What About India's MSME Sector: COVID-19 Pandemic and Indian MSME Sector Outlook

12 Pages Posted: 1 Nov 2020 Last revised: 16 Mar 2021

See all articles by Anukarsh Singh

Anukarsh Singh

O. P. Jindal Global University

Date Written: June 12, 2020

Abstract

This paper talks about impact of COVID-19 induced triple crisis (supply chain, demand chain and labor disruption) on India's Micro, Small, and Medium Enterprises, which is one of the key driver of Indian Economy. MSME's are the backbone of the economy employing more than 11.10 crore workers in non-agricultural activities across country, and accounts for about half of India's exports. On the background of health emergency, the MSME units are in a distressing situation as severely constrained demand has contracted their revenue. The pandemic further exacerbate myriad of problems to the sensitive MSME sector as their liquidity comes from daily demand for their product, and they don't have huge cash reserves. With sustainability of MSMEs at stake the prospects of economic development of India presents a very gloomy picture considering MSMEs contribute about 30-35% to the GDP. Their closure could lead to a structural problem in economy while widening the inequality gap. The aim of study is to assess the impact of demand, supply and liquidity shock inflicted by corona virus on India’s fragile MSME sector while suggesting recovery measures to the government.

Keywords: Micro, small and medium enterprises, MSME sector, COVID-19 pandemic, economy, manufacturing sector, labor shock, supply shock, demand shock

JEL Classification: A22, G01, G00, G18, H11, H12

Suggested Citation

Singh, Anukarsh, What About India's MSME Sector: COVID-19 Pandemic and Indian MSME Sector Outlook (June 12, 2020). Available at SSRN: https://ssrn.com/abstract=3696778 or http://dx.doi.org/10.2139/ssrn.3696778

Anukarsh Singh (Contact Author)

O. P. Jindal Global University ( email )

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