In brief
As India grapples with low female labour participation and entrepreneurship rates, new research suggests that supporting female-led businesses can create numerous job opportunities, consequently boosting economic growth and women's contributions to the GDP.
A recent study sheds light on the critical importance of female entrepreneurship in increasing women's workforce participation in India. With women's contribution to the GDP standing at a mere 17%—less than half the global average—it is imperative to recognize the untapped potential of women entrepreneurs. The study reveals that fostering female-led enterprises can create job opportunities for other women and serve as a catalyst for economic growth.Globally, women own less than 20% of businesses, according to a World Bank survey spanning 2006 to 2018 across 138 countries. In India, despite low levels of labour participation and entrepreneurship among women, the situation appears to be improving slightly, particularly in the realm of micro, small, and medium enterprises (MSMEs). Currently, women represent about 14% of entrepreneurs in India and contribute significantly to the industrial sector.However, most women-owned businesses in India are microenterprises, often operated as single-person ventures, revealing a stark contrast to male-owned firms that tend to employ more individuals. While females operate a substantial number of enterprises, their overall contribution to the GDP leaves much to be desired, ranking India 57th in women's entrepreneurship globally.Research conducted by Gaurav Chiplunkar from the University of Virginia and Pinelopi Goldberg of Yale University suggests that promoting female entrepreneurship could enhance women's participation in the workforce. The authors identified significant barriers that hinder women's entry into the labor market and their ability to expand businesses, such as the high costs associated with hiring workers, lack of childcare options, and inadequate transportation.By simulating the removal of these barriers, the researchers demonstrated that boosting female-owned enterprises would lead to increased workforce participation among women, economic gains through higher wages and profits, and the potential displacement of less productive male-owned firms.Policies encouraging female entrepreneurship are deemed essential, with Mr. Chiplunkar arguing that fostering entrepreneurship may yield quicker results than changing deep-rooted social norms. Ashwini Deshpande from Ashoka University highlights the necessity of tackling household chores that predominantly fall onto women’s shoulders as well as amplification of access to childcare and transportation solutions.Despite a recent uptick in women's labour force participation, experts caution that this growth may not reflect improvements in stability or employment quality, as many women are engaging in self-employment or facing disguised unemployment, which severely impacts productivity.Therefore, there is an urgent call for enhancing women's participation in consistent salaried positions that provide job security and benefits, pivotal in promoting economic empowerment. Strengthening female entrepreneurship may serve as a viable strategy to tackle underemployment in India—a crucial step towards achieving an ambitious GDP growth target of 8% by 2030 as outlined in a Barclays Research report. The pursuit of women's potential in the workforce remains an essential endeavor for India’s sustainable economic future.
