This study aimed to understand how women-led rural businesses fared during the first wave of the COVID-19 pandemic and it was conducted across four states in India.
Background
In the aftermath of COVID, industries across India and enterprises at all levels have been affected. However, evidence from across the globe suggests that women-led enterprises, which represent only 19.5% of overall enterprises and are predominantly informal, were disproportionately affected. Very little is known about the impact of a long-drawn lockdown affecting supply chain, business operations and sales. This study was conducted in June 2020, to understand how women-led businesses in the states of Madhya Pradesh, Bihar, Chhattisgarh and Odisha were faring. Subsequently, a subsample (n=205) was resurveyed in November 2020.
Approach
A sample of 2,083 enterprises was surveyed for the study. Stratified random sampling was used to select samples based on enterprise type (individual/group) and industry sector (manufacturing/services/trading) that are either run from an establishment or from individual households. Female entrepreneurs were contacted via a phone survey to understand how COVID-19 has impacted their businesses – market access, supply chains to the contractors, and business revenue as well as coping mechanisms employed by them to sustain their business.
Key Findings
Findings from the study document highlight some of the financial and social distresses faced by these entrepreneurs at an individual, household and enterprise level. Some of these include:
- Enterprises closures: 1 in 3 women entrepreneurs have shut down their business either temporarily or permanently.
- Formalisation is a helpful insurance: Unregistered enterprises are more likely to face permanent closures (12.07% vs 8.81%)
- De-prioritisation of business: For 48.4%, the business was the primary source of income for the household, but post COVID, the numbers went down to 36.2%
- Substantial revenue drop: 72.5% average drop in revenue between lockdown and at the time of the survey regardless of nature of enterprise (service, production, retail)
- Loss in risk appetite: Approximately 1 out of 2 respondents who reported permanent closure of business are unlikely to restart a business again
- Promise of future cashflows: Over 1 in every 2 enterprises is providing goods on credit and most (over 3/4th) remain confident that they’ll recover the amount sold on credit
- Change in loan preferences: 80% did not take any enterprise related loan during the lockdown, more than three-fourth respondents dipped into personal savings and business cash reserves
- Increased time burden: 2/3rd enterprises surveyed mentioned a reduction in time spent on business activities and over 40% of respondents reported an increase in time spent on household chores
Implications
The study was among the first to document how the pandemic affected women-led businesses in India, and the double-burden faced by entrepreneurs. The survey and the subsequent resurvey were crucial and timely in informing some of the policy responses of the non-farm team under the National Rural Livelihoods Mission, and National Mission Management Unit and guided discussions around identifying promising recovery strategies.
Related Resources
Article: 2020 Lockdown Shut 11% Women MSMEs, Only 1% Got Back on Feet With Govt Help, Finds Study
Article: How did India’s Women Enterprises Fare during the COVID-19 Lockdown?
Article: The Harm COVID Is Causing to Women Entrepreneurs
Postcards From the Field: Rural Women Entrepreneur’s Response to the COVID Crisis
Presentation: Findings From a Resurvey of Closed Enterprises