Article

Impact of COVID-19 Pandemic on SEDME (Small Enterprises Development,

Management & Extension Journal)
MSMEs: A Study of Karimnagar 49(1) 82­–106, 2022
© The Authors 2022
District of Telangana State Reprints and permissions:
https://doi.org/10.1177/09708464221092493
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DOI: 10.1177/09708464221092493
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M. Malla Reddy1 , A. Srividya1, V. Kavya1, R. Bharath1,

M. Srikar1 and D. Vinay Kumar1

Abstract
The COVID-19 pandemic has impacted gravely all the economic activities across the world, and India
is no exception. One of the victims and most vulnerable sectors of the Indian economy is the micro,
small and medium enterprises (MSMEs) sector because of its size, scale of operations and financial
resources. The present study is aimed at assessing the impact of COVID-19 on MSMEs operating in
the Karimnagar district of Telangana State and diagnosing the issues and challenges being faced by
the enterprises during the pandemic period. The study is an analytical and descriptive type of research
in nature and it is based on both primary and secondary data. The primary data were collected
from about 120 MSME units in the Karimnagar district by administering a structured and pretested
questionnaire. Descriptive statistics along with chi-square and ANOVA were used with the help
of SPSS to analyse the data. The study found that two-thirds of the enterprise’s operations were
extremely affected and experienced the reduction of orders from the customers, while about 41.7%
of the MSMEs’ sales turnover plummeted from 40% to 60% due to virulent virus. Shockingly, the
majority of the enterprises i.e., 60% incurred losses, and about 26.7% of the MSMEs decided to scale
down or sell their units or shut down the operations due to various issues and challenges such as lack
of orders, mounting manufacturing costs, payment of EMIs and statutory expenses. The study suggests
that the government should ensure to provide free access to loans, waiver of the interest on EMIs
and statutory payments besides relaxing the taxes for some period to revive the MSME sector as it is
widely acclaimed as the golden duck of the Indian economy!

Keywords
COVID-19 Pandemic, micro, small and medium enterprises, issues and challenges of MSMEs, Indian
economy, Atmanirbhar Bharat Abhiyan stimulus package

1Department of Commerce, SRR Government Arts and Science College (Affiliated to Satavahana University), Karimnagar,
Telangana, India

Corresponding author:
M. Malla Reddy, Department of Commerce, SRR Government Arts and Science College (Affiliated to Satavahana University),
Karimnagar, Telangana 505001, India.
E-mail: mmreddydl@gmail.com
Reddy et al. 83

Introduction
The outbreak of the COVID-19 pandemic, which has catastrophic consequences, has gravely hit all the
economic activities across the world. The devastating pandemic has taken more than 195 countries in
its grip across the world (Sipahi, 2020). The entire world is passing through a great uncertainty due to
COVID-19. To contain the spread of the COVID-19 pandemic, many countries, including India, have
imposed lockdowns during the two waves of the COVID-19 pandemic. Consequently, economic
activities across the world, including India, have come to a grinding halt and have been severely
impacted due to disruptions caused by the COVID-19 pandemic. Due to COVID-19-induced
lockdowns, businesses and manufacturing activities were severely affected, the supply chain was
totally disrupted, transportation and tourism sectors came to a grinding halt, employees and workers
lost their employment and the exodus of migrant workers, particularly in India, further worsened the
crisis (Shafi et al., 2020).
One of the most badly hit sectors of the Indian economy was the micro, small and medium enterprises
(MSMEs). The MSME sector has been one of the most vulnerable sectors during the pandemic because of
its small size, the scale of operations and availability of financial resources. The empirical studies have
apparently found that approximately 95% of the firms were impacted negatively due to the nationwide
lockdown imposed during March–April 2020 (MSME, 2021). Even after phase-wise unlocking, reports
found that almost 40% of the businesses remained interrupted till the end of February 2021. It was found
that about 11% of the business volume of Indian MSMEs declined because of the lockdown in 2021 in
comparison to 46% decline registered during the nationwide lockdown in 2020 (Agyeya, 2020).
The MSME is the sector that was already reeling under a huge distress, first, because of demonetisation,
and then the poor implementation of GST followed by the prolonged economic slowdown and, finally,
the biggest of all—the COVID-19 pandemic, which has aggravated the crisis in this specific sector
further (Rath & Das, 2020). Because of the small size, the scale of operations, limited financial, and
managerial resources, these enterprises do not have the capacity to deal with something that has
catastrophic consequences.
The MSME sector has emerged as a highly vibrant and dynamic sector of the Indian economy over
the past few decades. It contributes significantly to the economic and social development of the country
by fostering entrepreneurship and generating large employment opportunities at comparatively lower
capital costs, next only to the agricultural sector. MSMEs are complementary to large industries as
ancillary units, and this sector contributes significantly to the inclusive industrial development of the
country. Being a highly vibrant and dynamic sector of the Indian economy, the MSME sector is considered
as the backbone and engine of the economic growth of the country. Currently, this sector is contributing
over 30% to the Indian gross domestic product (GDP), about 45% to industrial output and 48% to the
total exports. There are about 63.3 million MSME units that are operating in India, of which 63.052
million are micro enterprises (99%), followed by small enterprises with 331,000 (0.52%) and Medium
Enterprises with 5,000 units (0.01%). It is offering about 111 million job opportunities (NSSO, 2015).
The MSMEs are classified as below according to the Micro, Small and Medium Enterprises
Development (MSMED) Act, 2006. The enterprises with the investment in plant and equipment of up to
`10 million and turnover of up to `50 million are classified as micro enterprises. The enterprises with the
investment in plant and equipment of up to `100 million and turnover up to `500 million are small
enterprises and investment of up to `500 million and turnover of up to 2,500 million are classified as
medium enterprises (MSME, 2021). The new classification of MSMEs, which was announced on 13
May 2020 as part of the Atmanirbhar Bharath Abhiyan package, came into effect from 1 July 2020.
84 Small Enterprises Development, Management & Extension Journal 49(1)

Micro, Small and Medium Enterprises in Telangana

The MSMEs are playing a pivotal role in the economic development of Telangana by providing large
employment opportunities besides entrepreneurship. There are about 2.605 million MSME units in
Telangana State, of which more than 2.5 million units are micro enterprises and the remaining units are
SMEs. About 56% of the MSME units are operating in rural areas, and about 44% are operating in urban
areas. After the agricultural and construction sectors, the MSMEs provide the largest employment
opportunities in the state. Due to the COVID-19-led lockdowns and restrictions, the operations of the
MSME units in the Telangana State were badly impacted (Industries and Commerce Department, 2021).
According to the data provided by the Department of Industries and Commerce, Government of
Telangana as shown in Table 1, there are about 13,379 registered MSME units with an investment of
`184.65 billion and providing employment opportunities to 243,556 people. Of the total MSMEs, a
whopping number of them are micro units, that is, 8,094, while small units are 4,623 and medium units
are just 362. Comparatively, small enterprises are providing the highest employment opportunities, that
is, 1, 31,942 in Telangana State. (Industries and Commerce Department, 2021).

