Availability of funds - the key to revival, availability, funds, availability of funds, revival, economy, world economy, pandemic, economic growth, indian economy, msme, micro small and medium enterprises, revival of economy, micro small medium enterprise, financial companies, non banking financial companies, microfinance, microfinance institutions


The jury is still out on the actual contraction that the world economy will undergo due to the coronavirus pandemic. But, with a vaccine date in the zone of speculation, the global rating agencies are converging on their assessment of the world economic growth for the current fiscal. And they are more or less unanimous that the contraction would be over minus 4 per cent.

Fitch Ratings, in its assessment published on September 7, has brought the annual contraction figure marginally down to a negative 4.4 per cent from its June assessment of a negative 4.6. But, for the Eurozone, UK and India the predictions are not at all good. Fitch expects the Indian economy to contract a little over 10 per cent, which is worse than its earlier assessment of 5 per cent.

Fitch and other rating agencies, however, are hopeful that the situation might look up if the spread of COVID-19 is contained and lockdowns in all its forms are lifted. These conditions are highly speculative and the reality may differ drastically from the assumptions.

However, all may not be lost. The stakeholders of the Indian economy are known for their resilience, and the MSMEs or micro, small and medium enterprises even more so. The policymakers, having noted the nimbleness of the MSMEs, are reorienting policies and trying to redirect the funds flow through various fiscal interventions towards this segment.

This is the most crucial initiative, and if it works it can upset all predictions about a contraction. There is over-capacity in the system. The producing units are operating at around three-fourths of their capacity and the build-up is rising albeit at a slower pace. The under-utilisation of capacity has been prompted by the continued fall in demand.

There is a section of analysts who are speculating on a V curve revival of the economy. It means that, as the economy has contracted sharply, it would recover with similar sharpness and the fall and recovery would look like the alphabet ‘V’. They are saying this with the belief that the contraction has happened due to a non-economic exogenous factor, the coronavirus pandemic. With the passing of the pandemic, all other things remaining the same, and with the government initiating demand recovery through various fiscal interventions, the economy will get back its pre-lockdown strength.

With more funds available, demand will rise and absorb the over-capacity in the system. Right now, therefore, the key to a revival lies in the availability of funds and comprehensive cross-channel intervention, including non-banking financial companies and microfinance institutions.


Business in rural India will be the key to Atmanirbhar Bharat, economy, export, agriculture, market, development, potential, industry, food processing industry, atmanirbhar bharat


The Honourable Prime Minister has taken his 2014 Make-in-India mission to its logical second stage by stressing the need to create a Bharat that is Atmanirbhar or self-reliant. As Krishnamurthy V. Subramanian, the Chief Economic Adviser to the Government of India, explained recently, this is not about creating an inward-looking economy but about creating an economy that can stand on its own in the face of competition. It’s about creating a value chain that will stand global scrutiny of India’s quality and efficiency. It will also be about leveraging and unlocking values of our traditional economic strength.

In other words, his explanation is about tapping our own strength in all economic fields and being export competitive. I have always argued in favour of agriculture. And I think agriculture will have a bigger role to play as Make-in-India is taken forward.

The argument is very simple. Agriculture and the allied industry have huge employment potential. We are the sixth biggest market among all the nations in food and grocery. Yet our food processing industry still has a long way to go. Agriculture is the sector that has a huge untapped potential and can change the face of the country if the potential is realised the way Gujarat has realised its potential in the dairy sector.

This is not to say that the conventional industrial segment is not needed. Industry has its place. But agriculture has a huge potential to unleash a long chain of development related to it, from the field to the market. According to Invest India, a Government of India initiative, the processed food market is expected to grow to $543bn by 2020 from $322bn in 2016, at a CAGR of 14.6 per cent.

The Centre has rightly pointed out that food processing has an important role to play in linking Indian farmers to consumers in the domestic and international markets. And the Ministry of Food Processing Industries (MoFPI) is making efforts to encourage investments across the value chain. The industry engages approximately 1.85 million people in around 39,748 registered units with fixed capital of $32.75bn and aggregate output of around $158.69bn. However, the processing industry is largely focused on grains, sugar, edible oils, beverages and dairy products.

