A Bad Year for MSMEs: Over 10,000 Closed in 2022-23

New Delhi: As many as 10,655 micro, small and medium enterprises closed down in the financial year 2022-23 – the highest in the last four years. This data also misses one year of the month, since the year is still ongoing – so the actual number may be even higher.

In 2021-22 that number was 6,222, which in 2020-21 it was far lower at 175 and in 2019-20 it was 400.

This data was revealed by the Union government in response to a question raised in the Rajya Sabha, Business Standard reported.

According to the data, the ratio of closures to new firms opening has also been worsening. "There were over 11,000 new firms started for every one of the 175 that shut down in 2020-21. This was down to 349 new firms for every shutdown in 2021-22. The current year has seen 167 firms open for every closure," Business Standard reported.

Economists have been raising concerns for a while now about the health of MSMEs in India and concern this poses for the economy as a whole and unemployment, particularly after the twin shocks of demonetisation and a poorly implemented GST regime, and then the COVID-19 pandemic and lockdowns it brought with it.

Former chief statistician of Indian Pronab Sen recently told Karan Thapar in an interview that the condition of the MSME sector, which accounts for 30% of the economy and perhaps 40% of employment, is the most worrying and critical problem that must be tackled. A lot critically depends on whether new MSMEs are created to replace the approximately 20% that died and disappeared during the pandemic, he added.

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