The Crisis Facing India's Women Entrepreneurs & Why It Needs Our Attention

The biggest hurdle for women entrepreneurs remains the access (or the lack of it) to finance.

6 min read
Edited By :Saundarya Talwar

Sahana Bibi, a 45-year-old woman, resides in a busy narrow lane across one of the sub-urban parts of Kolkata. She wakes up at around 4 am every morning to buy fresh flowers from Kolaghat and Ranaghat for her flower shop in Kolkata's Mullick Ghat Bazaar: One of India’s busiest and largest flower markets.

Sahana has been working in the Mullick Ghat flower market area for over 35 years, ever since she was a child helping her parents procure and sell flowers for temple offerings then.

Working an average of 18 hours a day, Sahana sometimes stays over at her shop overnight to sell off her existing stock of flowers (before they go bad).

Most of her usual business clientele buys flowers for either decoration purposes or temple offerings. She takes most of her business orders from an old, basic Nokia 105 model phone.

With no formal education, Sahana Bibi is an entrepreneur with great business clarity, explaining in detail the diversity of flower baskets sold in Mullick Ghat and some of the challenges faced by her (and other women) selling flowers in an extremely competitive market space.


In spite of a high demand for flower products in the market, she is often puzzled by how little the state (and agencies) have done for the area in improving the market conditions for business or attracting more people to the area, especially tourists visiting Kolkata, for whom, a view of the largest flower market at the ghats of Hooghly offers some pristine shades and historical memories.

As an entrepreneur, her long-term vision is to see an ‘increase in her profit margins’ beyond a thin, seasonal profit range of 6-10 percent (ie over the average costs incurred in procuring, transporting, and packaging decoration flowers).

To realise this goal, she is keen in receiving more capital borrowings (via loan) in setting up a separate shop with a roof on top, access to internet and then to get some training through private or public agencies on utilising technological support to have a digital presence online, to thereby expand her consumer base across the city.

It was fascinating to observe the extent to which she was aware of the benefits of using internet through mobile and other platforms to grow her business.

The biggest hurdle for women entrepreneurs remains the access (or the lack of it) to finance.

A view of Mullick Ghat Bazaar.

(Photo Courtesy: Deepanshu Mohan)


The Reason Women's Entrepreneurship Requires Our Attention

Sahana’s story is a microcosmic reflection of the tale of millions of low-income women entrepreneurs, working in the unorganised space due to a lack of jobs in the organised sector.

The trials, struggle and day-to-day challenges mitigated by women like Sahana – in starting, running and operating a small business (say, selling fresh flowers) – may well be beyond the scope of our reflection here, but warrant our due attention.

In a recent report published by IWAGE, in collaboration with Krea University's LEAD initiative, one gets a macro picture of the dismal state of ‘women entrepreneurship’ in India.

In the aftermath of a global pandemic, and the response to it via successive curfew-style lockdowns, which hit the small enterprises the hardest, and where a majority of women-led venturers are located, it becomes imperative to document, archive, and study different avenues to encourage sustainable growth with a greater impetus provided to women-based entrepreneurial opportunities.


The report by IWAGE delves deep into the various factors and circumstances inhibiting the growth of women-led enterprises, exploring how women entrepreneurship can be encouraged, while also being a ‘force of change’.

Our Centre for New Economics Studies’ (CNES) recent work across cities of Kolkata, Lucknow, Jhansi, Katni, Pune, and Delhi has ethnographically studied case-interviews of over 500 women entrepreneurs, who – mostly because of no opportunities of work in the organised space within their native towns – ended up starting a small business in the vulnerable, unorganised (informal) space of the cities.

The situation for both, women-employment and women-based entrepreneurship appears calamitous.

If we look at the recent data, extracted from the round 73 of National Sample Survey (NSS), there are less than 21 percent of women entrepreneurs in the MSME sector, which holds the bulk of the share in India’s manufacturing landscape.

In the organised formal jobs sector, only seven of 100 entrepreneurs in India are women and of them nearly half (49.9 percent) get into business ‘out of necessity rather than aspiration’, as per the IWAGE report.

