MSMEs: The Backbone of India's Economy
Shocks: Demonetisation, GST and Covid
MSMEs were hit hard by successive shocks, and government responded with credit guarantees and relief measures.
Small firms have fewer reserves to absorb shocks.
Successive shocks
Cash withdrawal in 2016, GST in 2017 and the pandemic in 2020 each strained small firms.
Relief
An emergency credit line guarantee scheme offered extra loans to eligible MSMEs.
Uneven recovery
Some firms recovered quickly, while others closed permanently.
Lessons
Buffers, digital records and diversified customers help firms survive.
A guaranteed loan
A small factory borrows under a government-backed scheme to pay salaries during lockdown.
Assuming all MSMEs recovered at once
Recovery varied widely.
Key takeaways
- Shocks hit small firms hard.
- Credit guarantees offered relief.
- Recovery was uneven.
- Buffers improve resilience.
No recording for this one yet - EconReader can read it aloud for you.