Chennai: A tenth of the city's eight million population remains uncared for in all the cacophony of the super manifestos for the May 16 elections. The sky-high promises in those poll pledges have just skipped them.
The plight of the 14000-odd MSMEs (Micro Small and Medium Enterprises) hit by the mega rain-floods remains bleak even five months after the disaster that drowned most of them. The government has not helped, their insurance claims remain unsettled.
All the poll manifestos have left out one crucial element in their sky-high promises. They have not bothered to take note of the piteous conditions still faced by the 14,000-odd MSMEs (Micro Small and Medium Enterprises), most of which remain critically starved of revival support from the government, banks and the insurance sector. The politicians appear oblivious, even at poll time, to the plight of these units and their employees, notwithstanding that they constitute almost a tenth of Chennai’s 70 million people.
“A significant portion of these MSMEs has not yet recovered from the flood impact. We also found in our survey that most of them got no worthwhile support from their bankers, insurance companies or the government to tide over the physical and intangible losses suffered by them”, said Badri Seshadri of the Nurture Trust, which was founded by the IIT-IIM alumni in Chennai for nurturing entrepreneurship to trigger national growth. Along with his colleagues N. Muthuraman and Anand Kannan, he presented the survey findings to the media here on Wednesday.
The survey was done among more than 500 MSMEs across 12 industrial clusters in Chennai using a ‘structure questionnaire’ between 5th of April and 4th of May. The SRM University and Feedback Consulting collaborated with Nurture Trust in this massive exercise undertaken on the field by a large army of college students and their findings analysed by experts.
“The impact of the floods has been the most severe among the small firms with less than 50 employees. More than a third of the MSMEs either slashed salaries or laid off employees to recuperate from the losses”, said S. Chandramouli of Feeback Consulting. However, the redeeming factor is that two-thirds of those MSME owners stood firm they would not shut down, cut salaries or lay off staff. Had they done that, it would have been disastrous for the MSME families that constitute about ten per cent of Chennai’s over eight million people.
“It was a wondrous element even in this grim picture. Many entrepreneurs remained determined they would go on. They did not want to send their employees home. The staff offered to work harder without making fresh demands. We found very little help came from the government, the banks and the insurance sector”, said Anand Kannan, adding that some of the units “just remained opened for the sake of showing they continued to function and did not collapse”.
The survey estimated the per-unit loss to be around Rs.11.8 lakh, besides intangible losses such as loss of credibility with customers (who chose to move away), broken supply chain and employee attrition which could have long-term impact on the MSMEs, which constitute both the manufacturing sector including auto spares, leather, rubber, plastic, metals and textiles, and the services sector comprising IT/ITES, besides other consultancy firms.
Banks, insurance companies fail to chip in with funds
The survey findings are shocking, to say the least. Obviously, the MSME sector does not have much of political clout as otherwise it would have got the government to help with a revival package. It would have wrenched space in the poll manifestos.
“The role of banks and insurance companies during the episode leaves much to be desired”, said the survey report. “MSMEs unanimously agreed that banks were least helpful to tide over the difficulty while private financiers stepped in to fill the gap (their high interest rates could end up swallow up the units).
The survey also found that only 50 per cent of the MSMEs received any claim from the insurers for damage to their facilities”. It was also found that disaster insurance had poor penetration among the units and even those insured faced “very long” delays in settlement of claims, while the government and the IRDA (Insurance Regulation & Development Authority) chose to stay indifferent.
Interestingly, there was better penetration of the disaster insurance among the IT/ITES units. “The new generation MSMEs in the IT/ITES sectors appear to have been better prepared to deal with such calamities such as having a disaster recovery plan and higher insurance penetration. On the other hand, the manufacturing sector was least prepared and suffered the maximum losses”, said Dr Santhosh Kumar of SRM University.
