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A once-in-a-century pandemic called COVID - 19 had a significant negative impact on nearly every area of the Indian economy. Nearly all firms have felt its effects but small enterprises in India which make up the majority of the country's economy have been particularly hard hit because they typically have low-profit margins and little capital.

2020, the first year of the COVID - 19 pandemic could witness an inflow of academic studies on the imminent risk to small businesses due to their vital position in the economy. This research article which examines the “Covid-19 pandemic and its impact on the business world in India” is divided into various sections: a look at the studies on the effect of entrepreneurship and small companies; a summary of the significant participation in this special issue and some suggestions for post-pandemic research and analysis.

In addition to protecting small company jobs, encouraging entrepreneurship, and increasing government debt, responding to COVID-19 necessitates the development of successful entrepreneurship and robust location-specific commercial networks. The COVID-19 infectious disease presents small enterprises with a never-before-seen challenge and new market potential.

Detrimental effects on the rest of India's small enterprises

Over 82% of India's small enterprises, mostly in the industrial sector had reportedly been badly impacted by COVID-19 based on a report. In addition, the study of 250 firms revealed that 70% of companies believe it will require at least another year to return quickly from the pandemic depression and return to market conditions before COVID-19 emerged. Take into account that India is one of the pandemic's worst-affected nations worldwide. The second wave, which turned out to be greater than the first, impacted the nation severely just as things were starting to move in the right direction.

Effect on the GDP of India

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The global economy is experiencing its steepest decline ever. Nearly every country's growth had been significantly harmed by the coronavirus, which was also to blame for the global GDP decline. India is similarly affected by this virus as other nations, but not as severely. Sales and income have decreased in almost every industry sector. India's GDP progress in the third quarter of 2020 was 4.7%.

Market Share slumps

Ever since the start of this pandemic, share markets such as the Sensex and Nifty had taken a plunge (COVID-19). In a month, the Sensex had dropped by about 8000 points. Investment in the stock market had lost almost Rs. 33 lakh crore as of March 12th, 2020. It might signal the start of a downturn which the Indian markets would prefer to avoid. The stock market was infected with a virus therefore investors were encouraged to invest safely. Pharmaceuticals, healthcare, and fast-moving consumer goods (FMCG) were a few sectors that could profit from the new coronavirus following the market meltdown.

According to recorded results of the survey, the implications on industries and businesses had a diverse Impact

The Confederation of All India Traders (CAIT) stated in a report that due to extremely declining consumer visitor numbers, significant employee absences, and major monetary issues, traders across the nation were extremely sad and helpless. A different study based on the financial effects of the pandemic on MSMEs and their expectations for earnings and was carried out by a non-financial banking organization in the second part of May 2020. 14,444 MSMEs responded to it. Nearly 50% of micro, small, and medium-sized businesses (MSMEs) were said to have had a 20–50% decline in their profits.

Clothing Sector business impact

Clothing Manufacturers Association of India (CMAI), a trade group for the apparel sector, conducted a survey of 1500 of its members and found that at least 60% of them expected a 40% decline in income and that over 20% of them were considering shutting down their businesses after lockdown. Over 7 lakh people were employed by CMAI's 3,700 members, the majority of which are MSMEs. MSMEs make up a substantial portion of the Indian clothing sector.

In a survey of 360 businesses, the owners were instructed to calculate the cumulative losses they would suffer if the lockdown ended on May 17, 2020. It was on average, 17% of their yearly sales, which means that two months' worth of revenue has gotten lost. The losses were greatest for the smaller MSMEs. Those with fewer than eight employees lost 24% of their yearly sales, compared to companies with more than 45 individuals, which saw a much lower loss of only 10%. The survey results also demonstrate that before the shutdown MSMEs were typically functioning at 75% of capacity. MSMES were only generating an average of 11% of their capacity after the lockdown, with 56% of them completing nothing.

Manufacturing, services, and trade impact due to Covid - 19: results of the survey

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A quick survey of 1,416 micro businesses was carried out across the nation divided into several mediums in manufacturing, services, and trade. Between May 29 and June 10, the first stage telephonic survey was undertaken. Business owners in the survey had an average age of 12 years and a median size of 2 employees. 67% of the businesses had 1-4 employees, 24% had 5–15 employees, and 9% had more than 15 workers.

Only 17% of micro-businesses were partially or functioning during the lockdown, with a large number of them being shut down. It is noteworthy that this study was carried out while the country was under lockdown. Due to their ignorance of the government classification, it was discovered that 52% of the vital enterprises were still closed. 92% of the respondents to the poll kept all non-essential companies closed. In comparison to the pre-COVID scenario, 72% of the enterprises that were fully or partially operational observed a considerable decline in profitability.

