Death By A Thousand Cuts

Why the relief package will not undo the lockdown’s destruction of the MSMEs

- Himanshu

Many in India have finally woken up to the precarious conditions in which a majority of the country’s workers live and work. Driven to starvation because of an abruptly announced lockdown, migrant labourers have had no option but to try to return to the safety of their homes in villages. As a callous government blocked all public transport, many decided to make the journey on foot or on bicycles, even as the police came down heavily on them. Several perished of starvation, or in mishaps, on the way. Most of them had led financially precarious lives even before the pandemic. The choice for migrant labourers was to either take the risk of contracting COVID-19 by venturing out or confront the danger of death by starvation.

The lockdown has entered its third month, and is unlikely to be lifted any time soon, even though daily circulars keep changing its definition. While the effectiveness of the lockdown in containing the spread remains unclear, the economic devastation it has caused is plain to see. Many of the workers we see on the streets today are employed in enterprises categorised as micro, small and medium enterprises. Even though data is limited, it seems suffice to say that the economic impact of the lockdown is likely to be far worse for the MSME sector than its larger counterparts. Unlike big companies that have large cash reserves and access to credit, the MSME sector not only loses out due to a lack of economic activity but also due to insufficient access to credit and other support provided by the government.

In an attempt to save face, on 12 May, Prime Minister Narendra Modi announced a grand relief package to revive the economy of