MSMEs Bounced Back Stronger Since Onset of Covid-19 Pandemic

The MSME sector has emerged 'stronger' during the last two years since the onset of the Covid-19 pandemic, leveraging the digital payments ecosystem. In the pre-pandemic times, the impact on MSME business operations was due to restrictions on movement, inability to manage cash flows owing to reduced consumer demand, and uncertainty around business recovery post resumptions.

If we look at the business aspect, 46 percent of MSMEs across India needed financial support to mitigate the impact, with higher demand from non-metros than metros, according to a report by Fintech lender NeoGrowth. 

Arun Nayyar, Whole-time Director, and CEO, NeoGrowth stated, “Many MSMEs were struggling in 2020-21 due to the burden of loan repayments because of the cessation of demand from consumers. Early on in the pandemic, we identified that MSMEs needed extra support since this was a genuine business disruption. We realized that MSME customers were inherently honest and had the willingness to pay back.”

In fact, the fintech lender provided support and handheld them throughout their journey, right from proactively understanding their sentiments at the beginning of the pandemic to supporting them, so that they are 'able to bounce back'. 

With this feedback, NeoGrowth launched an industry-first initiative, Sanjivni, to "aid the bounce-back of MSMEs", the company stated.

"Financial support availed by non-discretionary MSMEs was less as compared to other businesses. Maharashtra was the worst-affected state during the first wave and close to 50 percent of MSMEs in Pune and Mumbai needed financial support, the company added. 

"Despite being the first ones to be impacted by the pandemic, MSMEs showed grit. They reinvented themselves by adopting digital solutions for their business, acquiring new skills, diversifying their customer base, and adopting digital lending for their financing needs," the report concluded.
 

READ MORE: How to Strengthen Indian MSMEs