One day, Sage Durvasa offered Indra a garland of flowers. Indra annoyed by the bees surrounding the garland threw it to the floor which enraged Goddess Lakshmi. The Goddess of wealth upset with Indra left the Devaloka and the gods started losing power to asura (demons) as they no longer had her presence and blessings in the form of fortune. Indra approached Lord Vishnu in desperation to ask for ways to regain blessings of Lakshmi and defeat the asuras. Lord Vishnu suggested the churning of the ocean in order to extract the elixir of life. The churning of the ocean or Samudra Manthana thus started in alliance with asuras and various treasures begin to rise to the surface.¹ Among them was the Goddess on lotus flower, Lakshmi the Devi of fortune and wealth who returned to the world. ²

In Indian scriptures, wealth is referred in feminine. Wealth is “Dhanalakshmi” and worship of Goddess Lakshmi forms part of most Indian household. Yagyas which formed an integral ritual in Vedic era to propitiate Gods for securing material/spiritual wealth is offered to the female “Swaha – the wife of Agni”. As Government of India led by a female Finance Minister looks ahead after a challenging year of high fiscal deficit and lockdowns, the offerings to the Yagya in the form of Budgetary announcement is already made. The question is whether budgetary allocations can be aided by policy interventions to unlock the untapped economic potential of half the population – women. A modern equivalent of Lakshmi returning to the working world would be necessary to aid economic growth.

With a budget focussed on capital expenditure (capex) & R&D, India despite a pandemic ravaged economy is well on course to achieve high growth in ensuing years. Broadly, India can take two paths to achieving high growth rates. One is accounting way wherein a high growth of nominal GDP is accompanied by a strong currency and large inflationary component comprising the figures. However, the nominal GDP growth so achieved would require sustained capital inflows which can lead to appreciation of currency and augmentation of foreign exchange (forex) reserves. The International Monetary Fund (IMF) in its January 2021 update on World Economic Outlook has only marginally raised projected growth of world output in 2021 and beyond. With such projection, the possibility of considerable export stimulus to India’s GDP growth seems unlikely.³ Even in case of sustained capital inflows and high growth in nominal GDP, the final outcome would be characterized by high inflation and unemployment.

The second path is the Budgeted one which pushes capex stimulus and brings in multiplier-accelerator-interface to set the spiral of investment-income-consumption in the economy. A strong infrastructure push in public sector to raise income and consumption which in turn will induce private investments will set in motion an accelerated pace of multiplier. The budget also has provisions aimed to reinvigorate human capital and innovation to increase total factor productivity in the economy.⁴ However, any effort to increase GDP should include policies to tap the vast potential in Lakshmi who form part of every Indian household – the women.

The high potential women workforce

Indian women have always been a vast untapped potential in the economic sphere held back due to a number of factors. As per the Economic Survey, about 60 per cent Indian women in age-bracket of 15-59 years are engaged in full time housework.⁵ The exit of women from paid work over the last decade has been staggering and explains the 28-point tumble to 140th rank out of 156 countries in the annual World Economic Forum (WEF) gender gap ranking.⁶ While job losses hit Indian economy in the aftermath of pandemic, female labour force bear a disproportionate brunt of the economic losses. In February 2021, female labour force participation shrunk by 9% as against just 1.8% for men. The worst hit are urban women with labour-force contraction affecting approximately one out of three women.⁷ The dismal figures are telling given that India has one of the worst labour force participation rates (LFPR) in the world at mere 21%. In other words, 79% of Indian women do not even seek work.⁸ A target to take female LFPR closer to the global average of 47% would provide the single biggest boost in Indian economy.⁹

The Government of India in the Economic Survey 2018 noted that agricultural sector in India is undergoing feminization. Presently, agriculture sector employs 80% of all economically active women in India including 48% of self-employed farmers and 33% of agriculture labour.¹⁰ The Government in recent years launched a number of initiatives such as Mahila Kisan Sashaktikaran Pariyojana (MKSP) and Deendayal Antyodaya Yojana-National Rural Livelihood Mission aimed at training women on various aspects of agriculture, business, entrepreneurship and skills development. ¹¹