Micro, Small and Medium Enterprises in Karimnagar District

Karimnagar district is one of the 33 districts in Telangana State, which is playing a significant role in
the economic progress of the state. It is home to about 1,862 MSMEs besides 2 Large Enterprises as
depicted in Table 2, and provides direct employment opportunities to about 17,536 people (District
Industries Centre, 2021).
The study is divided into the following sections: The first section deals with the introduction. The second
section discusses the summary of review of literature followed by the third section which presents the objectives
of the study and hypotheses. The fourth section is devoted to research methodology. The fifth section of the
study deals with results and discussion that include the profile of the respondent MSMEs. The sixth section

Table 1. No. of Registered MSMEs in Telangana State Since 2015.

Category Number of Units Investment Value ( ` billion) Employment Generated
Micro 8,094 26 81,121
Small 4,923 118.65 131,942
Medium 362 40 30,493
Total 13,379 184.65 243,556
Source: Department of Industries and Commerce, Government of Telangana.

Table 2. No. of MSMEs in Karimnagar District.

Sl. No. Type of Unit No. of Units
1 Micro units 1,314
2 Small units 541
3 Medium units 7
Total 1,862
4 Large Enterprises 2
Total Industries 1,864
Source: Industrial Profile of Karimnagar.
Reddy et al. 85

analyses the impact of the COVID-19 pandemic on MSMEs in Karimnagar district of Telangana State. Findings
are mentioned in the seventh section. The eighth section presents the policy recommendations. Finally, the
ninth section discusses the conclusion and implication of the study. The tenth section discusses the limitations
and scope for further research.

Review of Literature
Various studies relating to the impact of the COVID-19 pandemic on MSMEs were reviewed, and the
summary has been presented hereunder.
The lockdowns imposed to contain the spread of COVID-19 considerably impacted the economic
activities of the MSMEs. The MSME sector faced various problems such as an acute cash crunch, shutdown
of businesses and large-scale job loss across all types of units, irrespective of their size and operations
(Indrakumar, 2020). The MSME sector was found to be resilient enough and stood tall against various issues
and challenges that emerged due to COVID-19, and the majority of the MSMEs did not face the risk of
permanent closure (56%). The MSMEs have faced the problems of temporary closure, which has affected
their revenues. To better strategise, a majority of the enterprises put off their plans of business expansion and
growth. With a view to cope up with the crisis, many MSMEs have devised innovative methods of
diversifying into new business activities (27%). Though various initiatives were arranged by the government,
the majority of MSMEs are not aware and have not yet availed the benefits (Chayanika Rath & Priyanka
Das, 2020). The economic and financial problems of the MSMEs in India are unprecedented and threaten
their very existence and survival. The demand shocks due to the second wave effects of the pandemic
resulted in a deeper damage to the economy in general and the MSMEs in particular (Krishnarajapet, 2020).
Over 83% of the enterprises were neither prepared nor had any plan to handle the COVID-19 situation in
Pakistan. Further, more than two-thirds of the participating enterprises reported that they would not be able
to survive if the lockdown lasted for more than 2 months. Protection of employees and information accuracy,
boosting the economy, income and employment support for MSMEs, planning, building resilience
capabilities and positive social relations are to be adopted to ease the adverse effects of the pandemic (Shafi
et al., 2020). Given the extensive pandemic chaos, the government needed to establish an ongoing monitoring
system and declare urgent relief measures to improve the confidence of the MSMEs sector. E-market
linkages for MSMEs should be prompt, and fiscal stimulus should be increased to achieve the vision of self-
reliant India (Behera et al., 2020). It was observed that as the COVID-19 pandemic is a crisis with an
unforeseeable ending, the government and business enterprises in every sector need to work together so as
to address the root causes of the crisis (Sipahi, 2020). The MSME sector had suffered a number of setbacks,
with the vast majority of MSME units failing to benefit from a variety of Government schemes and programs.
Diversifying products and services, rescheduling bank loans, scaling down of operations, relying on savings,
and seeking help from informal sources were among the measures used by MSMEs to resurrect their
operations (Chattopadhyay & Sahu, 2020). The impact was found to be severe on trade, manufacturing and
MSME sectors. The study projected that the manufacturing sector may shrink from 5.5% to 20%, exports
may shrink from 13.7% to 20.8%, imports may shrink from 17.3% to 25% and MSMEs’ net value added
(NVA) from 2.1% to 5.7% in 2020 over the previous year. The economy was heading towards a recession,
and the situation demanded a systematic, well-targeted and aggressive fiscal–monetary stimulus measures
(Sahoo & Ashwani, 2020).
The relief package was not sufficient to compensate the losses incurred by the business entrepreneurs
of MSMEs in India. Furthermore, many people migrated from rural regions to urban regions in search of
86 Small Enterprises Development, Management & Extension Journal 49(1)

better job opportunities, which worsened the situation. The manufacturers of both non-essential and
essential goods suffered losses close to 50% during the pandemic. The strategy of providing credit
facilities would enable MSMEs to adopt the latest technology like e-commerce. The recommendations
of the study included disbursement of credit guarantee schemes, provision of subsidies and extension of
tenure of repayment of loans (Roy et al., 2020). The liquidity infusion measures, at this juncture, without
adequate measures to revive demand would not help the MSMEs to tide over the crisis induced by the
COVID-19 lockdown (Gosh, 2020). About 59% of the start-ups and MSMEs in India were likely to scale
down, shut down or sell themselves during 2021. The survey found that only 22% of the start-ups and
MSMEs have more than 3 months runway, 41% are out of funds or have less than 1 month of funds left.
About 49% of the start-ups and MSMEs plan to reduce employee compensation and benefit costs by July
2021. The government should be more empathetic to pain and challenges of MSMEs and should provide
timely relaxation on taxes (Local Circles, 2021). The study carried out by the International Labour
Organization (ILO, 2021) examined the impact of the COVID-19 pandemic-related market disruptions
for both MSME owners and workers and made an attempt to understand the government’s coverage and
access to policy measures in three states of Maharashtra, Tamil Nadu and Uttar Pradesh. The study
apparently found that about 92% of the unit owners said that the lockdown had impacted them. The
closure of the enterprises had a cascading effect and impacted their cash flows, supply chains and
availability of labourers. The main issues and challenges being faced by the MSME units were paying
wages, reduced demand, cash flow issues and repayment of loans. Most of the respondents expressed the
need for financial support, that is, interest-free loans, low-interest credit lines and guarantees or tax
breaks. Compared to Maharashtra and Uttar Pradesh, Tamil Nadu appeared to have done better in
addressing some of the impacts. About 86% of the enterprises were fully functional in October 2020
(ILO, 2021). According to a survey conducted by the Consortium of Indian Association (CIA), about
73% of the Indian SMEs did not make a profit during the financial year 2020–2021. A total of 80% of
the owners were insecure about an uncertain future with the double whammy of the pandemic crisis and
economic explosion. The study suggested that the government should exempt SMEs from statutory
compliances, litigations, penal actions and protect them from the high rate of interest on loans and
support them with liberal loans (Soni, 2021). The most recent amendment to the definition of MSMEs,
which took effect in July 2020, is expected to boost the sector’s competitiveness and encourage MSMEs
to pursue expansion plans. To revive the Indian economy, the Government, industry, and all major
stakeholders will need to work together (Lahiri, 2022).
In the backdrop of the above review of literature, it was found that there are no research studies
carried out on the impact of the COVID-19 pandemic in Telangana State in general and Karimnagar
district in particular. This prompted the researchers to embark on the present study to examine the impact
of the COVID-19 pandemic on MSMEs in the Karimnagar district of Telangana State. The study is
aimed at assessing the impact and exploring the issues and challenges being faced by the MSME units.
The study is important and imperative for the government, policymakers, practitioners and owners of the
MSMEs to understand the impact and devise suitable steps to tide over the crisis.

