R Srinivasan

Look to your gender, Nirmalaji!

R Srinivasan | Updated on September 05, 2019 Published on September 04, 2019

India’s greatest demographic dividend lies in its women. But that potential remains unrealised

One cannot help feeling a little sorry for Finance Minister Nirmala Sitharaman. The past few days in particular have been arguably the worst she has had to face in her current stint helming the economy. Despite a series of sweeping measures — from the ₹1.76-lakh crore reserve transfer from the RBI to the Centre to the mega merger of state-owned banks to several measures aimed at, to quote her own words, “honouring wealth creators” — the said wealth creators have stubbornly refused to respond.

GDP growth in the first quarter of the current fiscal has collapsed to 5 per cent, the worst in six years. Manufacturing expanded at its slowest pace in 15 months. Despite the hasty rollback of an ill-advised charge on overseas investors, the markets are tanking fearing an exodus of foreign portfolio investors. Despite the rupee crashing against the dollar, exports are showing no immediate signs of a pick up, with exports inching up 2.5 per cent in July.

Economic focus

Meanwhile, the “reforms” announced to spur growth have singularly failed to achieve that goal. This is largely because most of the reforms are actually simply the correcting of some past mistakes (like de-criminalising the failure to meet the CSR spends on the part of corporates, though it still remains a civil liability and, therefore, a back-door tax on corporate profits), or the relaxing of a few restrictions which shouldn’t have been there in the first place (like those on e-commerce and single-brand retail). And even direct action, like allowing government departments to buy new cars, is unlikely to pull the automobile sector out of its current monumental slump.

So what can she do? One, of course, is to put some actual money into the hands of consumers by way of meaningful tax breaks, or seriously incentivise consumption (like the tax deduction on home finance kickstarted the real estate boom years ago), or simply start a massive income transfer scheme (like a universal basic income).

The trouble is, though we are an aspiring middle-income country our tax collections are nowhere near the levels required to attempt such sweeping giveaways. With a perfect storm of structural and cyclical issues striking at the same time, it is a moot point whether some of these measures would have worked even if the money had been around.

Perhaps it is time our policymakers stopped chasing the immediate and the short-term fixes and looked instead to some more long-term solutions which can lead to a secular and sustained increase in growth levels.

Two big fixes will be revamping the direct tax code and fixing the mess in the GST. For various reasons, I have little hope of either materialising in a meaningful way. The Centre already has a revised direct tax code pending with it, but the vim with which Modi Sarkar 1.0 initially approached the subject has long evaporated. The late Arun Jaitley had promised to cut corporate taxes to 25 per cent in his first Budget, something which the government does not even bother to discuss seriously nowadays.

On the GST front, admittedly, the Centre cannot do anything on its own, but even there, the approach continues to be one of piecemeal tinkering, rather than the bold restructuring which is needed.

Disparity in numbers

Which leaves us with the biggest resource that we have — human beings. India’s much talked about demographic dividend continues to remain largely unrealised, because of systemic failures in education, training and skilling, which have left most of the millions of young people joining the workforce every year largely unemployable.

Even here, despite some attractive sloganeering like “Beti bachao, beti padhao”, we have largely neglected the biggest component of our demographic dividend — our women. Consider these numbers from the UN India Business Forum’s factsheet on gender:

At 17 per cent, India has a lower share of women’s contribution to the GDP than the global average of 37 per cent; in a scenario where women participate in the economy as equals with men, it could add $2.9 trillion to India’s annual GDP by 2025. Only 14 per cent of Indian businesses are run by women. Over 51 per cent of the work done by women in India is unpaid; 95 per cent is informal. Women farmers comprise 38.87 per cent of agricultural labour and yet control only 9 per cent of the land in India; 60 per cent of women (double the ratio for men) do not own any valuable asset in their name, like land or housing.

Women’s contribution

One could go on, but perhaps another statistic will help break down the potential impact of women being economically equal to men: More than 50 per cent of women don’t have cellphones, and 80 per cent of women cellphone users lack access to the Internet (these are 2016 numbers, the figures may have improved since then). If as many women as men had phones, it could create $17 billion in revenue for phone companies in the next five years alone!

For that to happen, the presence of women has to significantly improve in the education and skilling system. A Deloitte study, which looked at the potential of Industry 4.0 to redress India’s yawning gender imbalance, concluded pretty much the same thing. Of India’s approximately 120 million-strong population of adolescent girls, three million are not in school, while nearly 40 per cent drop out between the ages of 15-18 — i.e., without completing a formal school-leaving programme. Without the education and skills, women will continue to miss out on the benefits of growth.

Nirmala Sitharaman is the first woman to hold the job of Finance Minister since Indira Gandhi. That ought to make a difference to the dismal economic disparity women face. Perhaps she can serve the economy best by looking to see what she can do for her sisters. Unleash the potential of India’s women and you will undoubtedly unleash the potential of Mother India.

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Published on September 04, 2019
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