MSMEs require assistance once more, but not in the same manner that the government did previously.

There is still a need for a regulator in this market, which a Parliament panel believes the RBI can provide, despite the fact that members of the financial ecosystem are growing increasingly open to the idea of assisting the sector with receivables.

Payment gateway prices for micro, small, and medium-sized businesses (MSME) are skyrocketing.

These gateways provide MSMEs with integrated services that assist them maintain tax records by providing inventory management in addition to payment receipts.

The market for the gateways has exploded as clients, especially from middle-class families, convert to digital payments when doing business with small businesses and roadside vegetable vendors.

This may come as a surprise considering how little progress was made with the past year's package of initiatives to assist MSMEs.

Not a single financial institution is willing to try the "Fund of Funds" out.

Instamojo acquired a tech business in the middle of the second Covid wave primarily to improve its skill set and better serve India's 64 million or so MSMEs. Other payment processors like Paytm, Razorpay, and CCAvenue are encroaching on the same commercial territory.However, less than a year after the first Covid epidemic, the second one is already wreaking havoc on thousands of MSME units.

Although the crisis's duration may be compressed this time, it will undoubtedly leave behind much more wreckage than the initial wave.

The industry accounts for more than 10 million jobs and approximately one-third (31.66%) of the gross value added in India.

Any change in this area worsens inequality more than any other, possibly with the exception of agriculture.

MSMEs require a boost in confidence

Already lacking was the MSMEs' sense of business confidence. According to Bornali Bhandari, senior fellow at NCAER, the business confidence survey, which the think tank conducts, has lagged behind that of the large enterprises during FY21.

Early in April, just a few weeks ago, the central government approved an ordinance allowing "pre-packaged" insolvency for MSMEs.

It was anticipated that the law will inspire these tiny units to approach banks to reorder their business with much greater confidence.

They may start over after surviving the effects of Covid.

The prepackaged offer falls under it because the threshold for starting bankruptcy proceedings is Rs 1 crore of default.

Before her creditors file for bankruptcy protection, an MSME owner might present them with a settlement plan.

Now that the sector has been damaged, it is possible that the ordinance may need to be suspended for a while while the minister of corporate affairs assesses the situation.

If not, the banks may put significant pressure on the owners of these units to keep their NPA numbers low.

No takers for GOI projects

A number of initiatives were unveiled by the finance ministry last year as part of the Covid revitalization package. These comprised:

20 billion rupees in subordinate debt

Automatic loans without collateral of Rs 3 trillion or the Emergency Credit Line Guarantee Scheme

Infusion of Rs 50,000 crore in equity through the MSME Fund of Funds

A new, updated standard for classifying MSMEs

Udyam Registration

There are no international bids for purchases under Rs 200 crore

The third and fourth components are separated by something resembling an invisible line.

The three below have all been carried out without incident.

They updated outdated systems in the industry without the requirement for money.

The three schemes have all performed very poorly above the line.

They will all need to change their strategies if they want to advance.

The attitude in the MSME sector has not significantly improved because they have not delivered.

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