Objectives of the Study

1. To study the impact of COVID-19 on the MSMEs in the Karimnagar district.
2. To explore the issues and challenges being faced by the MSMEs during the pandemic period.
Reddy et al. 87

Hypothesis
Ho 1: There is no significant association between the place of the MSMEs and their closure during the
lockdown period.

Ho 2: There is no statistically significant difference between categories of MSMEs and the impact of COVID-
19 on the enterprises.
Ho 3: There is no significant association between the type of enterprise and utilisation of loan moratorium
facility.
Ho 4: There is no significant association between the type of enterprises and the time required to reach the
pre-pandemic level of business.

Research Methodology
The present study is an analytical as well as the descriptive type of research and is based on both primary
and secondary data. The present study is based on the survey method. Simple random sampling technique
has been adopted to select the sample respondents. The primary data for the study have been collected
from a sample of 120 MSMEs in Karimnagar district by administering a structured and pretested
questionnaire. The secondary data have been collected from various sources such as Press Notes of the
Ministry of Finance, Government of India, annual reports of MSMEs, articles published in journals and
magazines, online database and newspapers. The primary data so collected have been processed and
analysed by adopting various statistical tools like percentages, averages, chi-square and ANOVA with
the help of the SPSS. The survey was carried out in Karimnagar urban and rural areas from 10 November
to 20 November 2021.

Results and Discussion

Profile of the Respondent Micro, Small and Medium Enterprises

The data pertaining to the demographic and socio-economic profile of the respondent MSMEs located in
the Karimnagar district have been depicted in Table 3.
It is clearly evident from Table 3 and Figure 1 that half of the surveyed MSME units are operating in
both rural and urban areas of the Karimnagar district. As far as the types of enterprises are concerned as
shown in Figure 2, a whopping 82.5% of the respondent enterprises are Micro enterprises, followed by
small enterprises, which account for 13.3%, and medium enterprises that account for just 4.2%. With
regard to categories of the enterprises as shown in Table 3 and Figure 3, all the enterprises, that is,
manufacturing enterprises (33.4%), services enterprises (33.33%) and trading enterprises (33.33%), are
equally distributed.
Registration of MSMEs is still going on the UDYAM portal. Dramatically, about 80% of the
respondent MSMEs in the Karimnagar district are not yet registered on UDYAM portal as presented in
the Figure 4. However, about 20% of the enterprises were registered on the portal.
Analysis of the nature of the enterprises/businesses as demonstrated in Figure 5, reveals that the
majority of the surveyed MSMEs, that is, 50%, are manufacturing their own branded products, rendering
their own branded services. With regard to the distribution of the workers is concerned as displayed in
88 Small Enterprises Development, Management & Extension Journal 49(1)

Table 3. Demographic and Socio-economic Profile of the Respondent MSMEs.

Sl. No. Variable Classification Frequency %
Rural 60 50.0
1 Place Urban 60 50.0
Total 120 100.0
Micro 99 82.5
Small 16 13.3
2 Type
Medium 5 4.2
Total 120 100.0
Manufacturing 40 33.3
Services 40 33.3
3 Category
Trading 40 33.3
Total 120 100.0
Yes 24 20.0
4 Registration on UDYAM portal No 96 80.0
Total 120 100.0
Own products/Services 60 50.0
Part of supply chain 40 33.3
5 Nature of enterprises/businesses
Job works 20 16.7
Total 120 100.0
Self employed 20 16.7
2–5 workers 45 37.5
5–10 workers 22 18.3
6 Number of workers 10–20 Workers 13 10.8
20–50 Workers 11 9.2
50–100 Workers 9 7.5
Total 120 100.0
Source: Primary data.

Figure 6, about 37.5% of the MSMEs have workers ranging from 2 to 5 workers, followed by about
18.3% of the enterprises having workers ranging from 5 to 10 and about 16.7% being self-employed
enterprises. However, about 7.5% of the enterprises have workers from 50 to 100 workers.

Impact of COVID-19 Pandemic on the MSMEs

The COVID-19 has severely impacted the MSME sector as this sector is one of the most vulnerable
sectors by size and scale of operations. There are about 1,862 MSMEs operating in the Karimnagar
district. The MSMEs have been facing various issues and challenges since the lockdown period. A survey
was administered to collect the responses from the owners of the MSMEs in both rural and urban areas
of the Karimnagar district. The responses of the MSMEs on the impact of the COVID-19 pandemic on
various aspects have been analysed as under.
Reddy et al. 89

Urban Rural
50% 50%

Figure 1. Place of the MSMEs.

Source: Primary data.

Medium
Small
4%
13%

Micro
83%

Figure 2. Type of Enterprises.

Source: Primary data.

Trading Manufact
33% uring
34%

Services
33%

Figure 3. Category of Enterprises.

Source: Primary data.
90 Small Enterprises Development, Management & Extension Journal 49(1)

Yes
20%

No
80%

Figure 4. Registration of MSMEs on UDYAM Portal.

Source: Primary data.

50
33.3
16.7
Own Part of Supply Job Works
Products/Services Chain

Figure 5. Nature of Enterprises.

Source: Primary data.

37.5
40
35
30
18.3
25 16.7
20 10.8
9.2 7.5
15
10
5
0 Self Employed 2 to 5 Workers 5 to 10 Workers

10 to 20 Workers 20 to 50 Workers 50 to 100 Workers

Figure 6. Number of Workers of the MSMEs.

