Every year, just around the Budget, Outlook Business reporters visit India’s important industrial clusters for a lowdown on prevailing business sentiment. We believe meeting MSME entrepreneurs at their factories and industrial units is a much better way of gauging what they are going through. The news has not been good for a while and this year’s State of the Economy edition reflects just that.
The IMF reducing the FY20 growth forecast to 4.8% aside, the government seems to be running out of levers to power growth. Even more worrying is that a majority of SME entrepreneurs are battling a liquidity crunch. Due to this, they have no choice but to hold back capex and hiring in FY21. Excess capacity and the current economic slump have led to a further fall in capacity utilisation. Unemployment is at a four-decade high and layoffs remain a concern even today across sectors.
Despite fighting a battle for survival, entrepreneurs are adapting to make the most of a difficult situation. As you will read in this edition, even the traditional foundries of Coimbatore are assimilating robots so that their manufacturing facilities can support the transition of auto companies to electric vehicles. The diamond merchants of Surat are grudgingly accepting the influx of artificial stones and bicycle component makers in Ludhiana are raring to move up the value chain to higher-value bicycles.
The only thing consistent in this edition as with our earlier editions is the optimism of the entrepreneurs that they can eventually make their way through this slowdown. Even last year, the entrepreneurs polled believed that FY20 would be much better than FY19. Sadly, that has not been the case and we need to wait and watch if FY21 will be any different.