Effects of the pandemic on MSME and Migrant workers

Msme sector in India is one of the worst hit sectors of the economy during the pandemic. With a total of
6.34 crore MSME out of which 51 % are situated in rural parts and 99.5 % of the total being a micro level
enterprise totally employing over 11 crore people has taken the worst hit. The International Finance
corporation (world bank) states that the formal banking system supplies less than one third of the credit
that it requires. Estimates also suggest that only 7% of this industry only can survive 3 months with their
cash in hand. Hence it is very important to take actions on stabilizing this industry which is of outmost
importance to India’s growth in the coming years.
According to the World Bank, the lockdown in India has impacted 40 million internal migrants. With
factories and workplaces shut down due to the lockdown, millions of migrant workers had to deal with
the loss of income, food shortages and uncertainty.  Many migrants also died due to the lockdown, with
reasons ranging from starvation, suicides, exhaustion, road and rail accidents, police brutality and denial
of timely medical care.
The following suggestions can be analyzed further.
To reduce the woes of migrant workers, the government can provide proper facilities including
transportation, masks, sanitization kits to workers who want to return to their job. The stimulus of Rs.20
lakh crore announced by the finance minister mainly focused on concessional credit to farmers and small-
time vendors.
The government can directly handed over (distribute) money in the hands of migrant workers because
borrowing money from banks will only add to the financial burden of the workers. It'll also increase the
flow of money in the market. Shortage of workers is affecting businesses including wholesalers, retailers,
factory owners etc to name a few. Because of this, even after the restrictions are released many industries
including MSMEs may not able to operate to their full potential as every sector is getting effected due to
lack of workers which in turn is going to have an impact on the Indian economy.

Micro-level: The important problem every msme enterprise is facing at a micro level is availability of
working capital in hand to surpass the pandemic. The micro level and small enterprise which normally do
not fall under the tax bracket hence go unnoticed must be registered and mapped. Secondly the banks
should be encouraged to provide credit at a cheaper rate considering the fact that pandemic has reduced
the asset value with considerable moratorium period. Formulate policies on taxation incentives that
retains more money with the enterprise.
Macro level: India as a whole must promote the Indian make products creating a demand for the msme
sector that will create a positive outlook post pandemic. Policies to safeguard the demand for msme
products and services must be drafted. Policies such as redrafting the norms and policies for international
mnc’s to set business in India in such a way that they do not consume the demand of the msme
products/services.