Source: Primary data.
Reddy et al. 91

Impact of Lockdowns
To contain the spread of the COVID-19 pandemic, the central government announced two lockdowns—
the first lockdown during April–May 2020 and the second lockdown during April–May 2021. During the
lockdown period, most of the MSMEs shut down their operations. The data pertaining to the closure of
the MSMEs during the two lockdown periods have been depicted in Table 4. From Table 4, we can
observe that the majority of the enterprises, that is, 51.7%, remained completely closed during both the
lockdown periods as they belonged to the non-essential category of enterprises, followed by about 27.5%
of the enterprises not closed and about 20.8% of the surveyed enterprises partially closed. Those
enterprises that belonged to the emergency category were not closed, and those that belonged to the
essential category-related businesses remained partially closed during the lockdown periods.
Undoubtedly, the lockdowns impacted the operations of the MSMEs severely.

Hypothesis 1 (Ho): There is no significant association between place and closure of the MSMEs during the
lockdown periods. The results of the chi-square test have been presented in Table 5.

It can be analysed from Table 5 that the Pearson chi-square value is 6.178 at 2 df and p-value is 0.046,
which is less than 0.05 at a 5% level of significance. Hence, the null hypothesis has been rejected. It can
be inferred that there is a significant association between the place of the MSMEs and their closure
during the lockdown period as the MSMEs in the rural areas were not fully closed.

Issues and Challenges Faced by the Micro, Small and Medium Enterprises
During the Lockdowns
During the lockdown periods, MSMEs have faced a host of issues and challenges. The data on the
issues and challenges faced by the MSMEs during lockdowns have been presented in Table 6. Analysis

Table 4. Closure of the MSMEs During Two Lockdown Periods.

Particulars Frequency %
Not closed 33 27.5
Partially closed 25 20.8
Completely closed 62 51.7
Total 120 100.0
Source: Primary data.

Table 5. Chi-square Test Results: Place and Closure of the MSMEs During the Lockdown Periods.
Test Value df Sig. (2-sided)
Pearson’s chi-square 6.178 2 0.046
Likelihood ratio 6.352 2 0.042
Linear-by-linear associa- 0.011 1 0.915
tion
No. of valid cases 120
Source: Calculation on SPSS.
92 Small Enterprises Development, Management & Extension Journal 49(1)

of Table 6 reveals that one of the most cited issues and challenges faced by the MSMEs during the
lockdown periods was the cash flow issues that accounted for 45.8%. The other issues and challenges
being faced by the MSMEs are the supply chain disruption (41.7%), lack of demand (43.3%), payment
of wages (36.7%) and payment of EMI and statutory expenses (53.3%). These issues and challenges
have hampered the operations of the MSMEs.

Impact of COVID-19 on MSMEs Business Operations

The COVID-19 pandemic left many MSMEs in the lurch. Most of the MSME businesses were drastically
disrupted. The information pertaining to the impact of the COVID-19 pandemic on enterprises/businesses
has been presented in Table 7.
It is very clear from Table 7 that about 60% of the respondent MSMEs opined that the impact of the
COVID-19 pandemic was extremely high on their operations, while about 16.7% of the respondents said
that the impact was very high, and about 12.5% expressed that the impact was moderate on their
enterprise/business operations. Interestingly, around 10.8% of the enterprises/businesses stated that their
operations were not impacted due to COVID-19 as these enterprises belonged to the emergency and

Table 6. Issues and Challenges Faced by the MSMEs During the Lockdowns.
Sl. No Issues and Challenges Faced First Cited Second Third Cited Fourth Fifth Cited
During the Lockdowns Cited Cited
Freq. 55 27 20 13 5
1 Cash flow issues
% 45.8 22.5 16.7 10.8 4.2
Freq. 29 28 52 5 6
2 Lack of demand
% 24.2 23.3 43.3 4.2 5.0
Supply chain Freq. 17 50 21 20 12
3
disruptions % 14.2 41.7 17.5 16.7 10.0
Freq. 6 15 25 44 30
4 Wages problems
% 5.0 12.5 20.8 36.7 25.0
EMI/statutory Freq. 5 6 12 33 64
5
expenses % 4.2 5.0 10.0 27.5 53.3
Source: Primary data.

Table 7. Impact of COVID-19 on MSME Business Operations.

Particulars Frequency %
Extremely high 72 60.0
Very high 20 16.7
Moderate 15 12.5
No impact 13 10.8
Total 120 100.0
Source: Primary data.
Reddy et al. 93

essential services category. The enterprises/businesses operating in the rural areas and those that belonged
to the essential and emergency services were found to be not much affected during COVID-19-induced
lockdown periods.

Hypothesis 2 (Ho): There is no statistically significant difference between categories of MSMEs and the
impact of COVID-19 on enterprises/businesses. The results of the ANOVA test have been presented in Table 8.

Table 8 presents the ANOVA results, from which we can observe that the F-value is 2.498 and p-value is
0.087, which is more than 0.05 with a significance level of 5%. Hence, the null hypothesis has been
accepted. It can be observed that there is no significant difference among the categories of MSMEs, that
is, manufacturing, services and trading, and the impact of COVID-19. Further, it can be said that all
categories of the MSMEs’ operations were badly impacted due to the COVID-19 pandemic.

Impact on Orders from the Customers

As soon as the lockdown restrictions were eased by the government, MSMEs swiftly resumed their
manufacturing activities, trading and other services. Though they have resumed their operations, there
has been no demand from the customers who have no money to spend. Table 9 presents the information
relating to the impact of COVID-19 on orders from the customers during the post-lockdown period.
From Table 9, we can see that the majority of the enterprises, that is, 64.2%, experienced a reduction
in orders from the customers due to lack of money in their hands, followed by about 20.8% stating that
there has been no change in the quantity of the orders from the customers. Interestingly, about 15% of
the enterprises said that orders from the customers increased during the post-lockdown period. Even
though MSMEs resumed their operations on a positive note, the majority of the enterprises witnessed a
reduction in orders from the customers due to a lack of sources of income.

Table 8. ANOVA Results: Category and Impact of COVID-19 on MSMEs Business.

Particulars Sum of Squares df Mean Square F Sig.
Between groups 5.365 2 2.683 2.498 0.087
Within groups 125.626 117 1.074
Total 130.992 119
Source: Calculations on SPSS.

Table 9. Impact of COVID-19 on Orders from the Customers Post the Lockdown Period.
Particulars Frequency %
Reduction in orders from customers 77 64.2
Increase in orders from customers 18 15.0
No change in orders quantity 25 20.8
Total 120 100.0
Source: Primary data.
94 Small Enterprises Development, Management & Extension Journal 49(1)

Impact of the COVID-19 Pandemic on Workers

During the lockdown periods, workers lost employment as the manufacturing activities were shut down
completely. Migrant workers faced difficulty in getting back to their native places as the transportation
was halted. As a result, the unemployment rate soared during the lockdown periods. The survey’s
findings clearly indicated that owners were unable to pay the wages to their workers due to cash flow
issues. The information regarding the payment of wages to the workers during the two lockdown periods
has been presented in Table 10.
In retrospection, Table 10 reveals that the majority of the enterprises, that is, 52.5%, paid wages to
their workers to retain them after the lockdown period. While about 24.2% of the MSMEs paid half of
the wages, about 13.3% paid some amount of wages to their workers. On the other hand, about 10% of
the MSMEs had not paid any wages to their workers due to various reasons.

