Sorrows come in all sizes: Miseries all around Kerala ever since pandemic struck

Nine  years ago, a non-resident Keralite opened a food manufacturing unit at his native place in Kollam district.
Workers taking back husks, the main raw material for coir, placed for decaying in the backwater at Azhoor. The coir unit hub is hopeful of resuming functioning once the lockdown ends | BP Deepu
Workers taking back husks, the main raw material for coir, placed for decaying in the backwater at Azhoor. The coir unit hub is hopeful of resuming functioning once the lockdown ends | BP Deepu

THIRUVANANTHAPURAM: Several of the 1.19 lakh micro, small and medium enterprises in the state have closed down for good amid repeated lockdown and local curbs. The others look up to the government for interest subsidy scheme for term loans and new working capital loans to bounce back even if restrictions are eased

Nine  years ago, a non-resident Keralite opened a food manufacturing unit at his native place in Kollam district. All was well until last year when the global pandemic upended his business. Now, the 45-year-old has a  total liability of Rs 18 lakh in debt to banks and private moneylenders. Two weeks ago, he shuttered the unit permanently and is now looking for a potential buyer for it.

“A friend in the UAE has promised me to arrange a work visa. I wish to go back soon,” he said. The man preferred anonymity as he feared that the lenders would come knocking on his door if they knew about his misery.  

This isn’t an isolated case. Small industries in the state cutting across sectors are badly hit by the second spell of the pandemic-induced lockdown since May 9. A large number of micro, small and medium enterprises (MSMEs) remain closed although the government allowed them to function with 50% of employees from May 31.

“Most of the enterprises are struggling to survive amid the pandemic and lockdown. Lack of working capital and debts have forced many entrepreneurs not to make use of the easing of  curbs. Also, there is another section of entrepreneurs who couldn’t open their units despite the relaxation. Restrictions at the district and regional levels are still being imposed when the infection rate goes up,” said M Khalid, state president of the Kerala State Small Industries.

Association (KSSIA). As per the data with the Department of Industries and Commerce, the state has 1.19 lakh MSMEs of which 69,956 are in the manufacturing sector and 49,185 in the services sector. Official figures weren’t available for the total number of persons employed by the MSMEs. According to the KSSIA, an estimated 15 lakh persons, including migrant labourers, work in the sector.

The local footwear industry is one  which is crippled by the spate of lockdowns and restrictions. Kerala is the country’s leader in polyurethane (PU) footwear industry and the districts of Kozhikode and Malappuram are a major hub with over 200  units. “Ramzan and  monsoon were major business seasons for us. To miss both the occasions was to forgo 40-50% of my annual business,” says Rahman, a Malappuram-based businessman. 

Rahman said he has “temporarily laid off” some staffers as production has been stopped for  the time being. “I’m not sure whether I would ever recall them,” he  said. The general lockdown last year had forced a vast majority of  entrepreneurs to avail of fresh working capital loans.

The Emergency Credit Line Guarantee Scheme under the Atma Nirbhar Bharath Abhiyan too had a large number of takers. As per the statistics with the State Level Bankers’ Committee, until October 2020, emergency credit amounting to Rs 4,863.53 crore was disbursed to 1.04 lakh borrowers.

“Several entrepreneurs have fallen into a debt trap and are at a point  of no return if not for an intervention by the government. An interest  subsidy scheme will be a real support,” Khalid says.

The KSSIA has submitted a charter of demands to the government to help its members  survive the tough time. The prime demand is an interest subsidy scheme  for the term loans and working capital loans availed of by the  enterprises from banks and other financial institutions.

A one-year moratorium should be announced on all MSME loans and the penal interest be avoided. The ceiling on additional working capital should be raised to 30%. All statutory payments to the government are to be deferred. A waiver on fixed charge and duty on electricity and instalment mode of  power bill payment are among the demands.  

Every dark cloud has a  silver lining. A small section of MSMEs, like two textile units in the KINFRA Integrated Industrial and Textile Park in Palakkad, have turned their disadvantage into an opportunity. “They switched from garment  making to the production of PPE kits and face masks. They are having  good business now,” said a park officer.

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