Profits fell by 78% and 81%, respectively, in the commercial and production sectors, where the downturn is more extreme. The trading sector was somewhat severely affected, with 62% of enterprises experiencing a decline in profits. The average revenue for the microbusinesses that were open during the lockdown was only 28% of normal pre-lockdown sales.

Endurance International Group (EIG) online survey to the MSME

Endurance International Group (EIG) distributed an online survey to their MSME customer base in the sectors of commerce, academic facilities, technical support services, separate columnists, advisors, branding & advertising, travel, and financial services in order to better comprehend the developments between smaller companies as during lockdown. The metropolitan areas were home to the majority of these MSMEs. During the first two weeks of June 2020, the survey was carried out.

According to the research, MSMEs had seen a severe negative impact from COVID-19, and many had been forced to temporarily halt or shut down their operations. One-third of the MSME respondents to this study said that they were temporarily closed in their operation till things go back to normal.

Impact of Covid -19 on MSMEs in urban areas: Manufacturing and retail sectors

MSMEs in urban areas and those operating in the manufacturing and retail sectors are disproportionately affected by this downturn in operations. Almost 60 percent of MSMEs assessed think it would take up to 6 months for a business to resume as usual. MSMEs were looking for government assistance to get through this crisis. More than 50% of MSMEs anticipated for receiving tax breaks or exemptions from the government, while 36% of MSMEs requested loans with 0% interest or lower rates. According to the poll, since the shutdown began due to the COVID-19 outbreak, almost 30% of MSMEs had launched a company website or enabled e-commerce capability.

More than 50% of MSMEs assessed relied on WhatsApp and video conferencing applications to conduct their businesses throughout these difficult circumstances. They were able to provide e-commerce features that enhanced their ability to generate income. E-commerce increased its revenues earned to MSMEs in the commerce and educational services sectors by 53 percent and 65 percent, respectively. The main obstacle to building an online presence as per the survey was a lack of technical skills and the perceived expense of doing so.

According to a new poll by the All India Manufacturers' Organization (AIMO), roughly 35% of micro, small, and medium-sized businesses and 37% of independent contractors have begun to close their doors. According to reports, AIMO called this "mass devastation of the company" unprecedented. Over 46,000 submissions from organizations and business groups across the nation comprised the survey's database. MSMEs who responded to the study also stated (32%) that it would take them roughly six months to get over the shock.

The India SME Forum's Vinod Kumar called emphasis on the “microenterprises” current struggle, which was particularly challenging. He described that “of our 86,000 members in the India SME forum, 24,000 members are micro units. Almost 80% of them are going to be in deep trouble and will look at closing down if no funding comes in from the center or states,

Over 20 lakh Indians could lose their jobs in the restaurant business as a result of the coronavirus pandemic based on the National Restaurant Association of India (NRAI). Over 5 lakh restaurants were represented by the NRAI in India. Entrepreneur Dushyant Singh who owns three restaurants in Jaipur said that starting a restaurant business again using the same staff would've been challenging due to the high overhead costs associated with the industry.

Government of India and CII initiatives

The Confederation of Indian Industry (CII) had urged the RBI to lower the cash reserve ratio and the repo rate by a combined 50 basis points. The government intends to set aside money to help MSMEs get through this period of suspension, cash flow difficulties and functioning capital problems.

Following are a few of the significant steps the Indian government had taken up to rejuvenate the nation's economy, with emphasis on the agriculture and related sector and MSME:

Atma Nirbhar Bharat Package

In order to combat the COVID-19 pandemic in India, Hon'ble Prime Minister Shri Narendra Modi issued a clear call for the Aatma Nirbhar Bharat, or Self-Reliant India Movement on May 12, 2020. This special economic and complete plan was valued at Rs. 20 lakh crore or 10% of India's GDP. The five pillars of the Atma Nirbhar Bharat package are the economy, infrastructure, system, lively demography, and demands.

The major changes, are MSME businesses, agricultural and related sectors, migrant labor, civil aviation, defensive performance, energy, residential, and social welfare initiatives presented in the economic package. The following key efforts pertain to agriculture, associated industries, and MSME:


In addition to the Rs. 90,000 crores initially supplied by NABARD for covering the crop loan requirements of Rural Cooperative Banks and RRBs (Railway Recruitment Boards) Rs. 30,000 crores further Emergency Working Capital had been made available to farmers through NABARD. 3 crore farmers—most of them small and marginal — benefited from this. A special initiative to offer PM-KISAN recipients, particularly farmers and fishermen who raise animals for a living, concessional financing through Kisan Credit Cards. This action gave 2.5 million farmers more liquidity worth 2 lakh crore. 18,700 crores in fund transfers was made possible with PM-KISAN.