Removal of Workers During the Pandemic Period

The MSMEs that were struggling to survive resorted to laying off workers to reduce the burden and to scale
down their operations. Consequently, few workers lost employment opportunities in the MSMEs. The data
regarding the removal of workers during the pandemic period are presented in Table 11. Interestingly, about
69.2% of the MSMEs have not removed a single worker, followed by about 15% of the enterprises having
removed less than 2 workers to scale down the operations as the demand was sluggish. While around
7% of the MSMEs have removed workers ranging between 2 and 5, 5% of them have removed workers
ranging from 5 to 10 workers and 4.2% of the MSMEs have removed more than 10 workers.

Table 10. Payment of Wages to Workers During Two Lockdown Periods.

Particulars Frequency %
Fully paid 63 52.5
Half-amount paid 29 24.2
Some amount paid 16 13.3
Not paid 12 10.0
Total 120 100.0
Source: Primary data.

Table 11. Removal of Workers During the Pandemic Period.

Particulars Frequency %
Not removed 83 69.2
Less than 2 18 15.0
2–5 workers 8 6.7
5–10 workers 6 5.0
More than 10 workers 5 4.2
Total 120 100.0
Source: Primary data.
Reddy et al. 95

Impact on Sales Turnover

The sales turnover of the MSMEs during the pandemic period decreased adversely as there was tepid
demand from the customers. Table 12 presents the data related to the impact on sales turnover during the
COVID-19 pandemic.
It can be observed from Table 12 that about 41.7% of the surveyed MSMEs stated that there was a
decrease of 40–60% in their sales turnover during the pandemic period, while 13.3% registered about 20%
decrease and 60 to 80% decrease, respectively, in sales turnover. In a stark contrast, about 10% of the
respondent MSMEs opined that their sales turnover had increased. Increasing the sales turnover amid a
pandemic crisis is considered as a boon in disguise.

Moratorium Facility
As soon as the first lockdown was imposed by the central government, the Reserve Bank of India (RBI)
has announced the deferment of individuals’ and MSMEs’ EMIs for 3 months initially, and this was later
extended to 6 months. The moratorium facility provided by the RBI was a temporary relief to MSMEs
as most of the enterprises were shut down during the lockdown period.
Table 13 presents the data on the utilisation of the loan moratorium. A whopping 55% of the surveyed
MSMEs have utilised the facility of deferment of EMI or loan moratorium for 6 months. However, about 45%
of the enterprises have not availed the facility as they might not have loans or might have not used the facility.

Hypothesis 3 (Ho): There is no significant association between the type of enterprise and utilisation of loan
moratorium facility. The chi-square test results have are presented in Table 14.

It is clearly evident from Table 14 that the Pearson’s chi-square value is 5.395 at 2 df, and p-value is
0.067, which is more than 0.05 at a significance level of 5%. Therefore, the null hypothesis has been
accepted as the p-value is more than 0.05. It is observed that there is no significant association among
the MSMEs in terms of the utilisation of the loan moratorium facility provided by the RBI during the
lockdown period.

Table 12. Impact on Sales Turnover During the COVID-19 Pandemic.

Particulars Frequency %
Less than 20% 16 13.3
20%–40% 13 10.8
40%–60% 50 41.7
60%–80% 16 13.3
More than 80% 13 10.8
Sales increased 12 10.0
Total 120 100.0
Source: Primary data.
96 Small Enterprises Development, Management & Extension Journal 49(1)

Atmanirbhar Bharat Abhiyan Package to Micro, Small and Medium Enterprises

To tide over the pandemic-induced crisis and to resume the manufacturing and business activities after
the lockdown, the Government of India under the leadership of Prime Minister Narendra Modi announced
about ₹20 trillion Atmanirbhar Bharat Abhiyan Package, which is equal to 10% of India’s GDP. As part
of this, about ₹3 trillion Emergency Credit Line Guarantee Scheme (ECLGS) with collateral-free loans
were announced to MSMEs and small businesses. Besides, ₹500 billion subordinate debt and ₹200
billion fund of funds were also announced (PIB, 2020). The eligible MSMEs have availed of this facility
to resume their operations. Later, the scope of ECLGS has been expanded to ₹4.5 trillion (PIB, 2021a,
2021b, 2021c). The information pertaining to awareness and utilisation of the Atmanirbhar Bharat
Abhiyan package is presented in Table 15. It can be observed from Table 15 that when respondents were
asked if they know about the Atmanirbhar Bharat Abhiyan package announced for MSMEs, dramatically,
about 58.33% of MSME owners opined that they were not fully aware of the package, and about 41.67%
said that they know something about the package announced for the MSMEs.
As far as the availing of ECLGS loans, about 46% of the owners of the enterprises who know about
the package availed the loans and the remaining 54% did not avail the said loans. The reasons for not
availing ECLGS loans are as follows: no eligibility (48.15%), no requirement (22.22%), a small amount
(18.52%) and additional burden (11.11%). In terms of availing other loans, the majority, that is, 80%, did
not avail other loans, and about 20% stated that they had availed the loans from other sources to resume
their manufacturing activities.

Recovery of Sales Turnover

After the second lockdown period, manufacturing and business activities were resumed. A few MSMEs
have recovered the sales turnover to the pre-pandemic level as well. Table 16 shows the data relating to
the level of recovery of sales turnover to pre-pandemic levels. It is clearly evident from Table 16 that

Table 13. Utilisation of Loan Moratorium Facility by MSMEs.

Particulars Frequency %
Yes 66 55.0
No 54 45.0
Total 120 100.0
Source: Primary data.

Table 14. Chi-square Test Results: Type of Enterprise and Utilisation of Loan Moratorium Facility.
Test Value df Sig. (2-sided)
Pearson’s chi-square 5.395 2 0.067
Likelihood ratio 5.828 2 0.054
Linear-by-linear 0.962 1 0.327
­association
No. of valid cases 120
Source: Calculations on SPSS.
Reddy et al. 97

about 39.2% of the enterprises have reached up to a level of 40–60% of the sales turnover, followed by
about 21.7% reaching a level of 20–40% of pre-pandemic sales turnover. Interestingly, about 16.7% of
the enterprises have already reached 100% levels of the pre-pandemic sales turnover.

