Page 100 - Abhivruddhi

two grown up daughters, one of them is studying B.Com. and the other
one is engaged to be married. Her husband works as a casual labour. The
problems arose in the family when Rashida’s business shut down during
the lockdown and her husband lost his job. She took no time to exhaust
her savings and use up the business capital she had. With the money
borrowed from her sister-in-law she could tide over this difficult phase. To
make things worse Rashida’s daughter needed to undergo an emergency
surgery and she had no option but to turn to the external money lender
to take a loan of Rs. 25,000 to meet the medical expenses. The burden of
this loan also affected the revival of her business. Such situations were
common where health emergencies impacted business turnover.
C. House-repairs over Business Finance
Ashwini lives in a community in Pimpri in a house with mud walls
and tin sheets. She runs a small homebased grocery store with a daily
turnover of Rs. 500. She has 3 school going children and her husband
works as a driver. Every year during the monsoons the water seeps into
the walls and at times enters her home damaging household goods and
her merchandise too. She did not have enough savings to repair her house
so had to withdraw capital from her business. In addition, she had to take
a loan from the local pawn broker by pawning her gold ornaments at an
interest rate of 2%. This led to a reduction in her profits and she had no
option but to close her business and start working as a domestic worker
to meet her household expenses and pay off her loans.
Reshma’s business receives a blow if she has to pay high fees for tuitions.
Or when Rashida’s daughter needs emergency treatment in a hospital. Or
when Ashwini had to close her business for house repair. Even otherwise
successful businesses like Ram’s run into troubled waters since he has not
made any financial plans nor has the wherewithal to save for any changes
in his business or family emergencies.
Generally, for small vendors adverse situations arise out of needs and/
or family emergencies such as
1. unexpected expenditure on healthcare and other emergencies,
2. purchase/improvement of housing asset
3. large sudden need for education and/or marriage of their family
members.
And every time cash from business capital flies to meet these immediate
needs. Most of these situations arise out of poor financial planning and
force them to withdraw capital. In effect their dependency on typically
high-cost informal sources of credit increases their business vulnerability.

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