Globally, India ranks third among countries reporting gender gaps in business: Only 33 percent of the early-stage entrepreneurs in India are women.

India also ranks 70th among 77 countries covered in the Female Entrepreneurship Index.


One major reason for these poor numbers remains centred around the fact that India’s female labour force participation rate (LFPR) – the share of working age women who report either being employed, or being available for work – is as low as 16.4 percent (in the 15-29 age group), 33 percent (in the 35-39 age group), as per the 2017-18 PLFS data (not taking the pandemic effect into consideration).

Among women in the prime working ages of 30-50, more than two in three women are not in the workforce, with the majority of them reporting that they are “attending to domestic duties only”.


Why Are the Numbers on Indian Women Entrepreneurs So Bad?

As observed in the case of Sahana Bibi and reported by other women entrepreneurs, who were interviewed for our studies, most women are faced with numerous hurdles when they look to start a new business (and then run it).

Beyond sociological reasons and different cultures of patriarchy at play, which restrict women to enter the labour force, the biggest hurdle for women entrepreneurs remains the access to finance. Other issues that go along with it include the absence of business support networks, skewed social norms, and restricted mobility.

Almost every woman entrepreneur spoken to complained of loan applications being either rejected or delayed by banking institutions. As per a 2019 IFC report, this bias in rejecting loan applications for women entrepreneurs is already known. The report says almost 70 percent of the total finance requirement of women entrepreneurs in the country remains unmet.

There are three government loan schemes available for small businesses under the government-run Mudra or Micro Units Development and Refinance Agency Ltd, Shishu, Kishor, and Tarun. These offer loans ranging from Rs 50,000 to Rs 10 lakh and of these, women tend to ask for the lowest bracket – Shishu (Rs 50,000).


As per the IWAGE report, “Women don’t have the confidence (at the moment) to secure high-value loans. They find it intimidating. There is social conditioning that tends to undervalue what women do by women themselves.

Women are risk-averse and hence settle for smaller loans which they think can repay easily, as per the report.

Banks, on the other hand, are reluctant to give these loans because they earn low interests. Business loans of larger sums come at 11-14 percent interest, while small-sum Mudra loans are at less than 10 percent.

Other government schemes, on the other hand, are either less entrenched in the awareness-psyche of new entrepreneurs, or are viciously trapped in bureaucratic red-tape.


The Pandemic Made Things Worst…

In responding to the catastrophic economic impact caused by the pandemic, and in an already slowing pre-pandemic economy, the Indian government had announced relief measures for MSMEs in 2020.

No specific measures were provided for women entrepreneurs, though 73 percent of women-run businesses were hit badly, and nearly 20 percent were on the brink of closure, as per a 2020 Bain-Google-AWE Foundation report.

The crisis has already made the low female-LFPR position worse and caused households' debt-burden to rise, which further inhibited women to start a business. The macro effects of the second wave, which was far more devastating than the first, are yet to be brought out.

What is needed is urgent attention and a conscious public policy attempt to both boost women's employment and encourage women entrepreneurs.

Social organisations like Man Deshi foundation along with other community mobilisation efforts across many states have done much in this regard – to develop business skills amongst women – but the effect of all this is localised and accessible at a nano-scale, compared to the structural nature of the problem.

Providing equal access to finance, collateral for larger loans, while promoting agency and business space to female entrepreneurship (and employment) would also raise India’s growth levels (via GDP) while reducing the high unemployment level.

The potential benefits, as a per a recent IMF study, were estimated to be at a 7 percent increase in GDP. But even beyond the utility-determined growth benefits, for reasons of agency-representation and the enhancement of well-being for all, India’s women – millions like Sahana – deserve better from an ‘aspiring’ nation.

(The author is Associate Professor of Economics, OP Jindal Global University. He is currently Visiting Professor, Department of Economics, Carleton University. He tweets @prats1810. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)

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Edited By :Saundarya Talwar
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