Raispaisa Enterprises Private Limited

How the Coal Crisis is Impacting the MSME Sector ?

As the demand for economic activity increases in India, the demand for electricity is rising just as much. However, India is on the verge of facing large-scale power cuts due to the fact that we are running dangerously low on one important raw material - coal. Coal accounts for 70% of the country’s electricity output. According to the Central Electricity Authority data, 67% of the 135 thermal plants tracked had just four days of coal supplies or less.

The coal shortage is severely impacting the country right now, and it is specifically impacting the MSME sector even more. Let us see what the consequences and impact of this on the MSME sector is:

Low Availability of Raw Materials

The coal crisis that may result in large-scale power outages will result in a vast shortage of raw materials for running most businesses under the MSME sector. Since coal is in shortage, many companies will scout for other raw materials and fuels. This can create chaos, confusion, and bring most MSME businesses at a loss.

Decreased Productivity Rates

No coal will mean most small businesses will have to rely on more expensive fuels to keep their production running. This will keep small businesses at a loss, and be a huge disadvantage for their productive and economic growth. Low energy always means low productivity and in turn, stagnated growth.

No Economic Profit

India’s dependence on coal also contributes heavily to its trade deficit. Blackouts have a huge impact on economic recovery. Businesses will pay more to get more expensive fuels and lose their profits in energy recovery. Many businesses in the MSME sector may also have to go under or function at a high loss because of this