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68% start-ups, MSMEs didn't benefit from Centre's COVID-19 schemes, claims survey

Joe C Mathew     January 15, 2021

A clutch of MSME (Micro, Small & Medium Enterprises) and startup schemes of the Centre, which were meant to help them tide over Covid-19 crisis may not have helped, an online poll by community social media platform LocalCircles says.

LocalCircles' annual 'Pulse of the startups and Micro Small & Medium Enterprises (MSMEs)s' survey finds that 68 per cent respondents did not benefit from the government's MSME and startup-centric schemes like Startup India, MSME Samadhan, no or low interest loans, Make in India, Atmanirbhar Bharat, etc, in the past 12 months.

The main hurdle in availing the Centre's Rs 3 lakh crore emergency credit line was that it was restricted only to MSMEs that have existing debt or loans on their books. LocalCircles says it has been collecting inputs from startups and MSMEs through 2020 to understand challenges they faced during the pandemic.

"In late December, LocalCircles concluded its annual survey, 'Pulse of the Startups & MSMEs - 2021 edition', with over 20,000 responses received from over 8,000 startups and MSMEs across India to ascertain their current state of affairs, challenges, hiring plan, cash flow and outlook amongst a host of issues. It also gathered their experience dealing with pending issues related to angel tax, whether or not they beneffited from any of the government schemes, expansion plans, along with their perception on removing GST under reverse charge on services procured from abroad," says LocalCircles.

Funding remains the major problem for startups and MSMEs, the survey revealed. Around 28 per cent listed raising funds or loans as top challenges in 2021, while another 25 per cent were worried about finding growth. While 19 per cent worried about the survival of their business, 13 per cent maintained bureaucratic inefficiencies as their top challenge in the new year.

On the schemes launched by the Centre for MSMEs, only 21 per cent said they have benefitted. Sixty eight per cent said no they didn't. On the hiring plan for 2021, 44 per cent said they will hire more staff. Among the total 2,671 responses, 46 per cent said they have "no plan to hire and possibly may even reduce headcount."

The cash flow situation of MSMEs and startups also remains thin. Only 31 per cent said they have over 3 months of cash. Another 27 per cent said they have reserves up to "1 to 3 months", while 24 per cent said "less than a month".

While 45 per cent expect growth in their business in 2021, 42 per cent see stagnation, sale or closure. LocalCircles said it received over 20,000 responses from 8,255 unique startups, SMEs and entrepreneurs from across 121 districts of India. Around 42 per cent were from Tier 1 cities, 38 per cent form Tier 2 cities and the rest were from Tier 3 and rural locations.

Also read: MSMEs business activity reaching near-normal levels: Report

ALSO READ: FM Sitharaman announces Rs 3 lakh crore collateral-free automatic loans for MSMEs

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