell in deaf ears. Alas! We all know that this is the sector that can create jobs which is the need of the hour.
Dear PM, your “ghoom phir-ke stimulus” will not save our battered economy. The small biz runners are an important part of our economy. Not the Ambanis or Adanis. Rather it will deteriorate the growth, sale and market. Now it’s time to help the small traders through direct cash transfer or monetary relief.