Why in the News?

Recent data from the National Sample Survey Office (NSSO) for 2022–23 shows a steady increase in women-owned enterprises in India’s informal sector. However, while more women are entering entrepreneurship, most remain confined to low-value, home-based, own-account activities with limited scope for productivity and growth. This paradox raises concerns about whether the rise in women’s entrepreneurship reflects genuine economic opportunity or distress-driven fallback due to shrinking job opportunities.

Status of Women Entrepreneurs in India

• As per NSSO surveys (2010–11, 2015–16, 2022–23), the share of women-owned enterprises has increased steadily.
• 97% of women-owned enterprises are own-account enterprises (operated without hired workers).
• 89% of employment in women-led enterprises is concentrated in such subsistence activities.
• Location Matters: In 2022–23, nearly 75% of women-run firms were home-based, compared to 70% of men’s firms operating from fixed premises, which tend to have higher productivity.
• Sectoral Trends:
  • Women dominate in manufacturing (especially textiles, tobacco, handicrafts) but face a widening productivity gap with male-owned firms.
  • In trade and services, productivity disparities persist.
• Caste & Education Influence: Enterprises owned by General caste women remain more productive than those run by SC/ST/OBC women. Similarly, education improves productivity but does not eliminate the gender gap.
  

Significance of Entrepreneurs in India

• Economic Inclusion: Women-led enterprises enhance participation in the labour force and support inclusive growth.
• Job Creation: Entrepreneurship provides livelihood opportunities in the absence of formal jobs.
• Local Development: Women-owned businesses, often rooted in communities, strengthen local supply chains and self-help networks.
• Demographic Dividend: With India’s young population, enabling women’s entrepreneurship can unlock vast untapped human capital.
  

Challenges Faced by Women Entrepreneurs

• Structural Barriers: Concentration in home-based, low-capital enterprises limits scale and productivity.
• Finance & Market Access: Limited access to formal credit, market linkages, and affordable workspaces.
• Social Norms & Mobility: Restrictions on mobility and engagement in public spaces prevent participation in high-value sectors.
• Productivity Gap: Male-owned enterprises remain significantly more productive, even when education and sector are comparable.
• Informality Trap: Lack of formal records, bookkeeping, and compliance knowledge prevents access to institutional benefits.
• Distress-driven Entrepreneurship: Many women turn to entrepreneurship out of necessity due to shrinking agricultural jobs and limited formal employment opportunities.
  

Steps Taken to Support Women Entrepreneurs

• Stand-Up India Scheme (2016): Loans to SC/ST and women entrepreneurs for greenfield enterprises.
• Pradhan Mantri Mudra Yojana (PMMY): Provides microcredit support for women-run small businesses.
• Mahila e-Haat: A digital marketing platform for women entrepreneurs.
• Women Entrepreneurship Platform (WEP): NITI Aayog’s initiative to provide networking, mentorship, and financial support.
• Self-Help Groups (SHGs): Supported under DAY-NRLM for credit access and capacity building.
• Skill India Mission: Promotes skilling and entrepreneurship among women.
  

Way Forward

• Sectoral Shift: Encourage women’s entry into high-value sectors like formal manufacturing, digital economy, and advanced services.
• Transition to Hired-Worker Enterprises: Provide access to affordable credit, physical infrastructure, and commercial space.
• Digital Empowerment: Promote digital literacy and e-commerce adoption to expand market access.
• Capacity Building: Offer targeted financial, regulatory, and digital skills training for nano-enterprises.
• Social Norm Transformation: Community-level campaigns to address gender norms restricting women’s mobility.
• Better Data: Introduce panel-based, gender-disaggregated enterprise data to track transitions and barriers more effectively.

Conclusion

The steady rise in women entrepreneurship in India is a positive development but risks being a distress-driven phenomenon rather than a catalyst of economic transformation. For women-led enterprises to contribute meaningfully to India’s growth story, policies must move beyond numerical inclusion to enabling qualitative transformation—from subsistence activities to scalable, productive businesses.

Mains Practice Question

1. Despite a steady rise in women-led enterprises in India, most remain confined to low-value activities. Discuss the structural barriers faced by women entrepreneurs and suggest policy measures to unlock their economic potential. (250 words / 15 Marks)