Keep in mind that the food processing industry is the single-largest employer despite being focused on just five areas. Imagine the growth potential. That’s the boost Atmanirbhar Bharat needs.

We need to answer why just one state should lead the race in specific fields, and why shouldn’t all other states, producing the same commodity, be on the same page in terms of an evolved processing industry. And that would deliver the developmental gains we are aspiring for.

Business in rural India will indeed be the key to an Atmanirbhar Bharat.


Business shows agility in adapting, business, adapting, agility, enterprise, intellectual, environment, entrepreneur, business world, production, pandemic, importer, exporter, vaccine production, market, new market, indian business, adaptability, creativity


An enterprise is seen by many as a field that needs the highest form of intellectual creation. Agility and the ability to adapt quickly to a fast-changing environment are the hallmarks of business. Entrepreneurs who cannot come up with a creative response could be left by the wayside. That is probably why an enterprise is called not just a business but a value creator.

The recent dynamics of the business world are proving how true the understanding is. Take ventilators. Even four months back when COVID-19 bared its fangs, India had a limited production capacity for ventilators. We were a net importer and when USAID promised a few hundred ventilators to support our fight against the pandemic, we clutched at it as the proverbial last straw.

Yet, now, when the US government tweeted about shipping 100 ventilators recently, we are already producing enough not only to support our own needs but also some extra to help others. The same was the story with the PPE or personal protective equipment. From being a net importer, India is going to be a net exporter. And now the world is looking up to us as a source for vaccine production once trials are successful.

In each of these instances and in many others, we are finding the truth about all that we have learnt from a distance.

An enterprise that was making luggage found its production stalled, as there were no outlets to sell or customers for its products. But soon it realised that with a little rejig the production line could churn out PPE kits without a hitch. And the company found a new market in the premier hospital segment.

This is the story across the spectrum in Indian business.

True, it doesn’t make for the full utilisation of the production capacity. But manufacturing units across the board are innovating to cater to a clutch of demands of the new normal. They are creating value that is fitting the market to a tee.

Right at this moment when survival is important, when the situation calls for weathering the storm, business is doing just that by creating value in a way that wouldn’t have made business sense even in March.

Agility, adaptability and creativity are coming to the fore in keeping the wheels of business running.


For new jobs to offset losses, watch MSMEs, pandemic, economy, self employment, economic, markets, jobs created, microfinance, job opportunities, new jobs, new companies, creating jobs


A CMIE survey claims that a little over 12 crore people in India have lost their jobs during the pandemic till date (July 2020) across the economy. Going by the Economic Survey, we had a workforce of a little over 47 crore in FY 2018. Factoring in the four crore that the NITI Aayog had claimed as net addition at the self-employment level in FY 2019, we may safely assume a workforce of about 50 crore at the time COVID-19 hit us and prompted the government to declare a lockdown.

So the COVID-19 lockdown may have claimed nearly 24 per cent of the workforce as its economic casualty, not counting those who were incapacitated or killed by the novel coronavirus. The figure may vary, but the proportion may not be very wrong.

Yes, the situation looks dire on the economic front. But that is because we are looking at it only from the single perspective of job loss or sectoral figures during the last four months. With the prolonged lockdown that began in end-March having been lifted and markets adjusting to a ‘new normal’, the registrar of companies has some good news to share. The RoC says it has registered 16,000 new companies during the pandemic till June.

There are other interesting figures that can be cross-read with such green shoots. Most of the jobs created in the last three years were by the MSMEs or micro, small and medium enterprises. And of all the jobs created, more than 70 per cent were in the micro-units.

There is an interesting parallel that can be found with the Bengali proverb that says, “storms claim big trees as victims, while the grass stays untouched.” The resilience and operational flexibility of an MSME allow it to react quickly and adapt well.

In a previous blog, I had said how microfinance could be the economy’s saviour in the current situation. Microfinance can enable the MSME segment to regenerate opportunities for the jobs that we have lost. While all of us thought that lack of PPE or personal protective equipment was a major hurdle in our fight against COVID-19, the MSMEs turned the situation around. India, which was a net importer of PPE, became a net exporter.

As for new jobs, while the RoC has not yet given the breakup of the new companies it has registered, one suspects that most of them will be in the MSME category.

Microfinance could once again be a saviour in creating jobs.

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