About 71% of the MSME establishments were unable to pay either partially or fully the wages due for March 2020 either due to logistics issue or absence of orders, among other issues, according to All India Manufacturers Organisation (AIMO).
AIMO, which is an apex trade body focused on the interests of the MSME sector, surveyed over 5,000 traders/MSMEs across the country over the last few days regarding the status and payment of wages/salaries for the month of March.
K.E. Raghunathan, past president, AIMO, said that salaries could not be paid for reasons such as computation, logistics and distribution issues for cash payments and cash flow.
Besides, more than 52% of the entrepreneurs found it difficult to assess and determine how much to pay as some of their staff had worked from home while some of them had remained idle at home.
Almost 63% of the entrepreneurs cited cash-flow issues for their inability to make wage payments, as the receipts from their customers had almost dropped to zero and there was no advance received during March for fresh orders. The cycle of ‘circulation or rotation of money’ had come to a zero.
Over 47% of the establishments also found it difficult to determine how to pay salaries to employees who may not have a bank account or access to bank account or had gone back to their villages, despite working for about 20 days in March.
However, certain sectors, which provided necessities such as basic food and toiletries, saw a rise in their net growth over the last 15 days due to panic-buying and increasing demand, the survey said. Ancillary manufacturing, automobile spare parts, apparel, consumer durables, electronics, tourism, restaurants, seafood and livestock, construction and real estate, travel and transportation are the worst-hit by COVID-19.