Many months-long lockdowns landed almost every business deeper into troubles. Therefore the sign of crisis going to ease is not seen anywhere near. Any round of bonanza may not bring quick relief.
How can small businesses survive?
The death rate of micro-enterprises in the days of the pandemic has been much higher than the number of Covid-19 victims’ death. Those who are on the brink of death deserve better care, not a set of wrong medicines. They need to be given a space for survival at every cost. I re-emphasize, small needs extra care and sympathetic attention, which, I am afraid, they don’t get nowadays.
India is now passing through a terrific economic slowdown and bottom of the pyramid being hit more disastrously, though Modi fans may not agree with it. Even before the lockdown, the situation was grim.
Many months-long lockdowns landed almost every business deeper into troubles. Therefore, the sign of crisis going to ease is not seen anywhere near. Any round of bonanza may not bring quick relief. The rebound that we see now are only because of the pent-up demands. I have my own reason to remain afraid of crises that stare at small businesses. A large chunk of them had to close down in the aftermath of the strict lockdown. The prevailing ground realities and what is in store of the government could only raise fear for the worst. Now the worst fear is, how long are we going to pass through the intense crisis.
Today, almost every entrepreneur has lost hope and many are feeling shy of speaking their experience out after being a fan of the government in the early years, say until the shocking demonetisation and hasty implementation of the Goods and Service Tax (GST). Lockdown forced on many businesses could only add to the long-drawn crises, devastating even the last remaining hope that the economy might naturally rebound.
Still, the government is on a heartless chase for economic transformation, keeping everything under a regimental framework. The tax regime is still in the old form chasing even small ones with terrifying demands and fault findings. The intention was said to be free of human intervention in the delivery of services and setting the system free of corruption. But the result is contradictory.
At the bureaucratic level, the corruption is still rising, though corruption at the Union ministry level might have come down.
Taxmen are overtaxing the business by putting hapless businessmen answer host of queries and leaving behind the direct threat of penalties. Many small enterprises still endlessly wait for years for their tax refunds. For one or the other reasons, it is delayed.
The sprawling micro sector, the very bottom of the economy is in shambles again. We saw their troubles after the demonetisation and implementation of the Goods and Service Tax (GST). Naturally, the micro-business will not survive a third blow, which has come down in the form of lockdown. The government is not unaware of this fact. Though the government has opened a loan tap for them to run their business with a moratorium, many are not surviving at all to make use of the loan bonanza. The remaining survivors are trying to reconcile with the cloudy atmosphere.
Micro sector players, being tiny by nature, naturally, cannot cope up with fast changes, especially if they are not given a breathing space. They must be given adequate handholding support. Change is inevitable for the smooth progress of any venture, but they also should have an atmosphere to adopt the changes. Nevertheless, that doesn’t mean, those who are unable to cope up with the changes must die. Letting any business die under the changing atmosphere is a show of ruthlessness to the hapless ones.
Most of them have lost everything. What they have with them is a huge liability. Those who are on the brink of death deserve better care.
They need to be given a space for survival at every cost. I re-emphasize, small needs extra care and sympathetic attention, which, I am afraid, they still don’t get. Institutions which are supposed to take care of them talk only big things, but reluctant of setting their eyes down, as they are busy with beautifying their talks and interpretations. The vulnerable sectors need defensive support. These are not unknown to policymakers.
Still, instead of creating a space for their survival as they are victims of a bad economic legacy and now a pandemic, the government is blind towards this. It is a matter of a big worry and public disappointment. Moreover, it is an indication of the government’s poor economic foresight. By bringing everything on to a high- funda technology platforms built by large technology conglomerates, things may not move the way small entrepreneurs want.
Let us not forget, as high as 70 % of the Indian economy at one point of time used to run on a parallel system, mainly because of the small business establishments’ poor adaptability of the then operational regime. If the system becomes inept again they will die prematurely, leaving behind a horrendous socio-economic crisis. The government has to look down to ground realities.
To make a small business resilient to the changes, it needs time, care and natural mentorship. They need systematic training, funding support, friendly tax regime, and a steady course to migrate into a new regime. They need to be liberated from the fear of inspector raj.
We have seen a transformation of a cash- based transaction into a completely electronic guided e-money system. Small traders took a long time to get used to the system. The old generation is still not familiar with this. As large corporate entities are dependent on small enterprises for their existence, there is a need for some synchronizations in transactions. As millions of micro and small businesses continue to bleed, the buying capacity of the people shrinks significantly, as we see now. This is the segment, who used to contribute a lion’s share of taxes and add vibrancy to the consumers market.
In a country of 136 crore, people, working- class and micro-business are constituents of the economy’s corollary. A decline in demand usually closes factory productions. Smaller ones will get the first hit. Bigger ones will get the chance to eat away the small ones as the latter give up their task of running their shops.