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Women entrepreneurs: The secret fuel to supercharge India’s economic growth

In the face of adversity, female entrepreneurs around the world have demonstrated adaptability and resilience to drive economic recovery.

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By CNBCTV18.com Contributor May 25, 2021, 8:11:11 AM IST (Updated)

Women entrepreneurs: The secret fuel to supercharge India’s economic growth
In the face of adversity, female entrepreneurs around the world have demonstrated adaptability and resilience to drive economic recovery. Over the past year, 42 percent of women business owners have shifted to a digital business model, and 34 percent have identified new business opportunities in response to the pandemic.


Yet, women’s representation in the economy remains drastically lower than men, especially in terms of business leadership. According to an International Monetary Fund (IMF) study, women own and operate about 5 percent of businesses in India, 90 percent of which are microenterprises.

This rigid gender gap in female entrepreneurship and more broadly labor force participation is multi-dimensional. Working on solutions and collaborations that address structural, cultural, and financial barriers can bring about gender equity, which would catapult India as a global economic powerhouse.

Structural Solutions

Indian women face structural challenges ranging from limited educational opportunities to inadequate digital infrastructure to restricted access to business know-how. While much progress has been made, driven primarily by innovative Government initiatives, there remain shortcomings. Now is the time for corporations and civil society to lean-in and supercharge the progress led by the Government.

For example, greater investment in STEM education for girls opens a world of future well-paid job opportunities in India’s rapidly expanding digital economy. Not only can corporates augment STEM education in schools, they can also create mentoring and internship opportunities to help girls and young women gain professional experience.

Partnering with Government and industry to expand business and digital literacy skills training, such as through the Digital Saksham initiative led by the Confederation of Indian Industries, is a pragmatic way to reach millions of entrepreneurs and unlock the full potential of women business owners.

Cultural Adaptations

Women are held back by inadequate support systems and deeply rooted cultural perceptions that confine women’s role to solely caretakers of the house and family. UN Women research shows that during the pandemic working-age women shouldered a disproportionate amount of the household work and caretaking responsibilities.

This placed incredible hardship on women entrepreneurs, who simultaneously were fighting to keep their businesses afloat. It is time for husbands, mothers-in-law and parents to celebrate and encourage women’s professional achievements. It is estimated that in less than 10 years women entrepreneurs could create more than 150 new jobs. To accelerate the achievement of a thriving and prosperous India, we need to re-conceptualize what is a woman’s duty; we need to encourage professional pursuits.

Financial Innovations

Among the most daunting barriers that women business owners have historically faced is limited access to funding. The Global Wealth Report by Credit Suisse indicates that Indian women own 25 percent of household wealth on average and are less likely to hold assets or property in their own names. This means women entrepreneurs struggle to qualify for business loans because collateral is held in the husband’s name and is often already pledged.

Achieving gender parity in access to credit has to compound economic returns. An increase in women’s access to formal credit would result in higher female entrepreneurship and employment, boosting India’s economic output by 1.6 GDP points, according to the IMF.

Fortunately, there are already existing innovations that help break through this credit ceiling. In a rapidly digitizing nation like India, technology can overhaul the way we assess bankability. Digital enabled tools and services, which are devoid of human bias, paperwork, and collateral obligations, can play a crucial role in addressing the credit deficit faced by female business leaders. For example, Mann Deshi Foundation is testing an alternative credit rating methodology with SBI.

Leveraging untraditional digital footprints, such as digital payments, invoices, and receivables, can help financial service providers assess risk more accurately and open access to capital for millions of under-banked women entrepreneurs. Exploring collateral substitutions, such as partial credit guarantees, can catalyse banks to expand financing. This short-term risk mitigation tool enables banks to lend to segments with which they are unfamiliar, particularly women-led businesses.

India has all the building blocks to become a global economic powerhouse, but it needs to unleash the full intellectual and entrepreneurial power of women to accelerate its ascension. Already technology innovations and new risk tools promise to provide greater financial agency to women.

Our collective responsibility is to scale structural solutions, expand cultural adaptations and mainstream financial innovations. When we achieve this, women entrepreneurs will take more risks, make informed business decisions, and forge new paths to prosperity. And, as research from around the world shows, investing in women leads to women investing back in their families, communities, and the world.

The author, Alison Eskesen, is Vice President at Mastercard Center for Inclusive Growth. The views expressed are personal
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