While overall female LFPR in urban India has consistently been in the 15-20% bracket, the fall in India’s LFPR can be almost fully attributed to the fall in rural India.¹² The fall in work-availability especially in non-farm sector can be a result of increased mechanization and a steady shift of rural India from agrarian to industrialised economy. While their male counterparts take up jobs by finding employment in other sectors, the same doesn’t seem to be happening in case of women. A number of jobs like driver, plumber and even labour in manufacturing shop floor are generally considered outside the purview of women narrowing down their options. Another possible reason for low LFPR is an outcome of positive development, namely - the rapidly increasing education levels in Indian women reducing willingness to do manual labour as well as increase in the average age at which productive work is engaged. (In LFPR, productive age is calculated as 15 and above). The result is that the women’s contribution to Indian GDP stands at just 17 per cent as against the corresponding figure of 40 per cent in the case of China.¹³With the overall female workforce participation at a paltry 10 per cent, the potential to contribute heavily to ambitious GDP growth targets rests with the women.¹⁴ As per a McKinsey & Company estimate, about $770 billion can be added to Indian GDP by 2025 by advancing workforce gender equality.¹⁵

Recognizing the valuable unpaid work

While the statistics on GDP capture paid work, Indian women are making much more valuable contributions beyond what the stats may indicate. As per an estimate, Indian women do 10 times more unpaid work than men.¹⁶ Taking into account the valuable work, Indian women probably beat global counterparts hands-down if GDP included monetary value of unpaid work. Importantly, unpaid domestic and care-giving services provided by women are not influenced by their level of education as noted in the Economic Survey 2020-21. Indian men engage in very less unpaid work which explains their higher contribution to GDP. Recently, a political party in Tamil Nadu led by an accomplished actor promised a salary to homemakers as part of his poll promise and reignited the discussion on the subject. While paying a monthly wage to homemakers seems like a good idea, placing a commercial value on such selfless work will be like devaluing the Indian women’s importance in Indian society. Instead of a salary in monetary terms, policy interventions to empower homemakers would be need of the hour.

The Income Tax provision of Hindu Undivided Family (HUF) headed by Karta has been in existence for decades. A provision to include tax benefits for working male member who transfers part of his income to a family HUF headed by his wife (Karta) would not only ensure monetary empowerment of unpaid working women but also empower them in the institution which affects them the most – the family. Empowering women in monetary terms will lead to higher growth and better Human Development Index (HDI) over the long run. Estimates suggest that women invest 90 per cent of their income back into their families compared with 35 per cent for men.¹⁷ Moreover, women are more likely to spend money on better healthcare, education and living standards of families which will have outsized impact on GDP.¹⁸ Closing the gender gap in education adds substantially to a country’s GDP whose benefits would be shared by boys and men.¹⁹ Moreover, the greater say of women over family income would encourage higher school enrollment for children including girls and kick-start a virtuous cycle of women’s education and empowerment feeding into each other.²⁰

An Income Tax provision with the working male member gaining monetary/non-monetary benefits in exchange for transferring the control over part of his income to wife would yield rich dividends for family and country as a whole. Any assessee who avails benefits under the section should be deemed to have relinquished the control over HUF to wife who will be the Karta while the couple’s children continue to enjoy equal share as a coparcener. According to a study by McKinsey, contribution of women to domestic or care work is estimated to be 0.30 trillion dollars which is neither measured nor valued in determining GDP.²¹ A tax provision aimed at greater spending control over family income would strengthen Indian economy by empowering unpaid homemakers. Research show how transfers of MGNREGS wages into a woman’s own bank account rather than household head increased women’s work under MGNREGS in Madhya Pradesh.²² Women who were granted access to their wages also worked more in private sector which is attributed to greater intra-household bargaining power²³.

To sum up, a good start would be to enable salaried class men with income below 5 lakh per annum to transfer a maximum of say 30% of salary into Family HUF headed by his wife and get a specified rebate on tax liability. Given that three quarters of total salaried tax payers together pay less than 1% of total tax,²⁴ the impact on government tax collection is miniscule but impact on their wife who will control the HUF (many of whom would be homemakers) will be very significant.²⁵ A higher intra-house bargaining power via the proposed provision to control HUF bank account may likely result in greater participation of homemakers outside of home too. The ease of registering a HUF, securing a PAN and opening a bank account should be looked into for enabling high rates of adoption for the lower middleclass. Expenses to maintain HUF and compliance should be kept at miniscule so that a practice of transferring specified sum to HUF of wife in order to get tax benefits gains traction.

