The Indian economy could grow by an additional 60 per cent by 2025, if women were represented in the formal economy at the same rate as men. But that requires a paradigm shift apart from strong government support.
When Nirmala Sitharaman was appointed as India's first full-time woman finance minister in 2019, little did anyone imagine that a year later she would be shepherding the country's $3-trillion economy through the worst pandemic of a lifetime. But under her stewardship, the Indian economy has weathered the storm remarkably - with a slew of bold reforms, projects and relief measures to tackle the coronavirus-triggered economic downturn in the country and progressively opening it up to more foreign investors.
Sitharaman has always been well known during her political career as an individual willing to face challenges head-on - and it is this trait of honest and strong-willed personality that led Indian Prime Minister Narendra Modi to appoint her as the Defence Minister in 2017. While Sitharaman's acumen in handling the economic onslaught of the pandemic is frequently written about, it is often forgotten that it was she who authorised the airstrike on Pakistan's Balakot terrorist training camp in 2019 as defence minister - the first time Indian warplanes had crossed the Line of Control in almost 50 years. Her political role apart, in many ways Sitharaman is the epitome of what - according to the 2020 Indian Economic Survey - only 40 percent of women in India between the age of 15-59 years are capable of becoming.
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According to the survey, more than 60 per cent of women in India in that age group remain engaged in full-time housework with no scope for professional work, corporate leadership or social roles. In 2016, a survey of the Ministry of Statistics and Programme Implementation found that women constitute only 13.76 per cent of the entrepreneurs in India or about 8.05 million out of the 58.5 million business founders. While the Indian government has launched a host of schemes to encourage women entrepreneurship, the numbers continue to be dismal and could pose a serious challenge to India's aspiration to become a $5 trillion economy by 2025.
On the flip side, the Council on Foreign Relations (CFR) estimated that the Indian economy could grow by an additional 60 per cent by 2025, if women were represented in the formal economy at the same rate as men. Current estimates place India′s rate of female participation in the formal labour force at around 24 per cent - among the lowest in developing nations. The majority of Indian women work in the informal sector in jobs with limited social protections and low wages.
But what kind of action is needed to make that happen
A Bain & Company Report 2020 on 'Powering the Economy with Her' suggests that encouraging entrepreneurship among women could create over 30 million women-owned enterprises which can in turn generate thousands of employment for women in India.
Empowering women has thus emerged as a critical issue in developing nations like India. Even though women are an integral part of any society, yet their involvement in decision-making by the use of their active contribution in economic activities remains scant. Women empowerment and economic development are interlinked, where on the one hand, development alone can play a significant role in driving down inequality between women and men while on the other hand empowering women can benefit development.
But the socio-economic impact of women being able to progress professionally and socially goes beyond the simple economic paradigm.
In a survey conducted by S&P Global last year, Asian women - including Indians - were found most likely to keep their finances separate from their partners, an independence that speaks to the growing autonomy and power women hold in the marketplace.
In India, the survey captured the opportunities and anxieties of the country's burgeoning middle-class women. Around 92 percent of women rated their current financial situation as “excellent-to-fair” (significantly more than the global average of 79 percent), and bucking global trends, 71 percent of Indian women said they consider the time to be opportune to invest in the stock market.
With India set to become the world's most populous country, a vibrant, sustainable labour market and growth of women entrepreneurs would enable more provisioning for education and healthcare, particularly among women.
“It is imperative to take bold action and address the challenges which constrain the participation of women's entrepreneurship. The dismal number of women-led enterprises in India are attributed to issues such as a long-existing, prevailing biases against their business management skills, conventional gender roles rooted in patriarchal mindsets, access to finance and networks, absent or inadequate family support, child-care and concerns regarding safety at work and in public spaces,” said Vidya Shah, CEO of EdelGive Foundation, the philanthropy arm of the Edelweiss group. “Frequently repeated stereotypes and the belief that men are more competent when it comes to financial matters and knowledge, reinforce the notion that 'business is not a woman's cup of tea',” she said.
Indeed, India stands to benefit more from women′s economic inclusion than any other nation in the world, and the government has been quick to recognize the immense potential.
From economic reforms that explicitly take gender into account - such as the Mahatma Gandhi National Rural Employment Guarantee Act that mandates equal wages for men and women and includes provisions for childcare at work sites, and the 2017 federal law mandating that all employers offer 26 weeks of paid maternity leave - to setting up savings and credit associations dubbed self-help groups (SHGs), which manage and lend accumulated savings to their members, the government has undertaken a wide swathe of measures for inclusive growth. With nearly 10 million groups across India, the government is now using SHGs as a delivery channel for government services aimed at women.
India has also taken steps to advance women′s financial inclusion through its Aadhaar program, the world's largest digital national identification initiative. Women can now open bank accounts using Aadhaar′s biometric information that also prevents men from unilaterally accessing funds in their wives' bank accounts - hitherto a widespread practice in Indian society.
“There is an urgent need to raise awareness around government schemes such as Annapurna, Stree Shakti, Mahila Udyam Nidhi Scheme, among others,” said Shah. “The lack of the right information and details on these schemes hinder women from participating and availing their benefits. Therefore, a robust national level campaign is vital to generate awareness, disseminate the right information and the relevant departments to approach.”
Yet, the sheer scale of growth needed for achieving true success with women's socio-economic progress in India requires more than a government role.
“It's hard to develop in an inclusive and sustainable way when half of the population is not fully participating in the economy. At 17 per cent of GDP, the economic contribution of Indian women is less than half the global average, and compares unfavourably to the 40 per cent in China, for instance. India could boost its growth by 1.5 percentage points to 9 percent per year if around 50 per cent of women could join the workforce,” said Annette Dixon, World Bank's South Asia Vice President.