Over half of MSMEs and startups could scale-down or shut business due to Covid-19: LocalCircles
A total of 59% of Indian and startups and micro, small, and medium enterprises could have to shut down, scale-down, or sell off their business due to Covid-19, according to a recent LocalCircles survey.
By the end of this year, a large number of small businesses could have to make irrevocable changes due to the coronavirus pandemic and subsequent lockdowns.
“Only 22% of startups and MSMEs have more than three months’ runway; 41% are out of funds or have less than one month of funds left and 49% plan to reduce employee compensation and benefits costs by July,” said community social media platform LocalCircles in its latest survey, ET Bureau reported.
The second wave of the virus has hit MSMEs especially hard, according to the survey. Many businesses were still working to recover from the financial effects of the first wave of the virus when the second wave swept the country.
“Startups want the Government to permit deployment of Corporate Social Responsibility funds into ‘Social Impact Startups’,” said the survey.
“The second wave of Covid has made many realise the need for more startups that are socially oriented in areas like emergency assistance, community engagement and mobilisation, health equipment support.”
The survey, which included 11,000 responses from over 6,000 startups and MSMEs in 171 Indian districts, paints a picture of a sector in turmoil. The government had named the MSME sector as the driving force behind India’s next wave of economic growth, but many businesses are now fighting to stay afloat as local lockdowns continue.
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