Inclusive Growth

Female labour force participation

News

• Economic Survey 2025-26: “increasing FLFPR to 55% by 2050 could be critical to maintaining high annual GDP growth”
• WEF’s Global Gender Gap report 2025: India SLIPPED 2 places and ranked in bottom 5 of Economic Participation and Opportunity subindex

Why low FLFPR?

• Claudia Goldin’s U Curve
• Limited access to STEM careers
  • Indian women == 43% STEM graduate, but only 27% participate in STEM workforce
• Poor public mobility infra
  • WB 2021 study: 31% women cited commute as a barrier to working
• Childcare & domestic duties
• inflexible work arrangements
• unpaid labour
• low share in gig economy
  • due to lack of maternity leave, algorithmic work distribution, safety risks, poor welfare benefit, gender segregation
• Lack of affordable housing, workplace discrimination, sexual harassment, lack of family support

Measures taken to improve FLFPR

• Labour codes
  • proportional representation of women in Grievance Redressal Committee
  • upto 26 weeks of paid maternity leave
  • prohibiting gender based discrimination in wages/ condition of employemnt
  • promoting creche facilities
  • adequate safeguards by establishment before engaging women in any hazardous or dangerous processes
• Safety at workplace
  • She-Box by MoWCD
• SHE-Mart in Union Budget 2026-27 to provide markets for products by SHG, rural women
• Expanding employment opportunity for women
  • removal of prohibition on women employment in designated hazardous industries by 17states / UT
  • permitting night time work for women in factories by 22 states/UT and in commercial establishment by 33 states/UT

What more can be done?

• extend safety infra
  • boost women police visibility eg. Kochi Women Police Control Room Vans, Hyderabad SHE Teams
• Create affordable and reliable public transport systems
• upgrade public spaces with lighting, safe crossings etc.
  • eg. Chennai’s inclusive street design manual
• Women centric industrial clusters & manufacturing
  • eg. Sakhi Niwas scheme of MoWCD
• Affordable housing
  • eg. Tamil Nadu’s Working Women Hostels Corporation (Thozhi Hostels)
• bridge re-entry barriers after childcare breaks
• promote hybrid models, flexible work
• PPP
  • eg. Telangana’s WE-Hub connects women with startup ecosystem & investors
• encourage women participation in STEM
• expand Anganwadi centers
• align education with industry demand to make easier for women to enter jobs

Freebies & economy

Issues with freebies

• fiscal handicap, hampers growth, crowding out effect
• poor social services
• debt overhang on govt, liability, public debt
• policy ad-hocism, uncertain economic environment
• diverts attention from more structural issues that cause poverty to prevail
• inflation
• wasteful usage of public resources
• politically irreversible in the long run, vicious cycle of fiscal distortion

Sustainable alternative to freebie

• sunset clause on schemes
• targeted schemes to benefit only the needy
• prioritize social infra, with long term multiplier effects
• focus on policy simplification to allow private sector to provide employment and social mobility to downtrodden
• redirect subsidy regime to sustainable development initiatives
• implement outcome based budgeting to curb short term freebies
• universal basic services, social safety nets
• increase capex

Microfinance Sector

Provision of small scale financial services to people who lack access to traditional banking services - World Bank

• Regulated by RBI
• significance: women empowerment, SHG, poverty reduction, rural development, socioeconomic transformation

Challenges of MFI (Microfinance Institutions)

• high cost of outreach
  • small ticket loans
  • India MFI outreach: 8%
  • Bangladesh MFI outreach: 65%
• high interest rates
  • MFI: 12-30%
  • banks: 8-12%
• rural urban disparities
  • only 800 MFI target urban poor
  • most target rural poor
• high loan defaults
  • no collateral
  • poor risk management
  • Gross NPA of MFI:
    • 8.8% in FY24
    • 16% in FY25
• overdependence on funding from commercial bank (80%)
• lack of product diversification
  • insurance, savings, remittance rarely offered

Govt Initiatives

• Credit Guarantee Scheme for Microfinance Institutions 2.0
  • through National Credit Guarantee Trustee Company Limited
• SIDBI’s Microfinance Scheme
• SHG - Bank Linkage Programme by NABARD
• PM Mudra Yojna

NITI Aayog - Comprehensive Framework to Promote Affordable Housing

Key issues in affordable housing

• limited land
• middle income groups buy units meant for EWS/Lower Income, thereby crowding out the poor
• EWS struggles to access formal loans
• vacant houses due to low rental yield, weak tenancy laws etc

NITI Aayog Recommendations

• zoning reforms
  • atleast 10% of all residential land marked for affordable housing as followed in Vienna & South Korea
• Transit oriented development
• 10-15% reservation of built up area for EWS/LIG housing
• reforms in rental housing legal framework

Land Reform initiatives

• SVAMITVA
• Bhu Aadhar ULPIN
• National Generic Registration System
• Model Land Leasing Act
• Digital India Land Records Modernization Programe

Jan Dhan Yojna

completed 12 years

• 63cr accounts
• cummulative deposite of 3.08L-Cr
• principle of Antyodaya
• bank acc: from luxury to basic socio economic entitlement
• 55% accts are women owned
• 77.8% are in rural/semi urban areas
• primary layer for over 300 DBT welfare programs (zero leakage)

features

• universal zero balance banking
• rs.10,000 overdraft facility for credit (institutional alternative to informal moneylender)
• transaction through indigenous RuPay card
• helps onboard users to micro-insurance schemes eg. PMJJBY, PMSBY, APY

Challenges

• account dormancy (15-20%), low transaction density
• underutilized overdraft facility due to strict screening norms, lack of awareness
• micro ATM glitches, cash shortage in remote areas
• poor digital literacy (risk of cyber fraud, phishing, ATM skimming)
• poor commercial sustainability for banks