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The impact of Covid-19 containment lockdowns on MSMEs in India and resilience of exporting firms

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  • Chen, Yutong
  • Debnath, Sisir
  • Sekhri, Sheetal
  • Sekhri, Vishal

Abstract

This study uses data from a survey of micro, small, and medium enterprises in India to document the impact of Covid-19 containment lockdowns on firms, their responses, and adaptation strategies. We find that the profits and sales declined substantially for the majority of firms. Temporary closures, pay cuts, and temporary lay-offs were the key measures utilized by firms to cope with the shock. Firms did not have adequate liquidity to last beyond six months, albeit the majority expected the pandemic to be over within that period. Micro-enterprises were the most fragile. Using a retrospective panel and matching-based difference-in-differences strategy, we show that exporting firms were able to cushion themselves from the domestic market contractions resulting from the lockdown.

Suggested Citation

  • Chen, Yutong & Debnath, Sisir & Sekhri, Sheetal & Sekhri, Vishal, 2023. "The impact of Covid-19 containment lockdowns on MSMEs in India and resilience of exporting firms," Journal of Economic Behavior & Organization, Elsevier, vol. 210(C), pages 320-341.
    • Handle: RePEc:eee:jeborg:v:210:y:2023:i:c:p:320-341
    DOI: 10.1016/j.jebo.2023.04.001
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    1. Chen, Jiping & Wan, Haiyuan & Zhang, Wei & He, Weidong, 2024. "Guarantee employment or guarantee wage? Firm-level evidence from China," China Economic Review, Elsevier, vol. 86(C).
    2. Le, Minh-Phuong & Chauvet, Lisa & Marouani, Mohamed Ali, 2024. "The Great Lockdown and the Small Business: Impact, Channels and Adaptation to the Covid Pandemic," World Development, Elsevier, vol. 182(C).

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    Keywords

    Covid-19; Pandemics; MSMEs; Export; India;
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