Categories: Business

GDP contraction poses threat to MSME says a report



new Delhi. With the decline in the country's gross domestic product i.e. GDP by 5 percent during FY 2020 – 21, the revenue of Indian industry can fall by up to 15 percent and this situation of the Micro, Small and Medium Enterprises (MSME) of the country. It can create "existential crisis". It has been said in a report released on Monday. It said that the policy steps taken by the Reserve Bank and the Finance Ministry are also expected to be of modest support in this case as demand cannot be increased rapidly by these measures. Increasing demand is very important for small businesses.

This report of the research arm of domestic rating agency CRISIL said that the MSME sector may have to face a sharp decline in revenue up to 21 percent in this situation. At the same time, its operating profit will reduce margin to 4 to 5 percent. The agency expects the country's GDP to decline by five percent. It is expected to decline due to the effect of the corona virus. Due to Corona virus, there has been a lockdown of about three months across the country, and some steps were taken later to open it. The Central Government and the Reserve Bank have announced some measures to help the MSME sector.

A provision has been made to provide guarantee free loan up to Rs. 3 lakh crore to the MSME sector. The report said that the reduced commodity prices can be taken advantage of but the small business class will not be able to take advantage of this due to weak demand in the economy. The biggest setback will be micro enterprises. These units account for 32 per cent of the total debt of the MSME sector. While these units are facing deep pressure in terms of revenue growth, operating profit margins and working capital.

This post was published on June 15, 2020 7:49 pm

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