Micro enterprises in the informal sector have been hardest hit by the pandemic. What will it take to get them up and running again?
A leather goods store in Dharavi, Mumbai. Image by Dhiraj Singh/Bloomberg via Getty Images
Cars honk, the traffic snarls. It is a usual day on Dharavi’s 60 Feet Road in Mumbai. But the shops on either side of the narrow road aren’t bustling with activity as they would pre-Covid. Every few shops dotting the street are shuttered.
“Earlier, at least five people would stop by my shop every day and ask me for directions to the leather market. Today, one buyer in several weeks asks for directions. That’s the state we’re in,” says Armaan Ali, 67, a steel trader who has lost Rs 35-40 lakh in unsold inventory since the onset of the pandemic. Dressed in a white kurta-pyjama and a skull cap, he has just returned to his shop after his namaaz prayers. From doing a few lakh worth of business every month, he now struggles to pay his Rs 80,000 rent. “The situation is bad,” he says, as his sons hover around listlessly; a worker sleeps on the sheets of corrugated steel piled up inside the shop.
Further down the road, Kishor Bagve sits in his garments shop waiting for customers. “Things are improving, but we are nowhere close to pre-Covid levels,” says the 45-year-old, who’s been running his business since 2006. He used to rake in around Rs 40,000 in sales every month; it’s now down to a fraction of that. “I manage to make Rs 200-400 a day—enough to cover my family’s food expenses for the day.” Help from the government hasn’t been forthcoming. “We haven’t received any help. Besides, what will I do taking a loan? How will I repay it?”
The footwear shop adjacent to Bagve’s is shuttered. “He closed down and went back to his village during the first Covid-19 wave,” Bagve says about his neighbouring shop owner. “He hasn’t come back since.” A cake shop next door is empty of customers. “Nobody really comes anymore,” shrugs the attendant. Meanwhile, a roadside tea seller and a vada pav vendor across the street are doing brisk business. A two-wheeler components and maintenance shop also appears busy.
“The pandemic has been an exogenous shock. It’s created far more disruptions in the informal sector than the formal sector,” says Pranjul Bhandari, managing director and chief India economist at HSBC bank.