Directions: Read the passage given below and answer the questions that follow by choosing the correct/most appropriate options:

Micro, Small, and Medium Enterprises (MSMEs) are critical for achieving the overall objectives of economic development. The sector is a significant contributor in terms of industrial output, employment generation, and the share of gross domestic product and export. But despite many initiatives by governments since Independence, the sector has been facing challenges in its quest for survival and growth. The COVID-19 pandemic has further exposed the vulnerability of the MSME sector. During the pandemic, this sector was among the worst-hit on account of the demand and supply shocks caused and the measures taken later to curb the spread of infection. The sector is still struggling to survive and recover from the pandemic-induced shocks.

Let us focus on the impact of COVID-19 on MSMEs. A recent study (by the writers) — as a primary survey of 225 small firms located in the National Capital Region (NCR) and Uttarakhand — observed that the turnover of around 90% of small firms had declined in FY2020-21. Around 53% of firms faced more than a 50% decline in their turnover. Around 29% of firms reported a collapse of their businesses. Around 53% observed a decrease in demand while around 36% faced an erratic supply of raw materials.

The main reasons for a fall in turnover included restriction/s on economic activities and mobilities; decrease in demand; shortage of raw materials; restriction on trade; slow recovery of markets; payment delays and labor shortage, among others. These firms faced a 25% reduction in their employment particularly in the informal workers’ segment which stood at around 47%. Major challenges faced by firms in their revival included delayed payment issues; reduced demand; a lack of financial resources; supply chain disruptions; increased cost of production; lack of skilled workers and, most importantly, business uncertainties.

Although most of the firms were aware of the initiatives under the ‘Atmanirbhar Bharat’ package, only half of them found it to be of any help. Given the lack of demand and business uncertainties, firms did not find it rational to avail of financial assistance available under the ‘Atmanirbhar Bharat’ package. A majority of firms suggested that the Government should have been more focused on creating a revival of demand for products and services.