Animal Husbandry

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The consumption of milk dropped by 20–25% during Lockdown. The Atma Nirbhar Package included the following steps to support the industry: co-operatives purchased 560 lakh liters per day (LLPD) in place of the daily cap of 360 LLPD. A total of 1110 million extra liters of milk was purchased, resulting in a payment of 4100 crores. Launched a new program to give dairy cooperatives interest subsidies at a rate of 2% a year for 20-21. Added 2% per year in rewards for timely payments and interest service. By releasing 5000 crores in added liquidity, this program will help 2 crore farmers.


The duration of the Sanitary Imports Permits (SIPs) for the import of Shrimp Brood stock was expanded by three months, allowing for the implementation of all four COVID-related statements for fisheries as listed under. The delivery of packages of brood stock was allowed to be delayed by up to one month. Even the rebooking of quarantined cubicles for abandoned shipments was permitted without incurring any additional fees. Documentation confirmation and NOC issuance for quarantine were shortened from seven to three days. Extension of 3 months for 242 Registered Shrimp Hatcheries and Nauplii Rearing Hatcheries' registrations, which expired on March 31, 2020. Aquaculture and marine capture fishing operations were extended to include inland fishing.

Businesses comprising MSMEs

Businesses and MSMEs were severely impacted by the COVID-19 outbreak and require additional money to cover pending operational expenses, purchase raw materials, and resume operations. The “3 lakh crore collateral free Automatic Loan facilities for Business, including MSME” were offered as part of the packages to satisfy the need.

For impacted MSMEs (Micro, Small, and Medium Enterprises) the Government of India will enable the availability of "20,000 crores as subordinate debt." This initiative will certainly impact two lakh MSMEs. MSMEs in operation, NPAs, or under pressure will be qualified. The government would give CGTMSE a 4000 crore assistance, and CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises) will give institutions partial credit guarantee assistance.

50000 crore equity infusions through MSME Fund of Funds

To offer equity investment to MSMEs with development prospects and viability, a Fund of Funds with a corpus of 10,000 crores will be established. A Mother Fund and a few Daughters Funds will run the FoF. The fund framework will enable daughters' funds to utilize $5000 crore of money. This will contribute to increasing MSME capabilities and size. MSMEs will be inspired to list on the entire board of stock markets as a result of this. New MSMEs definition was announced that the definition would be changed. The investment cap would be increased, and new turnover conditions would also be implemented. To do away with the distinction between the production and service sectors the Government of India modified the law as needed in this respect.

Infrastructure for Agriculture

Infrastructure had a critical role in the advancement of agriculture and in raising the degree of production dynamics. The only way to utilize the food to its fullest potential while providing the possibility for productivity improvement and a good price for the farmers was through the improvement of infrastructure, particularly in the post-harvest stage. The creation of these infrastructures must also take into account the dictates of nature, geographical differences, and maximizing the use of restricted land resources. The Honourable Finance Minister confirmed the 1 lakh crore Agriculture Infrastructure Fund (AIF) for farm-gate facilities for farmers on May 15, 2020, in light of the aforementioned.

For financing agricultural infrastructure improvements at farm-gate and aggregation sites (Basic Agricultural Co-operative societies, Farmer's Producers Associations, Agriculture Entrepreneurship, Start-ups, etc.), a financing facility of Rs. 100,000 crores will be made available. In order to engage in sustainable initiatives linked to post-harvest managed framework and community farmland resources through benefits and monetary help, DAC&FW (DEPARTMENT OF AGRICULTURE CO-OPERATION AND FARMERS WELFARE) had developed the Central Sector Scheme.


The coronavirus pandemic's effects on India have primarily disrupted economic activities and resulted in losses. Almost every industry had suffered as domestic demand and exports have sharply decreased with certain noteworthy exceptions where strong growth had been seen. It was clear that the present slump differs straightforwardly from downturns given the scope of the pandemic's disturbance. The business environment will change as a result of the abrupt decline in demand and increasing instability. Businesses can forge new paths in this unsettling climate by adopting new ideas like, "move towards localization, cash conservation efforts, distribution network resilience, and creativity."


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