MSMEs hold promise for sustainable, inclusive recovery: Survey

Covid-19 pandemic may have struck Indian entrepreneurs/MSMEs hard, but they hold significant promise for a sustainable and inclusive recovery, fuelling the drive to become a $5-trillion economy by 2025.

This is the consensus view of a paper, 'Entrepreneurship after Covid-19: An assessment of the short and long-term consequences for Indian small business' authored by Sreevas Sahasranamam (University of Strathclyde, Glasgow); and Ute Stephan and Przemyslaw Zbierowski (Kings College, London).

This is part of a larger global study carried out across 23 countries representing three-fourth of world’s economic output, lead author Sreevas Sahasranamam told BusinessLine . Almost half the entrepreneurs interviewed feared for their very existence, but their spirit of resilience shone through brightly, he said.

Mapping pandemic impact

The authors agree that the pandemic has put a significant stress on Indian MSMEs which contribute nearly one-third of GDP. It surveyed 107 entrepreneurs at the height of the pandemic (June 1-August 31, 2020) to map the impact of the pandemic on their businesses and the entrepreneurs personally.

Business service MSMEs dominated the sample size as against manufacturing ones, Sahasranamam said. Most of the sample was peopled by early-stage entrepreneurs who are more agile in terms of being hungrier for business and faster with technology adoption.

"This is a reflection of how they've been able to take the pandemic head on. They've been more adaptive to technology. And this has been a great enabler for business service startups."

Confident stride into future

Entrepreneurs looked to the future with confidence with nearly 60 per cent of the interviewed seeing business surviving the crisis and more than half expecting it to grow even larger than the pre-pandemic levels. At least 85 per cent expect to add employees to their business over the next five years.

More than 60 per cent saw long-term positive impact on their business coming from digitization, consumer behaviour change, new business opportunities, business efficiency and resilience gains.

Despite this optimism, many are in a precarious position. Nearly 50 per cent plan for the next 12 months only and nearly 3/4th predict they will run out of money in 12 months if the current situation persists.

At least 72 per cent have adapted their plans for business to the evolving situation (half of them had done so by end-March 2020). Nearly 70 per cent did not even apply for government support.

Stress at pre-Covid levels

More than half developed new products and services (in the digital space or specific to Covid-19) while others adapted business to the 'new normal' or saw demand rising from changes in consumer behaviour.

What stood out most was that entrepreneur life satisfaction and perceived stress level were comparable to pre-Covid levels. This could be a function of the healthy lifestyle choices of daily exercise for at least 30 minutes (69 per cent); sufficient sleep (58 per cent); and religious/spiritual indulgence (58 per cent).

Compared to entrepreneurs in China (95.3 per cent), Bangladesh (91.6 per cent) and Pakistan (71.7 per cent), Indians (49.5 per cent) perceived a lower existential threat posed by the pandemic. Less than one-third in India and Pakistan applied for government support against 60 per cent in Bangladesh.

Lower existential threat

Business resilience (measured on a 5-point scale of 1-strongly disagree to 5-strongly agree) was highest among Asian entrepreneurs with China at 3.7; Bangladesh at 3.7; India at 3.6; and Pakistan at 3.5).

Social commitment (the spirit of giving or volunteering in general) of entrepreneurs is another common attribute among the Asian peers, with Bangladesh and India taking the top two spots globally.

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