6th July 2024 (11 Topics)
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Low Female Labour Force Participation
Context
Efforts towards financial inclusion have highlighted a critical barrier: low labor force participation among women. In the fiscal year 2022, female participation stood at 32.8%, significantly lower than the 77% among men. Despite women leading nearly a fifth of Micro, Small & Medium Enterprises (MSMEs), they receive only 7% of outstanding loans in this sector.
This discrepancy underscores structural challenges such as limited capital, restrictive societal norms (like inheritance laws), and unequal access to education and training.
Current Challenges in Women's Economic Participation
- Low Labor Force Participation Rates: Disparity in female (32.8%) vs. male (77%) participation.
- Credit Access Discrepancies: Only 7% of MSME loans go to women-led businesses despite their significant presence (nearly a fifth).
- Gender Inequality: As per World Economic Forum's Gender Gap Report 2022, India ranked 135 out of 146 countries and was behind smaller neighbours, with gender inequalities exceeding five percent.
- Gender Pay gap: The Oxfam India Discrimination Report 2022 highlighted the gender pay gap in India, with women facing bias in recruitment and pay across the country.
Barriers to Financial Inclusion
- Structural Challenges: Limited capital, societal norms (e.g., inheritance restrictions), unpaid labour and vulnerable employment and unequal access to education and training.
- Perceptions and Biases: Stereotyping of women borrowers as higher risks, resulting in higher interest rates, stringent collateral requirements, and loan rejections.
- Behavioral Factors: Risk aversion, lower confidence in negotiating loan terms, and fear of rejection.
Pathways to Enhance Women's Participation
- Addressing Systemic Biases: Promoting fair assessment and treatment of women borrowers.
- Empowering Through Education: Enhancing financial literacy and skills training.
- Ensuring Access to Capital: Facilitating easier access to credit with reasonable terms.
- Supporting Women-Led MSMEs: Providing tailored support and incentives to foster growth and sustainability.
The increased involvement of women in entrepreneurship has the potential to boost India's GDP by $0.7 trillion by 2025.
Fact Box: Schemes to Promote Women Empowerment:
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