IIT-M to study impact of COVID-19 on Tamil Nadu MSMEs; outcome of research to frame recovery plan

To understand the impact of COVID-19 crisis on Micro, Small and Medium Enterprises (MSMEs) in Tamil Nadu, Indian Institute of Technology Madras will collaborate with industry bodies and bring out a detailed report. The study is expected to be completed within three to four weeks.

Department of Humanities and Social Sciences Faculty, Dr. Subash Sasidharan, Associate Professor of Economics, and Dr. Santosh Kumar Sahu, Assistant Professor of Economics from IIT Madras will undertake this study.

In the context of the stimulus package announced by the Hon’ble Union Finance Minister Nirmala Sitharaman for the MSME sector, this exercise will be a time-bound study for understanding the resilience of the MSMEs in Tamil Nadu.

Tamil Nadu accounts for one of the largest numbers of MSMEs in the country with more than 6.89 lakh registered enterprises. This, in turn, accounts for more than 15 percent of the total MSMEs in India. Given the significance of MSMEs in Tamil Nadu, the disruption caused by the COVID-19 is a major concern.

Based on the outcome of this study, the researchers plan to analyze the Adaptation and Coping Strategies to overcome the shock due to the pandemic, which could help in the quick recovery of the MSMEs in Tamil Nadu.

Speaking about the focus of this study, Dr. Subash Sasidharan, Associate Professor of Economics, Department of Humanities and Social Sciences, IIT Madras, said, “MSME sector is the largest employer in the country. The survival of these enterprises is at stake due to this pandemic. Therefore, there is an urgent need to undertake research to analyze the challenges of these enterprises in detail.”

The Institute is partnering with ConsoTree and industry bodies - Tamil Nadu Small and Tiny Industries Association (TANSTIA), an apex body of MSMEs, and district level bodies including Coimbatore District Small Industries Association (CODITSSIA) and Madurai District Tiny and Small Scale Industries Association (MADITSSIA).

The first phase of the lockdown witnessed a revenue shortfall of more than 44 percent in the Tamil Nadu MSMEs sector. The extension of the lockdown may further increase the revenue loss to more than 60 percent. This pandemic created an unprecedented crisis to the MSMEs in Tamil Nadu, with a severe shortage of working capital, which includes delay in payments, shortage of labor, and acute disruption in the supply chain.

The Plan of Action for the research study has been finalized by Dr. Subash Sasidharan and Dr. Santosh Kumar Sahu of the Department of Humanities and Social Sciences, IIT Madras, and R.K. Jeyabalan Chief Strategist and Executive Director of ConsoTree, its Directors Rajesh Srinivasan and Dr. Sridhar Shanmugam along with Office bearers of TANSTIA - Anburajan S; CODITSSIA - R. Rama Murthy and MADITSSIA - B Murganantham.