ABOUT a half of small industries have failed to economically recover from Covid shocks. A business confidence survey of the South Asian Network of Economic Modelling says that 46 per cent of the small and micro businesses still struggle as government attention on small and medium enterprises remains inadequate. This is the seventh round of the survey that the agency conducted on 502 firms nationwide in January. The agency has conducted the survey since July 2020 to weigh the situation of the economy and the sentiment of businesses during the Covid outbreak. While large businesses made a strong recovery, recovery rates for medium and small businesses are 16 per cent and 12 per cent. In October–December 2021, the domestic business status index showed a growth of 54.15 per cent, which was 52.31 per cent in the previous quarter, but the growth has been uneven. The ongoing wave of the omicron infection, as small and micro businesses say, may further slow down the recovery process as local and international markets remain unstable for most sectors. The government should address specific needs of the small and medium enterprises and create an enabling environment for them.

Primary reasons for the relative slow recovery of small and medium enterprises are their unequal access to Covid stimulus packages. The survey says that micro and small firms combinedly received 30.77 per cent of the loans compared with the 41.84 per cent loans that large firms received. This further shows that large industry owners with political clout have a greater access than small entrepreneurs. In addition to an inequitable access to the stimulus packages, the tax system gap and weak Covid management have also added to the vulnerability of small and medium enterprises. In October–December 2021, the tax system gap of enabling business fell by 1 per cent while corruption, skilled work force, transport quality, trade logistics and Covid management indices also fell by 1.7 per cent, 0.22 per cent, 2.59 per cent and 6 per cent. The weak recovery of small and medium enterprises indicates that the government’s Covid response was short-sighted. It has injected money in the form of loans and cash aid without ensuring a strategy for an equitable access and distribution. The business needs of small and medium enterprises are different from that of the large industrial sectors, but the stimulus packages were primarily designed to help large businesses, as is reflected in their higher economic recovery rate.

The government must, therefore, look into the unequal recovery rate between large and small and micro businesses and acknowledge the pro-rich bias in its Covid response. In so doing, it must instruct banks to disburse stimulus funds that are meant for struggling businesses, not for the profiteering ones. The government must also seriously deal with the fear of small businesses that the omicron wave would add to their vulnerability.