57% of MSMEs struggling to get new orders, hindering business growth
Digital platforms like Facebook and WhatsApp emerge as alternative marketplaces to buy raw material and sell produ cts, say 40 per cent rural entrepreneurs
30th December’22,: An all-India study, conducted by Bhartiya Yuva Shakti Trust (BYST) as a socio-economic initi ative has given critical insights into the working of about 5,685 Micro enterprises (MSMEs), owned by socially an d economically vulnerable entrepreneurs across India. The average investment of these businesses has been rec orded as little more than Rs.6 lakh, highlighting their low capital size, impending distress, and vulnerability to mu ltiple factors including local demand disruptions during the past two years of COVID-19.
The study, spread across 20 cities in 12 states, conducted by BYST, an initiative that mentors and arrange financi al assistance from Banks for budding rural as well as urban entrepreneurs, highlight that though markets have st abilized, at least fifty-seven (57) percent of them, are struggling to get new orders for their merchandise.
The study concluded in October 2022, with a sample size of over 5685 grassroot entrepreneurs on similar param eters, to draw on some key assessments on challenges faced by the vulnerable entrepreneurs.
“Lesser purchasing power of consumers lead to reduced demand and increased raw material cost due to higher transportation cost with increase in fuel prices have been cited among key problems faced by entrepreneurs dur ing the last 27 months. This highlights the criticality and urgency to integrate grassroots entrepreneurs and their enterprises in India’s economic value chain,” said Lakshmi Venkataraman Venkatesan, Founding & Mana ging Tru stee, Bhartiya Yuva Shakti Trust (BYST), who lead the initiative along with her research team.
The 5,685-sample size were drawn from Faridabad and Gurugram (Haryana), Sikar (Rajasthan), Uddham Singh Nagar (Uttrakhand), Rayagada, Bhubaneshwar and Jajpur (Odisha), Ranchi (Jharkhand), Chennai (Tamil Nadu), Hyderabad (Telangana), Vijayawada (Andhra Pradesh), Pune, Aurangabad, Wardha, Satara, Karad, Sangli Kolha pur (Maharashtra), Dibrugarh (Assam) and the State of New Delhi.
BYST take pride with its mentoring programme on one-to-one basis for tw o years after disbursement of loan by the Banks as more than 97% of loan of the assisted entrepreneurs are regular in repayment, 1.5% repaying wit h some delay and only 1.5% only are NPA against the industry average of more than 10% in similar category.
While the impact of COVID-19 has been slowly receding, the economic sit uation is yet to completely stabilize du e to multiple factors, including slow economic recovery, and fresh local supply chain disruptions among others. A bout 27% of the entrepreneurs say that they find difficulty in repaying their loan instalments on time while anot her 20% are finding it difficult in arranging raw materials for production. An increased cost of production has als o emerged as a source of concern for at least 9% of them.
On the other hand, Ms. Venkatesan highlighted that entrepreneur mobilized after the lifting of the lockdown, ha ve echoed a positive sentiment on business growth as 53 percent said they are doing better in some aspects of in comparison to the pre-pandemic phase.
The study also highlighted that 14% of the women entrepreneurs are finding it difficult in operating their busin ess being women, out of which 72% quoted in marketing of their products and 26% in the timely realization of book-debts.
“Women entrepreneurs need special mentoring and upskilling. Their inability to move around during odd hours, travel to other cities and lack of skilling in using digital marketing tools restrict them in growth of their business.” she said, adding that women have bias and barriers to overcome, such as conflict between work and personal res ponsibilities at home front, community restrictions and lack of support from society in general.
The biggest positive impact of the pandemic has been the digitization of supply chain management. About 40% o f entrepreneurs said they started using digital platforms mainly Facebook and WhatsApp to arrange raw mate ri als and market their products. Researchers feel that it is an indication that traditional supply chains are gradu all y getting disrupted, and a new supply chain has been simultaneously emerging with the help of social media and other digital platforms, which are now marketplaces in their own right.
