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Indian MSMEs Bounced Back Stronger Post-pandemic: Survey
MSME insight report 2022 – 'Rising In The Face of Adversity' is based on a comprehensive assessment of over 40,000 MSMEs from over 25 cities across 88 unique industries
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Micro, small and medium enterprises (MSMEs) have been able to bounce back stronger post-pandemic with timely support, according to a report by NeoGrowth, the MSME-focused fintech lender leveraging digital payments ecosystem.
At the onset of the pandemic in early 2020, 97 per cent of the MSMEs surveyed from NeoGrowth’s customer base of 16,087 MSMEs were worried that their credit scores would be negatively impacted due to non-payments.
While 65 per cent of MSMEs were confident of business recovery within 3 months, 93 per cent planned to reduce operations costs to manage liquidity and only 1 per cent expected a complete shutdown of their business operations.
Overall, 25 per cent of impacted MSMEs were run by women entrepreneurs, the report highlighted.
The report also mentioned that 46 per cent of MSMEs across India needed financial support to mitigate the impact, with higher demand from non-metros than metros.
Financial support availed by non-discretionary MSMEs was lesser compared to other businesses. Maharashtra was the worst affected state during the first wave and close to 50 per cent of MSMEs in Pune and Mumbai needed financial support.
In the second wave, MSMEs were well prepared and could adjust to the new business environment. Only 30 per cent of MSMEs required support in Wave 2 vs Wave 1. 63 per cent continued to show intent to honour their commitment despite being severely impacted or facing a business shutdown, it said.
Interestingly, 75 per cent of MSME borrowers who upgraded their pre-pandemic loans went for a higher amount with an 80 per cent average increase in the principal loan amount.
In March 2022, it was observed that MSME credit demand from non-metro cities was back to pre-COVID levels whereas that in metro cities was lagging marginally.
Non-discretionary demand-oriented business segments such as Petrol pumps, Infrastructure, and auto recovered faster than consumer-facing and discretionary demand-oriented businesses.
Arun Nayyar, Whole Time Director & Chief Executive Officer, NeoGrowth said, "Many MSMEs were struggling in 2020-21 due to the burden of loan repayments because of the cessation of demand from consumers. Early on in the pandemic, we identified that MSMEs needed extra support since this was a genuine business disruption."
He added that the MSME ecosystem in India is a 'Survival to Revival' saga. The vital lessons learned from the pandemic have transformed the way businesses operated and fast-tracked their move to digital. The credit demand from MSMEs is back to a healthy level.