The lack of easy access to capital severely hinders women entrepreneurs in India's semi-urban and rural areas, with the average investment to start business at a mere Rs 18,705, according to a new study by EdelGive Foundation released recently.
With several women taking up entrepreneurship only to supplement the family's income and, in turn, spurring consumption, the findings echo what experts have been flagging as having far-reaching implications on the country's economy.
The study, conducted last year on 1,235 women from 13 states in manufacturing, retail and service ventures, also found that 83% of them said they could not mortgage anything to get a loan because there were no assets or property in their name. Further, only 9% of them took a loan of any kind. The others said they did not want to take loans because of the fear of inability to repay, which would negatively impact their family and family pride.
The findings come at a time when India's female participation in the labour force is at just 21% as of 2019, according to the World Bank's data (modeled ILO estimate). The pandemic is widening that gap further as more women than men are forced to leave the workforce, according to several estimates.
The dwindling female labour participation rate means that almost 50% of the country's potential is not being fully utilised and, experts have pointed out, will deter India's economic development.
"Access to easy finance that gets to their doorstep has to be the first and foremost thing we give attention to. Even for a woman to come and access real finance in a bank is such a real hurdle in her mind," EdelGive Foundation CEO Naghma Mulla told Business Today.
Calling the findings alarming, Mulla said interventions which are women-friendly, which understand where she's coming from and which make finance available in her hand are of primary importance. In addition to not having any property in their name, Mulla said the huge backlash and discouragement which women face for getting into entrepreneurship also cripples their risk-taking ability.
This keeps their micro businesses from turning into more income generating ventures, though there is no evidence to show women are not good with finance or that they can't comprehend mathematics or accounts, she added.
The average income for these ventures is Rs 1,500-Rs 5,000, the study found. The findings also corroborate what blossoming social commerce apps like Meesho, Dealshare, Glowroad and Shop101 have said is the basis for their business model -- connecting small businesses and individual entrepreneurs having little to no capital to customers through social media platforms like Instagram and Facebook.
For instance, Meesho CEO Vidit Aatrey said almost 90% of its 13 million-strong seller network comprises of women entrepreneurs. The socio-economic profiles of the women surveyed and the women onboarded by the apps, even if not exactly the same, overlap to an extent. However, the trends and concerns are similar.
"Only a small percentage of the women are part of the workforce. So millions of women with such aspirations go to their family asking for money but never get access to capital," Aatrey told Business Today.