MANY startups and MSMEs are at the brink of closure due to the slowdown in the economy caused by lockdowns and restrictions imposed in various part of the country to contain the ferocity of COVID-19 second wave, according to a survey. The survey included responses from over 6,000 startups and MSMEs located in 171 districts of India. As per the report by Local Circles as many as 59 per cent of startups and MSMEs surveyed likely to scale down, shut down or sell themselves this year as they are facing a liquidity crunch. Asked about the months of cash (based on current monthly operating costs) they have on hand, 33 per cent of small businesses said they have only less than one month of cash, whereas 8 per cent are already out of funds.
Only 22 per cent have more than 3 months of runway, and 37 per cent have funds for 1-3 months, it said. Responding to a question on the outlook for the next six months, 59 per cent of small businesses expect to scale down, or sell off or shut down. “Of which, 37 per cent said they will scale down their operation, 14 per cent said they might shut down, whereas, 8 per cent would sale off their business in the next 6 months,” the survey noted. When asked about extending the time for completing government or public sector undertaking (PSU) contracts for 3-6 months, the majority of small businesses -- up to 92 per cent -- were in the favour.