Question: World and domestic economies have suffered a lot due to slowdown and small businesses have been hurt the most. Explain measures for reviving MSMEs and small businesses.
Answer: The effect of lockdown due to the pandemic has been disastrous for all businesses especially the smaller ones. As lockdown is being slowly relaxed, measures should be taken to revive these industries as they provide bulk of the employment especially in semi urban areas.
Reasons for slowdown
- Shortage of demand
As globe went into lockdown, the demand for non consumption products went down drastically. This reduced the demand in business model of small business and also smaller industries such as MSMEs.
- Breakdown of supply chain
The smaller businesses and industries are dependent on supply of raw materials especially components imported from abroad. With global lockdown, the supply chain failed to materialise and created crisis.
Measures to revive small business
- Credit facilities
Government has taken reviving small business and industries as a primary target as soon as lockdown is drawn back. To make this happen it is planning to provide long term credit to small industries to start operation. Small industries can lead the path towards economic recovery.
- Prioritise buying products from small industries
The government must make it a priority to buy items manufactured by small industries and MSMEs so that they get enough money to stay afloat and revive their status. This will also boost the other components of domestic economy such as consumer demand.
- Relaxation in taxes
Government can reduce the taxes that are required to be paid by these industries. This will allow industries to keep more money with them, that can be invested in the company or be paid as bonus wages.
Thus, reviving domestic economy is of utmost importance and the role of MSMEs and small industries is central to the plan of revival.