Coronavirus | Transporters, MSMEs wary of a lockdown

As COVID-19 cases continue in many parts of the country, the fear of renewed nationwide lockouts has created panic among transporters and MSMEs.

Following protests by traders, restaurant owners and their employees in Maharashtra, which is under a mini-lockdown and night curfew, transporters warned that supplies of essential commodities and medicines could be affected as the driver rushed to his hometown in large numbers. Were living.

“We understand that lockdown measures are slowly causing concern among drivers in many states,” said Abhishek Gupta, joint secretary of the All India Transporters Welfare Association. They fear that they may get stranded again if the trains are stopped. “Necessary steps should be taken to inform the central government that transport is not affected, otherwise we will have the same situation in the first few weeks of March 2020,” he said.

“We hope that if the availability of vehicles decreases, the supply of medicines, essentials and raw materials will be affected. Freight rates may strengthen and this will increase prices. According to him, small transporters dealing with merchants and shops have started feeling the heat as their consiners’ premises are closed, causing material to be caught and their trade volumes are drastically declining.

Trade organizations of micro, small and medium enterprises (MSMEs) said that although strict restrictions had to be implemented, the COVID scare had already begun to take a toll on firms.

“A completely unpredictable situation and insecurity is already on the minds of employers, employees and customers,” said KE Raghunathan, convenor of the Consortium of Indian Associations. “All payments to the government should be extended for six months,” he said.

“Now, merchants and MSMEs want the government to act swiftly to save us from a serious setback. We cannot afford a sudden lockdown again. Although a complete lockdown is unavoidable, it should be further encouraged [impose] Lockdown after this, ”he said.

“Raghunathan warned that the lack of seriousness of the public and administrators would eventually kill entrepreneurs.”

He said that since new restrictions were imposed, booking of new orders was halted. This would make the sector difficult as companies usually finalize annual rate contracts in the first quarter. “Advances against orders have stopped because firms are unable to deliver delivery commitments and there is uncertainty as to whether migrant workers will continue to work,” he said.

He said the annual maintenance contract (AMC) renewal of all B2C, B2B contracts has been put on hold. In states where assembly elections are being held, B2G contracts are waiting for a new government.

“Dispatch and installation plans are on hold, preventing investment and cash flow plans. All tourism and travel related activities are stopped for the second consecutive year. Campus and fresher recruitment continues and temporary employees are being asked to leave due to an unpredictable future.

He said that SMEs were finding it difficult to bear the additional costs related to COVID-19, adding that banks had started pushing for regularization of accounts.

MFI Collection

Rating agency Crisil said in a report that mini lockdowns imposed by states could affect collections of micro-finance institutions (MFIs). “With assets under management (MFI AUM) of ₹ 16,700 crore as of December 2020, Maharashtra is also in the top five states in terms of microfinance lending, accounting for 7% of all microfinance loans. Crisil said the non-banking finance company Microfinance (NBFC-MFI) accounts for 40%, or ₹ 6,700 crore.

Collection efficiency in Maharashtra was relatively low at 85–90% even before the latest reductions, as Crisil hinted at further reductions in collections, due to the previous extended lockdown. The all-India average storage efficiency in December 2020 was 90–94%.

Crisil Seetharaman, Senior Director and Deputy Chief Rating Officer, Crisil Seetharaman said, “The sector’s collection efficiency has stalled at 90-94% in the last few months.” “These mini-lockdowns may prevent improvements in the coming months,” he said.