Impact on Profit/Loss of the Micro, Small and Medium Enterprises

The COVID-19 pandemic has impacted activities and operations of the MSMEs; consequently, net
results have been impacted. The information regarding the impact of COVID-19 on the profit/loss of the
MSMEs is presented in Table 17.
In hindsight, Table 17 reveals that a majority of the MSMEs, that is, 61.7%, had incurred losses, and
about 10% witnessed no profit no loss during the pandemic period. Interestingly, about 28.3% of the
MSMEs have obtained profits amidst the pandemic crisis. Those MSMEs that are related to emergencies

Table 15. Awareness and Utilisation of Atmanirbhar Bharat Abhiyan Package by MSMEs.
Sl. No. Variable Classification Frequency %
Yes 50 41.67
Awareness of Atmanirbhar Bharat
1 No 70 58.33
Abhiyan package
Total 120 100.0
Yes 23 46.0
Have you availed of ECLGS Loan under
2 No 27 54.0
ANBA package?
Total 50 100.0
Not eligible 13 48.15
Not required 6 22.22
3 If no, reasons Small amount 5 18.52
Additional Burden 3 11.11
Total 27 100.0
Yes 24 20.0
Have you availed of any other loans for
4 No 96 80.0
your MSMEs?
Total 120 100.0
Source: Primary data.

Table 16. Level of Recovery of Sales Turnover to Pre-pandemic Level.

Particulars Frequency %
Up to 20% 11 9.2
20–40% 26 21.7
40–60% 47 39.2
60–80% 16 13.3
100% 20 16.7
Total 120 100.0
Source: Primary data.
98 Small Enterprises Development, Management & Extension Journal 49(1)

and essential services and those operating in the rural areas in the Karimnagar district have reported
profits during this crisis period.

Future of the Enterprises/Business

As the COVID-19 cases are decreasing and the vaccination drive has crossed about 1.5 billion
vaccinations, there is a ray of hope and optimism about the future of the manufacturing activities of the
MSMEs. As the demand has picked up and income levels of people are gradually increasing, most of the
MSMEs are hoping for the growth of their manufacturing/business operations in the future. The data
pertaining to the future of MSMEs is presented in Table 18.
It is clearly evident from Table 18 that the majority of the surveyed MSMEs expressed that they
reposed faith in the growth of MSMEs that account to 60% of the total, followed by about 13.3% of them
that were not sure about the future of their enterprises. On the other hand, while about 12.5% of the
enterprises decided to shut down their operations, about 10% reported that they would scale down, and
about 4.2% of them were ready to sell their enterprises as there was no hope of recovery from the
pandemic impacted losses.

Current Issues and Challenges of the Micro, Small and Medium Enterprises
Post lockdowns, the MSMEs are facing a gamut of issues and challenges that emerged due to the COVID-
19 pandemic, which are seriously hampering the recovery from the crisis. The data relating to the current
issues and challenges of MSMEs have been presented in Table 19.

Table 17. Impact on Profit/Loss of the MSMEs During the Pandemic Period.
Particulars Frequency %
Profit 34 28.3
Loss 74 61.7
No profit no loss 12 10.0
Total 120 100.0
Source: Primary data.

Table 18. Opinion on the Future of MSMEs.

Particulars Frequency %
Growth 72 60.0
Scaling down 12 10.0
Sale 5 4.2
Shutdown 15 12.5
Can’t say 16 13.3
Total 120 100.0
Source: Primary data.
Reddy et al. 99

As per the results presented in Table 19, most of the MSMEs, that is, 46.7%, are still facing issues in
terms of lack of orders from the customers, followed by about 29.2% facing the issue of increasing
manufacturing costs as the fuel prices are mounting. As a result, MSME owners are unable to take up the
new orders at lower prices and unable to complete the old orders without incurring losses. The other
issues and challenges being faced by the MSMEs are shortage of raw materials (10%), payment of EMIs
(9.2%) and statutory payments such as renewal of license, rent, rates and electricity bills. (5%).

Expectation of Micro, Small and Medium Enterprises from the Governments

The COVID-19-induced lockdowns dented the operations of the MSMEs. The national bodies like the
All India Manufacturers Organisation (AIMO) and Confederation of All India Traders (CAIT) have urged
the governments to take appropriate and necessary steps to revive the operations of the MSMEs. Table 20
presents the information pertaining to the expectation from the governments for the revival of MSMEs.
It is clear from Table 20 that the majority of the surveyed MSMEs, that is, 49.2%, are expecting the
government to relax the direct and indirect taxes for some period of time to ensure that the MSMEs
bounce back to their past glory. About 35% of them are in dire need of free access to loans for the
working capital requirements to run the manufacturing activities as most of the MSMEs are facing acute
shortage of working capital. As many enterprises are struggling to pay their EMIs, they want the
government to waive the interest on loans for some period, which total to 8.3%.

Table 19. Current Issues and Challenges of the MSMEs.

Particulars Frequency %
Lack of orders from customers 56 46.7
Increasing manufacturing / services cost 35 29.2
Shortage of raw materials 12 10.0
Payment of EMIs 11 9.2
Statutory payments 6 5.0
Total 120 100.0
Source: Primary data.

Table 20. The Expectations of MSMEs from the Governments.

Variable Frequency %
Timely relaxation of direct and indirect taxes 59 49.2
Free access to loans 42 35.0
Waiver of interest for some period 10 8.3
Payment of wages for some period 6 5.0
Waiver of statutory payments 3 2.5
Total 120 100.0
Source: Primary data.
100 Small Enterprises Development, Management & Extension Journal 49(1)

The MSMEs want the government to pay the wages for the lockdown period and to waive the
statutory expenses such as renewal license, taxes and electricity bills for some time to recover from the
pandemic shock.

Time for Full Recovery of Micro, Small and Medium Enterprises

As the new variants of COVID-19 are emerging, full recovery of MSMEs is highly uncertain. The data
on time for full recovery of MSMEs are presented in Table 21.
As observe in Table 21, about 32.5% of the MSMEs reported that it would take 3 more months to
reach the normal levels in business. About 26.7% of the MSMEs asserted that it would take at least 6
months to reach the normal levels in business, while about 21.7% clearly stated that it would take 1 year
to reach the normal levels in business. Interestingly, about 10% of the MSMEs said that their operations
have already reached the pre-pandemic level. However, about 9.2% of the MSMEs expressed that it
would take more than 1 year to recover from the pandemic shock.

Hypothesis 4 (Ho): There is no significant association between the type of enterprise and the time required
to reach the pre-pandemic level. Table 22 presents the chi-square test results of the type of enterprise and the
time required to reach the pre-pandemic level.

Table 21. Time to Reach the Pre-pandemic Level of Business.

Particulars Frequency %
3 Months 39 32.5
6 Months 32 26.7
1 Year 26 21.7
More than 1 year 11 9.2
Already reached 12 10.0
Total 120 100.0

Source: Primary data.

