Sharma Ji’s Store- The Backbone of Economy

Dotting the sides of each kaccha and pakka street of the nation, the local stores are where “Real India ‘’ shops. With India’s retail market estimated at $883 billion, the small and medium-sized Kirana stores enjoy the confidence of a large local customer base and account for more than 75% of the consumer goods market. With the surge of the pandemic and lockdown, the local Sharma Ji’s store witnessed a 39% growth, catering to every crevice of the country.

Not So Glittery

Despite the attractive numbers, the local retail outlets are posed with obstacles in every walk. Working on a tight budget, the mom-and-pop stores run the risk of not being digitally equipped. Stiff competition from e-commerce giants’ hyperlocal delivery model demands them to upscale their shelves and environment. However, financial challenges, the inability to seek loans due to lack of collateral gets them in a jam.

How Close are we to “Sabka Vikas?”

A developing economy like ours does not offer a smooth operational atmosphere for SME space that contributes to a lion’s share of GDP and employment.

· Lack of capital, funding, and resources makes the sector challenges.

· Out of the $1 billion working capital loan market, banks and larger NBFCs have a stronghold only in the $60–65 million section.

Even as Small and Medium Enterprises contribute to one-third of the GDP, a credit gap of $400 billion exists. High-interest loans and chit funds that send them down a spiraling debt trap, leading to-

· High delinquency

· Weak credit demand

· Low private loans to GDP ratio

Financial Inclusivity

Thanks to emerging technology, the 5 C’s of creditworthiness and CIBIL score are not the only benchmarks of SME Lending. Fintech start-ups are increasingly partnering with Location Intelligence platforms to uncover hidden stories about India’s micro merchant DNA.

· Scan the map of an area using the lens of a lender

· Get insights into the economic activity, affluence, customer footfall, and business potential

· Gauge creditworthiness and delinquency

· Merchant score is assigned by geocoding loan data

· Enhance decision-making speed about granting microloans to those without a collateral

Kirana Stores- A New Renaissance?

This unorganized segment includes 13 million Kirana stores pan-India, contributing to 11% of the GDP and 8% of the informal workforce. Modernization of 10% of these stores would boost retail consumption and propel employment, generating 3.2 million jobs. It is the need of the hour to finance the credit gap that the millions of Sharma Ji’s stores are facing and revamp them so that the revenue-generating embers do not get stifled out by e-commerce giants.