The credit rating agency ICRA has forecast better growth for microfinance institutions in 2021-22on the back of healthy demand and increasing economic activity. ICRA’s forecast, put out last week, is encouraging, though we were not surprised. Collection metrics indicate that the industry is going back to the days before the COVID19 pandemic hit the world. So ICRA’s estimated growth rate of 12-15 per cent in assets under management (AUM) is quite in line with our forecasts.

The fight for survival at the bottom of the financial pyramid is much harder than we can envisage. Even so, most of our customers have been focused and kept their businesses going, or even diversified. After a pandemic-driven year, our customers deserve to harvest the fruits of their resilience. They deserve a turnaround in the business environment.

However, we are now faced with the Omicron, a new variant of the Corona virus, which could impose another period of restricted activity if not a lockdown.

There seem to be differences in opinions about the new strain. An article (https://www.ndtv.com/world-news/coronavirus-omicron-cases-are-hitting-record-highs-but-heres-the-silver-lining-2687409) that I read recently says that “a string of new studies has confirmed the silver lining of the omicron variant: Even as case numbers soar to records, the numbers of severe cases and hospitalizations have not. The data, some scientists say, signal a new, less worrying chapter of the pandemic.”

But there is also another group of experts discussing that the situation may be different for India, as a rapidly spreading variant might exhaust the hospital infrastructure.

India reported over 37,000 new COVID-19 infections on January 3, 2022, which was significantly higher than what was recorded in November and December, when new cases remained around 10,000. While metropolises such as Delhi, Mumbai and Kolkata account for most of this surge, it will be fair to assume that rural India, home to our customers, will also get affected. If we factor in the so-called ‘residual pandemic’ where those who have recovered from COVID-19 are complaining about health problems, we do have challenging times ahead.

A few success strategies that I could gather from our interactions in the field involved customers diversifying to mitigate the risk. I have written earlier about garments tailors having added PPE kits to their portfolio and idol-makers having set up grocery shops.

As Village Financial Services, we have ramped up our ‘phygital’ strategy, so that the connect with our customers does not suffer because of the uncertainty cast on life by the pandemic.

It might be premature to forecast the end of the pandemic and a business-as-usual world. But our learnings will help us look forward more positively. We can at best hope that 2022 will be a year of revival and growth.