‘Business Slowly Back On Track, But Credit Line Not Revived’

Shashank Shekhar Shukla, a home décor professional in Uttar Pradesh, says small businessmen are still suffering from the impact of Covid waves

Covid and the hardships it caused are by and large gone from public memory. However, in much the same way as post-Covid health complications still persist, its impact on small and medium businesses is still felt bitterly. The pre-Covid practice of getting goods and products on generous credit lines among business houses is over and now we need to take all the products on cash. This causes a lot of stress on supply chain and liquidity.

I started my outlet in Lucknow about one year before the Covid pandemic broke out (and the concurrent lockdown). Our business supply chain enjoyed a long rope of credit facilities. For example, we used to pay them ₹50,000 as advance and used to get products and goods worth about ₹5 lakh on credit. The payments would be made in accordance to our sales. This was a routine practice in most of the businesses that I was familiar with.

However, once the Covid stuck, the cash flow in the market was severely impacted. Several businesses shot shops; several others diversified; trust deficit followed and everyone demanded on-spot cash transaction as a pre-condition for trading. Today, more than two years after the outbreak, even though business is limping back to normalcy, the credit lines no longer exist.

We have changed the practice of stocking products and showcasing them to our regular or potential clients. Instead, we only take procure the material as per the demand; this does affect the spontaneity and delivery speed but there is no solution. In a way, marketing has become more aggressive as first we have to create a demand for a specific product, make it look necessary for the customer, sell it, and then buy from the producer to deliver farther.

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However, profits are reviving, in some cases have risen too, but not to the tune of the pre-Covid era. Although the hesitance of the buyer to invest in something new has slowly waded off, there is still a shortfall of about 20% in business profitability. Covid also brought a change in consumer mentality. Overspending has been reduced by the middle class; the consumer has become tight-fist; luxury spending has come down drastically.

From my own perspective, modular kitchens fitted with state-of-the-art appliances had become an inseparable part of urban housing. Every middle-class house demanded it. Now, even double-income households are spending cautiously over such facilities. Builders, understandably, are also cutting corners to bring down costs.

Having said that it is commendable how our economy has overall recovered in such a short time when several countries in the world are still struggling. The markets have started beating on its regular pulse thanks to the policies of the Union government and the RBI. Various sectors have fully revived and, in some cases, have bounced back. I take pride in such resilience of Indian businesses and state support.

I would like to request the government and its economic arms to kindly take steps to instigate confidence down the line (to small vendors and producers) so that small and medium buisnesses return back to the old practice (of getting credit). If the benefits of state measures reach to the last man in the assembly, it would be development in its truest form.

As told to Rajat Rai