Gender and Economic Policy Discussion Forum XV

India is a dominant force in Asia’s economic growth and home to the world’s second-largest workforce— around 478 million people[1]. However, despite having one of the most progressive federal constitutions and an extraordinary track record of economic growth since the early 1990s, the participation of women in India’s formal economy is still disappointingly low. According to the 2011 census data, just 26% of all rural workers and 14% of all urban workers are women[2]. There are also special challenges in developing suitable savings mechanisms and financial products for women in the informal economy.

 In addition, not much research has been done on how women invest their income or how the state, in turn, invests into women. Development data repeatedly reinforces the point that investing in women’s health and education results in poverty alleviation, increased development, and healthier, better-educated children. Lakshmi Puri, the assistant secretary-general of UN Women, noted in 2011 that India’s growth rate could jump by 4.2 percent if women were given more opportunities. That would push India’s current growth rate of about 7.5 percent closer to 11 percent, making it, once again, one of the world’s fastest accelerating economies[3]. Therefore, investing in women means investing in communities and, in turn, nations.

Even the investments made by women who are regular workers are few. Women’s role in financial decisions can be judged by the following statistic. According to a study, just 36% of the total working women and 53% of the non-working women were merely informed about the investment decisions and played no role in taking them. Overall, 23%, or less than one in every four working women, take their own financial decisions about where and how to invest[4]. Even though women handle responsibilities at their workplace, what are the reasons for depending on parents and other family members for financial decisions? The reasons vary from risk aversion, insufficient financial knowledge to even lack of freedom to take financial decisions[5]. This calls for an increasing emphasis on financial literacy.

Women have faced similar hurdles when it comes to accessing credit and markets.  This is evident by the fact that stock and shares are not preferred forms of investment as just 18% of working Indian women invest in them[6]. In addition, when it comes to accessing credit, the relatively weaker sections such as self- employed female-headed households (who are mainly widows with small children) have much less access to credit both from formal and informal sources[7]. Thus, there is a need to diminish the hurdles women face by taking pro-women reforms in the credit and commodity markets.