Women in private sector

As per the last census, women constitute about 20.5 per cent of organized sector employees.²⁶ Indian laws make it amongst the best countries for working women in terms of availability of paid maternity leave. With 26 weeks of paid maternity leave along with provisions to extend leave, India occupies third position after Canada and Norway where it is 50 weeks and 44 weeks respectively.²⁷ However, the law may have evoked unintended consequences especially in startup, SME & MSME ecosystem leading to lower preference for women in hiring. The maternity-leave model of placing full economic liability for maternity payments on employer without any contribution from employees or State deters hiring of women and de-incentivizes employers.²⁸ A mere 3 per cent of working women benefit from the Act.²⁹ The law also stipulates employers provide mothers with sufficient breaks so that they may visit the child at the crèche.³⁰ Most employers in India haven’t adhered to compliance to crèche and stricter enforcement will only reinforce the private sectors bias against hiring women.³¹ In short, a lot of well-meaning laws introduced don’t get implemented due to economic costs associated with it and no perceived cost-benefit trade-off to a for-profit organization. The laws therefore don’t translate into a meaningful outcome which was intended but invoked a bias against women in order to circumvent it.

As per Companies Act 2013, companies with paid-up share capital above Rs.100 crores or turnover of Rs. 300 crores or more are expected to have at least one woman director. While Directorship in India Inc. despite the law is still seeing a male preserve, the numbers are encouraging with number of women directors growing from 20 per cent in 2019 to 26 per cent in 2020.³² A Report by Grant Thornton, Women in Business 2021 placed India in third position worldwide on the count of women in senior management roles.³³ As per last year’s Egon Zehnder Global Board Diversity Tracker, India has improved in gender diversity in company boards over the eight years from 2012 to 2020.³⁴ Unlike the law concerning maternity leaves and crèches, Indian companies have clear incentives to enable gender diversity. A Harvard Business school report of 2018 said a study found clear correlation between women in leadership positions and corporate profitability.³⁵

While numbers do point encouraging in quantitative terms, a closer examination makes it seem less impressive. Many women directors in India are members of promoters’ families and seem to be appointed merely to comply with the requirement. Very few firms have gone ahead voluntarily to appoint second women director indicating a compliance in letter only and not with an intent of productive gain of human resources. The possibility that a number of women directors are bereft of any real decision-making powers but appointed as token representative is frequently cited. The possibility carries weight given that the traditional route towards a board director position is through CEO experience where women representation is very low.³⁶ For the second year in a row, Nifty 50 companies have only 1 woman CEO. A 2% CEO representation in 50 biggest companies in India needs to be addressed.³⁷ The solution then is to encourage women participation across the board than mandating representation at the top. A law mandating companies to simply disclose in its annual report the headcount of total female workforce and comparison with competitors may be the right nudge. By not imposing a specified percentage by law but by imposing mandatory disclosures, companies can be expected to improve gender diversity on their own. The resulting hiring to get the annual report right will add women participation in the traditional career pipeline.

If women are making presence in career pipeline, it may translate into higher number of women in corporate boardrooms too. Given the low participation of women in workforce, an 11 per cent leadership role and 17% board position in Indian corporates aren’t dismal figures but point to Indian women standing on their own.³⁸ A top down approach along with bottoms up one will lead to more lower and middle-level leaders rising to the topmost position and increase proportion of women. Analysing boards of 151 German stock exchange firms Joecks et al report that at very low level of gender diversity there are negative effects on performance. But as proportion reaches 30 per cent, diverse teams demonstrate superior performance compared to homogenous teams. The underlying idea behind mandatory disclosure of gender representation in annual report without specified legal limit is to encourage corporates to hire women and cross the threshold towards superior performance. As per a Harvard study, gender pay gaps shrink when companies are required to disclose them.³⁹ Whether gender diversity increases when companies are required to disclose them needs to be examined and is a policy worth exploring.⁴⁰

The socio-economic factors

The current economic status of Indian women notwithstanding, Indian tradition has accorded high status to women to the point of reverence since time immemorial. The Atharvaveda (Book XIV-1-43) invites women into husband’s family “as a river enters the sea to rule there along with her husband as a queen over the members of the family”.⁴¹ A provision in tax laws requiring Karta of a HUF to be a woman for the purpose of claiming tax benefits would just be a continuation of our rich Indian tradition of equality. In the Brihadaranyaka Upanishads, the learned Maitreyi challenges her husband Vedic sage Yajnavalkya with philosophical questions. ⁴² As per scriptures, Gargi Vachaknavi participates in the brahmayajna and she challenged sage Yajnavalkya in a philosophical debate during Rajasuya Yagya conducted by King Janaka of Videha. ⁴³ The status of Indian women in recent history is in stark contrast to the importance ascribed to the female gender in our civilization. The complex social and restrictive practices of modern times including mindsets have disproportionately large impact on their current economic status too.

