One-third of enterprises pushed into debt during lockdown 2.0 in Kerala

The study also found that 26% of enterprises which had availed loans for survival in 2020 had repaid the same completely by July 2021.

Thirty-two per cent of enterprises in the manufacturing sector were in debt and 80% had delayed loan repayments. (Photo | RVK Rao, EPS)

THIRUVANANTHAPURAM: Nearly one-third of functioning enterprises in the state were pushed into debt during the second wave of Covid and subsequent lockdown in 2021. 

A study by the Economics and Statistics Department said 31% of the enterprises had incurred debt during April-July this year. 

The figure, however, is lower than the previous year when the lockdown was introduced first. Last year, during lockdown, 34% of enterprises in the state had plunged into debt.

During lockdown 2.0, 80% of the enterprises defaulted on loan repayments though there was no moratorium this year.

The study also found that 26% of enterprises which had availed loans for survival in 2020 had repaid the same completely by July 2021.

Nine per cent of the enterprises, which did not have loans in 2020, had to avail of new loans in 2021, says the report titled ‘Impact of Covid-19 on unincorporated non-agricultural enterprises in Kerala, Quick Study Report- Phase II’ released here on Thursday.

The number of enterprises that delayed their loan payments was 10 percentage points less in 2021 compared to 2020.

In 2020, 90% of the enterprises failed to repay their loans in time due to Covid but, in 2021, the number dropped to 80%.

It may be recalled that there was a moratorium on all loans for six months in the country during the first lockdown, while there was no relaxation for loan repayment this year. 

80% enterprises delayed payments

“This indicates that a marginal number of enterprises have stabilised their financial stature to a minimum so that they can repay their loans as compared to the previous year,” says the report.

Among the different sectors, the manufacturing sector recorded the highest number of enterprises with debt and default on loan repayments.

Thirty-two per cent of enterprises in the manufacturing sector were in debt and 80% had delayed loan repayments.

Business after lockdown never returned to normal in both years even when the survey shows that 2021 lockdown was better for businesses.