The Path to Women Empowerment Through Financial Inclusion

As we celebrate Women’s Day 2024 with the theme “#InspireInclusion’, it’s crucial to highlight the role financial inclusion of women plays in their economic empowerment, and its contribution to the country’s economy, apart from driving innovation and fostering sustainable growth, ultimately leading to a more prosperous society.

According to a study by the National Family Health survey, despite comprising nearly half of India’s population, women contribute a mere 18 percent to the country’s GDP, a sobering statistic that represents an enormous untapped reserve of human capital. For corporations, this disparity is not merely a social issue but an economic one that demands urgent attention. Another study by McKinsey & Company reveals that advancing women’s equality could propel India’s GDP by $770 billion by 2025, underscoring the transformative potential of empowering women economically. 

 

The Corporate Imperative

A December 2023 study conducted by Russell Reynolds Associates underscored the efforts needed to enhance gender diversity within Indian corporations, especially at senior levels. The study revealed that while progress has been made, with 27 percent of independent directors being women, there remains room for improvement, as only 10 percent of executive directors among the top 200 listed companies were female.

India’s G20 Presidency and Women 20 engagement group offer corporations a chance to promote women’s economic empowerment globally by integrating gender considerations into policies, fostering entrepreneurship, bridging the digital divide, and supporting education and skilling.

 

The Economic Imperative

India’s vision of becoming a developed nation by 2047 requires equal economic participation of women. Corporations promoting it drive sustainable growth, aligning with PM Modi’s statement that “When women prosper, the world prospers.”

The Women in India’s Startup Ecosystem Report 2023 highlights significant progress, with the proportion of women-led startups in India increasing from 10 percentin 2017 to 18 percent by 2022. Notably, the percentage of women-led unicorns also saw a notable rise, from 8percent to 17 percent during the same period. This upward trajectory reflects growing opportunities and recognition for female entrepreneurs in the Indian startup system.

India also boasts an impressive ecosystem of 13.5 million to 15.7 million women-owned MSMEs and agribusinesses. India’s female labour force participation rate has shown an upward trend, reaching 25 percent,according to Periodic Labour Force Survey Report 2022-23, showcasing progress towards greater gender inclusion in the formal workforce. This growing representation in the labour market is crucial as India strives to achieve its ambitious goal of becoming a $5 trillion economy by 2025.

However, these enterprises often face challenges like limited market access, inadequate business skills, and lack of mentorship. By promoting a nurturing environment, corporations can unlock innovation, job creation, economic growth, and drive their own sustainability agendas.

 

The Multiplier Effect 

Women’s economic empowerment not only benefits the economy but also promotes social justice and human rights. Financial independence challenges gender norms and contributes to community well-being, breaking poverty cycles and improving educational outcomes.

Stakeholders, including government, philanthropies, civil society, and the private sector, must collaborate to work on sustainable solutions. Improving infrastructure and public services, especially in education and livelihood support, is crucial for enhancing women’s workforce participation, as nearly 50 percent quit due to childcare responsibilities, as per a 2022 survey.

Challenges in Financial Inclusion 

Despite advances, there remains a significant gender gap in financial inclusion that hinders women’s access to affordable finance, credit opportunities, and banking services. This impacts their ability to start businesses, invest in education, and secure economic independence. Government initiatives have made progress, but the corporate sector needs to bridge credit gaps.

India’s Pradhan Mantri Jan Dhan Yojana was launched in 2014 to offer basic banking services to all households. Since then, over 460 million bank accounts have been opened, with 67 percent in rural and semi-urban areas, of which 56 percent are owned by women. Average deposits too have tripled.

Then there is the burden of unpaid work. Research by the Indian Institute of Management Ahmedabad in 2023 reveals that women aged 15 to 60 spend 7.2 hours on unpaid domestic work, while men spend 2.8 hours. Even among wage-earning individuals, women dedicate twice as much time to tasks like cleaning, meal preparation, and caregiving compared to men, as highlighted by the Time Use Survey conducted by the National Sample Survey Office.

Building an Ecosystem of Opportunity  

Sustaining momentum requires a whole-of-society approach where corporations, government, civil society, and individuals jointly dismantle barriers, challenge mindsets, and create an enabling ecosystem for women to thrive. India Inc must embrace DEI strategically, ensure pay equity, implement family-friendly policies, invest in leadership development, forge partnerships, and leverage CSR to empower women. This will help achieve true gender parity and unlock the potential of India’s talented women, paving the way for a more equitable society.

 

Written By Global DEI Alliance, an initiative that brings together individuals and organizations from around the world who are committed to promoting Diversity, Equity, and Inclusion (DEI) in the workplace and beyond.