Indian economy after a pandemic struck year is struggling with surging fiscal deficit and a lower gender gap can ensure a sustainable growth. Since women comprise the majority of population below the poverty line, policy interventions specifically addressing the gender would have outsized impact. ⁴⁴ A policy aimed towards it is not just economic in nature but is also a fundamental human right and form part of the 17 Sustainable Development Goals (SDGs) of United Nations.⁴⁵ The policy interventions will aid the already huge infrastructure outlay which the government envisages. An ambitious infrastructure project pipeline worth 111 trillion rupees ($1.5 trillion) is already in the horizon. To put it in perspective, the figure is more than what India has invested in almost previous two decades. A slashing of corporate tax rate, merging 29 labour codes into four, privatization of key Public Sector Banks, $28 billion in production-linked fiscal incentives are provided to give the much needed boost. Crisil an affiliate of S&P Global Inc estimates investment worth $37 billion over two-three years and boost wages by $55 billion annually. ⁴⁶ With a focus on capex, the government even amidst pandemic stuck with attempt to capture higher value addition.⁴⁷ Goyal and Sharma (2018) show that the multiplier for capex is 2.4-6.5 times the revenue expenditure (revex) multiplier; and the budget factors that in its allocation. Unlike in the 2008-13 period when fiscal deficit increased sharply with excessive revenue expenditure, the current surge in fiscal deficit is accompanied by capital expenditure which will come to fruition in the years to come. The Indian economy is expected to continue towards its ambitious growth trajectory after a temporary aberration. The fiscal policy of expanding revex is an economically myopic one which the government has avoided even when faced with grave challenges.

Given the dire need of Indian economy, women-centric policy interventions are the need of the hour to enable women to pitch in with their valuable skill sets. By 2030, India’s working age population is expected to surpass 1 billion and a 400 million women potential will be the biggest force in the world to propel Indian economy.⁴⁸ There are pockets of excellence indicating the latent potential notably the proportion of female commercial pilots. At 13 per cent, the proportion of Indian female commercial pilot is the highest in the world. The proportion is more than double the global average of a mere 5 per cent.⁴⁹ Indian women have already taken to the skies making their impact felt. In the macroeconomic context, it’s about adding more and more women into the workforce than pockets of individual excellence. Apart from economic growth, narrower gender gap results in twin benefits of individual well-being and better human resources for the society. The resultant outcome is not just in economic interest of the country but will lead to all-round development of the society.

Endnotes:

1. https://en.wikipedia.org/wiki/Samudra_manthan
2. https://www.bbc.co.uk/religion/religions/hinduism/deities/lakshmi.shtml#:~:text=The%20rebirth%20of%20Lakshmi,of%20the%20rebirth%20of%20Lakshmi.&text=The%20gods%20began%20to%20lose,asuras%20(demons)%20took%20control.
3. https://www.thehindubusinessline.com/opinion/the-right-way-towards-a-5-trillion-economy/article34046388.ece
4. https://www.thehindubusinessline.com/opinion/the-right-way-towards-a-5-trillion-economy/article34046388.ece
5. https://www.businesstoday.in/current/economy-politics/economic-survey-2020-60-percent-women-in-the-world-fastest-growing-economy-do-only-housework/story/395111.html
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39. https://hbr.org/2019/01/research-gender-pay-gaps-shrink-when-companies-are-required-to-disclose-them
40. https://en.wikisource.org/wiki/Atharva-Veda_Samhita/Book_XIV/Hymn_1
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45. https://economictimes.indiatimes.com/news/economy/policy/view-modi-is-making-the-same-huge-economic-mistake-as-nehru/articleshow/81881622.cms
46. https://economictimes.indiatimes.com/news/economy/policy/cea-subramanian-explains-the-economic-rationale-behind-modi-govts-policy-response-to-covid/articleshow/81499136.cms
47. https://www.bain.com/contentassets/dd3604b612d84aa48a0b120f0b589532/report_powering_the_economy_with_her_-_women_entrepreneurship_in-india.pdf
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