13 Sep , 2021 By : monika singh
MSMEs are heralded as the new engine of growth for the Indian economy. They drive approximately 30% of national GDP, and their growth will be critical to the ambition of a $5 trillion economy. Yet the ominous clouds of financial constraints loom large over this sector of the economy, and since the beginning of the pandemic, small businesses in India have seen significant distress with a third of all micro-enterprises reporting layoffs as their narrow well of cash reserves went dry.
Cash flow cycles for MSMEs that are part of the supply chains of large companies are stretched due to stuck and delayed payments, reflecting lopsided bargaining power vis-à-vis large buyers. It has been estimated that MSMEs are owed an aggregate of Rs 15-lakh-crore at a point of time. This number is only indicative of the working capital deficit faced by the small number of registered MSMEs in the country, amounting to just 13% of the existing small businesses. This problem is more severe for mi ..
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