Table 22. Chi-square Test Results: Type of Enterprise and the Time Required to Reach the Pre-pandemic Level.
Test Value df Sig. (2-sided)
Pearson’s chi-square 21.426 8 0.006
Likelihood ratio 24.395 8 0.002
Linear-by-linear association 0.060 1 0.807
No. of valid cases 120

Source: Calculation on SPSS.

Reddy et al. 101

It can be seen from Table 22 that the Pearson’s chi-square value is 21.426 with a df value of 8 and p-value
at 0.006, which is less than 0.05 at a significance level of 5%. The null hypothesis has been rejected as
the p-value is less than 0.05. We can conclude that there is a significant association between the type of
enterprises—micro, small and medium and the expectation of time required to reach the pre-pandemic
levels of business.

Opinion on the Government Initiation to Address the Challenges of Micro,

Small and Medium Enterprises
The central and state governments have taken some steps to tide over the COVID-19 crisis and to bring
it back to normalcy. However, there are still issues and challenges being faced by the MSME sector. An
attempt is made here to find out if the steps taken by the government are enough to address the challenges
of the MSMEs in the wake of the COVID-19 pandemic. Table 23 demonstrates the data on how much
was done by the Governments to address the challenges faced by the MSMEs.
It was notable to find that about 60% of the respondent MSMEs did not agree that enough was not
done by the government for the MSMEs to bounce back to their pre-pandemic levels, and about 20%
said that enough was done. However, about 20% of the surveyed MSMEs were unable to express their
view on what was done by the government to tide over the issues and challenges of the MSMEs.

Findings of the Study

• It was found that half of the surveyed enterprises are from both rural and urban areas in the
Karimnagar district, and the majority of the respondent MSMEs are of micro enterprises (82.5%)
followed by small enterprises (13.2%) and Medium Enterprises (4.2%).
• Analysis of the category of the MSMEs revealed that all the three categories such as manufacturing
(33.34%), services (33.33%) and trading (33.33%) were equally distributed, and most of the
MSMEs (80%) were not registered on the UDYAM portal.
• It was observed that about 50% of the respondent MSMEs were manufacturing their own branded
products, and about 37.5% of the MSMEs had workers ranging from two to five.
• As far as the closure of the MSMEs during the lockdown periods was concerned, while the
majority of the MSMEs, that is, 51.7%, were completely closed, about 20.80% of them remained
partially closed. However, 27.5% of the MSMEs were not closed during the lockdown period as
they belonged to the emergency and essential services category.

Table 23. Enough was Done by the Government to Address the Challenges Faced by MSMEs?
Particulars Frequency %
Yes 24 20.0
No 72 60.0
Can’t say 24 20.0
Total 120 100.0
Source: Primary data.
102 Small Enterprises Development, Management & Extension Journal 49(1)

• It was found that there was a statistically significant association between the place of the MSMEs
operating and their closure during the lockdown periods as the MSMEs in the rural areas were not
fully closed.
• It was clearly evident from the analysis of the issues and challenges being faced by the MSMEs
during the lockdown that the most cited critical issue and challenge was the issue of cash flow
(45.8%), and other issues and challenges included supply chain disruptions (41.7%), lack of
demand (43.3%), wage payments (36.7%) and payment of EMI, and statutory expenses (53.3%).
These issues and challenges have dented the operations of the MSMEs.
• It was found that most of the respondent MSMEs, that is, 60%, asserted that their business was
extremely impacted due to the COVID-19 crisis, followed by about 16.7% stating that the impact
was very high. However, about 10.8% of the MSMEs had no impact on business operations.
• It was observed that there is no significant difference among the categories of MSMEs, that is,
manufacturing, services and trading, and the impact of COVID-19 on MSME operations.
Further, it can be said that all the operations of the MSMEs were badly impacted due to the
COVID-19 pandemic.
• It was observed that a whopping 64.2% of the MSMEs experienced a reduction of orders from the
customers, and 20.8% said that there was no change in orders. Interestingly, about 15% of the
MSMEs witnessed an increase in orders from the customers even during the crisis period with
their innovative products and services.
• With regard to payment of wages to workers during the two lockdown periods, about 52.5% of the
MSMEs had paid full wages during the lockdowns, while 24.2% paid only half of the wages.
However, about 10% of the enterprises had not paid the wages due to an acute shortage of funds.
• It was reported that a majority of the MSMEs, that is, 69.2%, had not removed the workers during
the pandemic. However, about 15% of the enterprises had removed less than 2 workers, and about
7% of them had removed workers ranging between 2 and 5 to scale down their operations in view
of the COVID-19 crisis.
• About 41.7% of the respondent MSMEs clearly stated that about 40–60% of their sales turnover
had decreased during the crisis, followed by 13.3% of them experiencing about 20% decrease in
sales turnover. However, about 10% of the MSMEs had registered a growth in sales, which was
considered to be a boon in disguise.
• It can be observed from the analysis that more than 55% of the MSMEs had utilised the moratorium
facility on loans provided by the RBI for about 6 months. On the other hand, 45% of them stated
that they had not availed of the moratorium facility.
• It was observed that there is no significant association among the MSMEs concerning the
utilisation of the loan moratorium facility provided by the RBI during the lockdown period.
• About 58.63% of the MSME owners were not aware of Atmanirbhar Bharat Abhiyan package
announced for the MSMEs, and about 41.67% of them said that they knew something about the
package. About 46% of the MSME owners who were aware of the package availed the ECLGS
loans, and about 54% of them did not avail the loans. The reasons for not availing the ECLGS
loans were as follows: no eligibility (48.15%), no requirement (22.22%), a small amount (18.52%)
and additional burden (11.11%).
• It was apparently found that about 39.2% of the MSMEs have reached up to 40–60% of sales
turnover levels, followed by about 21.7% reaching 20 to 40% of their sales turnover.
Surprisingly, about 16.7% of the MSMEs have already reached 100% of their pre-pandemic
levels of sales turnover.
Reddy et al. 103

• About 61.7% of the MSMEs have posted losses during the pandemic period, and about 10% of
them stated that they witnessed no profit no loss. Optimistically, about 28.3% of the MSMEs
have earned profits amidst the pandemic crisis as they related to emergency and essential
services sector.
• It was reported that most of the surveyed MSMEs (60%) pinned their hope on the growth of their
business, followed by about 12.5% of them deciding to shut down their operations in the future,
and about 10% of them are about to scale down their operations. Around 4.2% of the MSMEs are
going to sell the enterprises as there is no ray of hope for recovery from the pandemic crisis.
• As far as the issues and challenges are concerned, most of the MSMEs, that is, about 46.7%, are
still facing the issue of lack of orders from the customers, and about 29.2% of them are struggling
with increasing manufacturing costs. The other issues and challenges being faced by the MSMEs
include shortage of raw materials (10%), payment of EMIs (9.2%) and statutory payments such
as a renewal of license, taxes and electricity (5%).
• It was observed that about 49.2% of the surveyed MSMEs are expecting the government to relax
the direct and indirect taxes for some period, and about 35% of the MSMEs are in dire need of free
access to loans to meet the working capital requirements to revive their operations. The other
expectations are waiver of interest on loans (8.3%) and waiver of statutory expenses such as a
renewal of license, taxes and electricity bills for some period.
• With regard to time to reach the pre-pandemic level, about 32.5% of the MSMEs opined that it
would take 3 more months, while about 26.7% of them asserted that it would take 6 months to get
back to the normal level of business. While 10% of the MSMEs said that they have already
reached the pre-pandemic level, about 21.7% opined that it will take one more year to reach the
pre-pandemic level.
• It was found that there is a significant association between the type of enterprises—micro, small
and medium, and the expectation of time required to reach the pre-pandemic level of business.
• It was examined that about 60% of the MSMEs clearly stated that enough was not done by the
government for the revival of the MEMEs, while about 20% of them said enough was done. On
the other hand, 20% of the MSMEs were unable to express their opinion on the initiatives
undertaken by the government to tide over the challenges of the MSMEs.

