Prop up MSMEs

The past five years have been very challenging for the Indian industry, particularly micro, small and medium enterprises (MSMEs). The disruptions caused by demonetisation, the GST regime’s chaotic rollout and the Covid-induced lockdowns have wreaked havoc on industrial units across the country. According to data shared by the Centre in the Lok Sabha on Monday, over 5 lakh companies have been shut down since April 1, 2016. Of these, more than 64,000 firms went out of business in the northern region comprising Chandigarh, Haryana, Punjab, Himachal Pradesh and J&K. Alarmingly, in stark contrast to the nationwide trend, the closures have outnumbered new registrations in the region during this period, with the worst-hit sub-sectors being textiles, garments, hand tools and sports goods.

The states that have witnessed the shuttering of the highest number of companies during 2016-21 are Maharashtra, Delhi, Tamil Nadu, Telangana and West Bengal. The developments underline the need for a nationwide audit to determine which industries require handholding the most. Union MSME Minister Narayan Rane said last week that the Centre was keen on providing help to units and factories which were closed during the pandemic so as to enable them to get back on their feet. A workable revival plan that facilitates the restoration and creation of jobs must be devised and implemented at the national and state levels.

The robustness of post-pandemic economic recovery depends on pulling MSMEs out of dire straits. Though over 7 lakh new firms were incorporated under the Companies Act during the past five years or so, many of these establishments have been hit hard by the pandemic leading to financial distress. Such companies need the government’s support to sustain their operations. The MSME sector, which contributes about 30 per cent to GDP, cannot be left to fend for itself. A country that aspires to be a global leader in startups should go the extra mile to reinvigorate down-and-out entrepreneurs and enterprises with policy interventions.

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