Bird’s view on the status quo of MSMEs

Author: M.Gnana Deepika, Student, School of Excellence in Law, Chennai, India



MSMEs significantly contribute to the growth of the economy and they are the most powerful drivers of the country’s development and employment. The current pandemic on the rapid spread of Corona Virus has led to the cessation in manufacturing and production of goods and services, delay in payments and also disruption in the supply chain leaving a negative growth in the economy. The Government has taken up various steps to revive the stressed enterprises through effective implementation of Atma Nirbhar Bharat Abhiyaan economic relief package. The government has also notified a revised criteria for classification of Micro, Small and Medium Enterprises which was in effect from 01.07.2020. Insolvency and the Bankruptcy code allows a creditor to file an application for CIRP on default of 1 lakh rupees. The introduction of the ordinance 2020 has suspended the initiation of CIRP against the debtors and the defaults that occur due to the pandemic is excluded from the definition of default. This ordinance though on one side protects the interest of MSMEs it has its own challenges as the suspension of the insolvency proceedings would lead to delay in the resolutions and also overburdens the NCLT on the release of the suspension. The economic package announcements made by the Hon’ble Finance Minister would help to revive the MSMEs as there is no revenue for this sector in the last few months. The following article mainly focuses on the ordinance passed by the government to protect the interest of the MSMEs and impact on the MSME as creditors and debtors.

Keywords: MSMEs, Covid-19, Economic Relief packages.


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