Suggestions for the Revival of the Micro, Small and Medium Enterprises
Based on the findings of the study, the following suggestions are offered for revival of the MSMEs.
• It is advised that the MSMEs should get registered on the UDYAM portal with a view to avail the
benefits of various schemes announced by the government from time to time as about 80% of the
surveyed MSMEs were not yet registered.
• As more than 76% of the MSME operations were extremely and highly impacted due to the
COVID-19 pandemic, there is a dire need to take suitable steps to extend hand-holding support to
MSMEs by the government.
• It is suggested that the government should take steps to provide alternate employment
opportunities to those workers who were removed from the MSMEs due to various reasons such
as lack of orders from the customers, scaling down of operations and selling off the units as
around 30% of the surveyed enterprises have removed workers ranging between two and ten
during the pandemic period.
104 Small Enterprises Development, Management & Extension Journal 49(1)

• It is advised that the MSMEs should explore the opportunities and devise strategies to increase the
sale turnover as more than 50% of the MSMEs have experienced decreasing sales turnover. With
innovative products and penetration into online marketing, MSMEs can boost the sales turnover
to reach normal levels.
• Awareness is to be created among the MSMEs and small businesses to avail Atmanirbhar Bharat
Abhiyan package, ECLGS loans and other initiatives to revive their operations as a whopping
70% of the MSMEs clearly said that they were not aware of the specific packages announced for
the MSMEs.
• As about 30% of the MSMEs are about to scale down, sell or shut down their units, the government
should ensure to provide easy access to loan facilities and suitable steps to avoid the closure of
MSMEs and address the issues and challenges.
• Post lockdowns, most of the MSMEs are still facing a host of issues and challenges such as lack
of orders, increasing manufacturing cost due to increase in fuel prices, payment of interest on
EMIs/statutory expenses and shortage of raw materials. Government should try to further reduce
the prices of fuel and ensure to waive the statutory payments and address the other issues and
challenges.
• The MSMEs are expecting the government to relax the direct and indirect taxes for some period,
ensure to provide free access to loans, waiver of interest on EMI for 1 year and waiver of statutory
expenses such as the renewal of licenses, taxes, electricity bills to revive and sustain MSMEs.
• The government should come up with more initiatives and steps to address the issues and
challenges of the MSMEs as most of them opined that enough was not done for the MSME sector
by the government.

Conclusion and Implications of the Study

The MSMEs sector is one of the most vibrant and dynamic sectors of the Indian economy in terms of
generating employment, contribution towards GDP, industrial output and exports. The COVID-19
pandemic has impacted the sector badly as it is a vulnerable sector in size and scale of operations. The
present study has been carried out to examine the impact of the COVID-19 pandemic on the MSMEs in
the Karimnagar district to help the government, policymakers and practitioners to understand the effect
and to devise suitable strategies to revive the MSMEs from the pandemic crisis. The study found that due
to COVID-19-induced lockdowns, the majority of the MSME operations were gravely affected. It was
found that about 60% of the MSME operations were highly impacted, and about 64.2% of the enterprises
experienced a reduction of orders from the customers. Most of the MSMEs’ sales turnover had also
decreased. Further, the study also brought to light the challenges faced by the MSME sector such as lack
of orders from the customers, increasing manufacturing cost, payment of EMIs and statutory expenses.
To conclude, the government should ensure provision of collateral-free loans at a lower rate of interest
to meet the working capital requirements of the MSMEs and to revive the manufacturing activities. The
government should also extend hand-holding support to MSMEs in terms of relaxation of taxes, waiver
of interest on EMIs and waiver of statutory payments for some period so as to ease them from the
pandemic crisis. Further, it is also suggested that the government should also ensure reduction in fuel
prices further to reduce the manufacturing cost. Moreover, the MSMEs should also try to devise strategies
to manufacture innovative products and leverage the online market facility to increase the sales turnover
and to get technical advice from the website called ‘Creation and Harmonious Application of Modern
Reddy et al. 105

Processes for Increasing the Output and National Strength’ (CHAMPIONS). The government departments
and public sector undertakings should ensure to purchase about 50% of their requirements from the
MSMEs during these testing times so as to protect them from the pandemic. The prime minister’s vision
of reaching a US$5 trillion economy by 2024 can only be achieved with the quick revival of the MSMEs
as they aimed at increasing their contribution to GDP from 30% to 50% and providing 50 million
additional employment opportunities. The government and the MSMEs should work hard to revive the
operations swiftly to bounce back to the past glory and to contribute to the economic growth as the
MSME sector is the golden duck of the Indian economy!

Limitations and Scope for Future Research

The present study attempts to examine the impact of the COVID-19 pandemic on the MSMEs operating
in the Karimnagar district and to explore the issues and challenges being faced by the MSMEs during
and after the lockdown period. The present study is confined to the impact of the COVID-19 pandemic
on the MSMEs operating in the Karimnagar district, and the size of the sample is also limited, that is, 120
MSMEs. The present study is limited by time, cost and sample. Therefore, the inferences drawn from the
study cannot be generalised to the entire population. As the subject of MSMEs is wider in nature and the
COVID-19 pandemic has impacted the MSMEs across the country, there is always scope for further
research on this ever-growing topic. There is scope for further research on the topic by expanding the
study to the entire state of Telangana to examine its impact. Further, a study can also be carried out on
the role of the Atmanirbhar Bharat Abhiyan package in the revival of MSMEs in Karimnagar district and
in the Telangana State.

Acknowledgement
The authors are so grateful to the anonymous reviewer for useful comments and suggestions to improve the quality
of the article. Also, thankful to the Editor-in-Chief S. Glory Swarupa for publishing the article.

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research, authorship and publication of this
article.

Funding
The authors received no financial support for the research, authorship and/or publication of this article.

ORCID iD
M. Malla Reddy https://orcid.org/0000-0003-1576-1526

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