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India needs to empower its women entrepreneurs

Time to put a gender-lens on all government schemes and processes, as enabling women enterprise ownership is an imperative

July 12, 2021 / 04:17 PM IST

The COVID-19 pandemic has sharpened existing inequalities, and one of the divides that has grown is the gender-gap. Data from the World Bank last year revealed that women-owned businesses were 5.9 percentage points more likely to have closed than male-owned businesses. Results from small-sample surveys conducted in India are indicative of the higher stress faced by women entrepreneurs. For instance, a report published in 2020 showed that almost three-quarters of women-led businesses reported cash shortages, compared to half of male-led businesses.

The pandemic has only exacerbated the challenges that women face in India. The female labour participation rate has been dropping for decades, and in 2015, we were ranked 70 out of the 77 countries measured by the Global Entrepreneurship Development Institute’s Female Entrepreneurship Index. In a male-dominated society as ours, women find it even more difficult to start and operate a business. Around 20 percent (See Table 1) of Indian MSMEs are owned fully or partially by women, as per the NSS 73rd round in 2015-16; this is lower than the global average of 33 percent share. In India, women entrepreneurs face a rejection rate of 19 percent by lending institutions, this is more than twice the rate of 8 percent for men.

The problems are well-known for Indian women with low social mobility and high burden of family and home care being the main barriers that impact all aspects of work. Women are more likely to be setting up micro-units (see Table 2 below) and while small businesses find it difficult to scale up, it is much more challenging for a woman to grow the business. No wonder then, that the 2020 report mentioned earlier year showed women entrepreneurs reporting higher stress of increased household conflicts and managing household expenses, compared to male entrepreneurs. Interestingly, and this is crucial for policymakers, despite the higher stress, women entrepreneurs were more optimistic of their business recovery than men, with half reporting a shift in business by adding different products and services.