CRISIL SME Tracker: Working capital gap widening for MSMEs

The working capital gap is a critical barometer of an enterprise's ability to meet its daily financing needs

CRISIL’s analysis of nearly 1,700 MSMEs (annual turnover up to Rs 2.5 billion) shows that their working capital gap — or the difference between current assets and current liabilities (excluding short-term bank borrowings) — has widened consistently since the financial year 2015.
 
Short-term debt raised by these enterprises — for working capital needs — grew just eight per cent annually, which is significantly lower than their funding requirement.
 
The trend would have continued in the last financial year, too, for two reasons: one, the introduction of the Goods and Services Tax led to increased working capital requirements in