Women’s Role in India’s Financial Growth Story

The recent report titled From Borrowers to Builders – Women’s Role in India’s Financial Growth Story was launched by NITI Aayog. The report marks developments in women’s financial engagement in India. As of December 2024, there was a notable increase in the number of women actively monitoring their credit scores. This reflects a growing awareness and empowerment among women regarding financial matters.

Overview of the Report

The report was published in collaboration with TransUnion CIBIL and MicroSave Consulting. The findings tell the importance of financial access for women entrepreneurs. The Women Entrepreneurship Platform (WEP) aims to create an inclusive ecosystem for women in business.

Increase in Financial Awareness

As of December 2024, 27 million women were monitoring their credit, a 42% rise from the previous year. Women’s share of self-monitoring credit increased to 19.43%. This shows a growing trend among women to engage with financial systems actively.

Regional

The report indicates that women from non-metro areas are more proactive in monitoring their credit compared to those in metro regions. Non-metro areas saw a 48% increase in self-monitoring, while metro areas recorded a 30% increase. Key states like Maharashtra, Tamil Nadu, and Karnataka accounted for 49% of women self-monitoring their credit.

Business Loan Trends

Women’s participation in business loans has risen . Since 2019, their share in business loan origination increased by 14%. By December 2024, women represented 35% of business borrowers. The share of women in gold loans also grew by 6%.

Challenges Faced by Women Borrowers

Despite the positive trends, challenges persist. Issues such as credit aversion and poor banking experiences hinder women’s access to finance. Barriers related to credit readiness, collateral, and guarantors also pose obstacles.

Role of Financial Institutions

The report calls for financial institutions to develop gender-smart financial products tailored to women. Enhanced financial literacy and access to credit are critical in overcoming the structural barriers faced by women entrepreneurs.

Government Initiatives

NITI Aayog emphasises the government’s commitment to promoting women’s entrepreneurship. The Financing Women Collaborative (FWC) was established to support this mission. The aim is to engage more stakeholders in the financial sector to enhance access for women.

Employment and Economic Growth

Encouraging women’s entrepreneurship is very important for generating employment opportunities. It is estimated that promoting women’s entrepreneurship could create jobs for 150 to 170 million people. This would contribute to equitable economic growth in India.

Future Directions

The report suggests that collective efforts are necessary to ensure equitable financial access. It advocates for policy initiatives that address existing barriers and promote financial literacy among women.

Questions for UPSC:

1. Critically discuss the impact of women’s entrepreneurship on India’s economic growth.
2. Examine the role of financial literacy in empowering women entrepreneurs in India.
3. Analyse the challenges faced by women in accessing credit in India and their implications.
4. Estimate the potential job creation from increased women’s participation in the workforce through entrepreneurship.

Answer Hints:

1. Critically discuss the impact of women’s entrepreneurship on India’s economic growth.

1. Women’s entrepreneurship encourages economic diversification and innovation.
2. It contributes to GDP growth and job creation.
3. Promotes equitable economic development, reducing gender disparities.
4. Empowers women, enhancing their decision-making power in households.
5. Encourages investment in local communities, boosting overall economic resilience.

2. Examine the role of financial literacy in empowering women entrepreneurs in India.

1. Financial literacy equips women with knowledge to make informed financial decisions.
2. Improves their ability to access credit and manage business finances effectively.
3. Encourages self-monitoring of credit scores, enhancing borrowing capacity.
4. Facilitates understanding of financial products tailored to women’s needs.
5. Promotes confidence in engaging with financial institutions and markets.

3. Analyse the challenges faced by women in accessing credit in India and their implications.

1. Credit aversion due to past negative banking experiences limits borrowing.
2. Lack of collateral and guarantors creates barriers to loan approval.
3. Insufficient financial literacy hinders effective engagement with credit systems.
4. Structural biases in financial institutions often overlook women’s needs.
5. These challenges perpetuate economic inequality and limit women’s entrepreneurship potential.

4. Estimate the potential job creation from increased women’s participation in the workforce through entrepreneurship.

1. Promoting women’s entrepreneurship could create 150 to 170 million jobs.
2. Increased workforce participation enhances economic productivity and growth.
3. Women-led businesses often hire within local communities, boosting local economies.
4. Empowered women can influence family income, improving living standards.
5. Job creation contributes to reducing unemployment and poverty levels in India.