Indian MSMEs have shown more resilience during second wave: Study

`Business declined only 11% in 2021, compared to almost half in 2020′

India’s medium, small and micro enterprises (MSMEs) have shown better resilience during the second wave of the COVID-19 pandemic as their businesses on an average declined only 11% as compared to almost half (46%) after the national lockdown in 2020, as per a study.

A 2021 mid-year COVID-19 impact analysis released by fintech start-up Khatabook on Wednesday, however, said the MSME segment was yet to recover to the pre-COVID-19 levels of March 2020.

According to the analysis, tier 1 and 2 cities experienced slightly less business impact of the pandemic during the second wave, as compared to metros, tier 3 and tier 4 towns. Also, large businesses were more sensitive towards the pandemic-induced restrictions than medium and small businesses, it found.

Uttarakhand, Kerala, and Madhya Pradesh were the most impacted MSME ecosystems in 2021 while Jharkhand, Telangana, and Bihar were the least impacted states. Between January 2020 to June 2021, Delhi and Uttar Pradesh, Haryana and Delhi, and Andhra Pradesh and Telangana exchanged the highest inter-state trade with each other.

Khatabook managed financial transactions for over 264 million MSME customers on its bookkeeping app. The platform has recorded transactions with a cumulative value of more than ₹ 14 lakh crore till date. From an estimated 6.3 crore MSMEs in India, 1.5 crore MSMEs have recorded transactions on Khatabook in financial year 20-21, representing 23% of the Indian MSME segment in financial year 20-21, the fintech firm claimed.

The pandemic impact analysis was done based on these cash flow activities of the MSME ecosystem represented by the Khatabook app.

The Co-founder and CEO of Khatabook Ravish Naresh said "The MSME segment is showcasing a definite learning curve with their usage behavior of digital platforms, indicating increased proficiency with digital solutions.”

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