Impact of COVID-19 Pandemic on MSMEs: A Study of Karimnagar District of Telangana State

Abstract

The COVID-19 pandemic has impacted gravely all the economic activities across the world, and India is no exception. One of the victims and most vulnerable sectors of the Indian economy is the micro, small and medium enterprises (MSMEs) sector because of its size, scale of operations and financial resources. The present study is aimed at assessing the impact of COVID-19 on MSMEs operating in the Karimnagar district of Telangana State and diagnosing the issues and challenges being faced by the enterprises during the pandemic period. The study is an analytical and descriptive type of research in nature and it is based on both primary and secondary data. The primary data were collected from about 120 MSME units in the Karimnagar district by administering a structured and pretested questionnaire. Descriptive statistics along with chi-square and ANOVA were used with the help of SPSS to analyse the data. The study found that two-thirds of the enterprise’s operations were extremely affected and experienced the reduction of orders from the customers, while about 41.7% of the MSMEs’ sales turnover plummeted from 40% to 60% due to virulent virus. Shockingly, the majority of the enterprises i.e., 60% incurred losses, and about 26.7% of the MSMEs decided to scale down or sell their units or shut down the operations due to various issues and challenges such as lack of orders, mounting manufacturing costs, payment of EMIs and statutory expenses. The study suggests that the government should ensure to provide free access to loans, waiver of the interest on EMIs and statutory payments besides relaxing the taxes for some period to revive the MSME sector as it is widely acclaimed as the golden duck of the Indian economy!