The pandemic has killed the spirit of entrepreneurship amongst low-capital, under-20 employment


Except for the few billionaires, the pandemic has hit everyone. The current lockdowns have seriously disrupted the production, distribution, and delivery of goods and services. Jobs have been lost. Every family, belonging to every class – upper middle class, lower middle class, poor, destitute – has suffered in one way or another.

During this terrible period, I watched the fortunes of agriculture, micro, small and medium-sized enterprises (MSMEs) and the service sector because together they employ the bulk of the workforce.

Focus on MSMEs

This column focuses on MSMEs. Newspapers reported a statement from a senior bank official who said, “SMEs and micro-enterprises have been hardest hit, with nearly 60 percent of NPAs coming from MSMEs in April and May, almost double what it used to be.” The Retailers Association of India (RAI ) told that sales in the country in May 2021 were 79 percent down from May 2019.

I decided to check the reported facts on the spot through an extensive telephone survey. I used the services of Mr. Jawahar (from Tiruchirappalli Regional Engineering College-Science & Technology Park) and his team. They obtained the names of MSMEs across Tamil Nadu from MSME Associations and Udyam. They asked 12 questions. There were 2,029 answers. The conclusions are worse than what the Senior Banker or RAI reported, and are very different from the “green shoots” seen from the windows of the Finance Minister and Chief Economic Advisor’s offices.

Let me summarize the answers to the 12 questions:

1. 1,900 out of 2,029 respondents (94 percent) said their sales decreased in 2020-21 compared to 2019-20.

2. The decline in sales was up to 25 percent for 441 respondents, up to 26-50 percent for 375 and more than 50 percent for 787. 291 MSMEs had completely closed.

3. As expected, 91 percent of those surveyed made losses in the period 2020-21.

4. In 90 percent of the cases the loss was up to Rs 10 lakh.

5. The loss was “replenished” by investing own funds (400 respondents), selling assets (285) or borrowing from banks or NBFCs (694) or from other sources (631). The Emergency Credit Line Guarantee Scheme (ECLGS), touted as a lifeline and route to Atmanirbharta, could only help some of the 694 companies that had taken out loans.

6. When asked “Has your company / unit been in operation since April 1, 2021?”, 852 of 1,935 respondents (44 percent) answered “No”. Of the others, only 195 (10 percent) stated that they were working at almost full capacity.

Massive job losses

7. In the years 2020-21 (pandemic year), 26 percent of those surveyed (1,266 who answered this question) had cut wages / salaries, 33 percent laid off employees, 23 percent laid off and 18 percent did all of the above.

8. The employment impact was predictable. Of 1,783 respondents, 1,200 (67 percent) fewer people were employed in the period 2020-21 than in 2019-20. Almost nobody was busy anymore. Massive job losses in 2020-21 are a fact.

9. Most of the micro and small enterprises among MSMEs employ 20 or fewer people. Of the 1,134 respondents who had fewer employees in 2020-21, 64 percent said up to five jobs were lost, and another 23 percent said 6-10 jobs were lost. Assume an average loss of five jobs multiplied by millions of MSMEs and you have a good idea of ​​the reality of unemployment that envelops the country.

10. Has the employment situation improved in 2021-22? Fifty percent of those surveyed (1,253) said that all or some of the employees had been reinstated, and 50 percent said that no one had returned to work.

11. Of the 1,510 businesses that closed in 2020-21, 470 (31 percent) had not reopened and 828 (55 percent) had only partially opened. Only 212 (14 percent) had fully reopened.

12. Of the 1,349 units that are now closed, 800 (59 percent) were confident about reopening. At the other end, 72 (5 percent) said they had closed permanently. The other 477 were not confident or will reopen on a smaller scale.

If you dig deeper into the numbers, you’ll find plenty of nuggets of information. Read the full survey results at or

Government, an indifferent entity

It is evident that the government has done practically nothing to keep the MSMEs on their feet. The ECLGS guaranteed Rs 3,00,000 crore. MSMEs were led to believe that the government guaranteed insolvency was Rs 3,00,000 crore. Therefore, it was assumed that assuming a moderate (10 percent) to high (25 percent) level of NPA, the loan amount available would be Rs 12,000,000 to Rs 30,000,000 crore. The deception was discovered when the government “made it clear”.

Rs 300,000 crore was the total loan amount under the program! Given the health of MSMEs’ balance sheets, bankers are struggling to meet even the Rs.300,000 billion target. The payout to date is around Rs.150,000 billion.

The pandemic has killed the entrepreneurship of low capital entrepreneurs, under 20s, low-revenue, for-profit business people. The government watched their businesses collapse. For them it is the way to Atma Nirvana.