Impact Of Women Entrepreneurship On The Indian Economy

Impact Of Women Entrepreneurship On The Indian Economy

By: Shruti Aggarwal, Co-Founder, StashFin

An entrepreneur with strong fund acquiring experience in start-ups and extreme skills and knowledge on finance, team development, and marketing.

For centuries, women had to fight for what is considered basic rights all across the world. Fortunately, over the last few decades, there has been a massive cultural shift, enabling women to take a better role in our societies. Even after massive reforms, though women are approximately half the Indian population, statistics suggest that no more than 27 percent of the Indian workforce was men.

Worse - women entrepreneurship is at a staggeringly low 14 percent, and even still, 90 percent of those businesses are micro enterprises. The Global Gender Gap report of 2018 ranked India at a low 108 (total of 149 countries included in the report), citing poor economic participation. Though India has been on a growth trajectory (bar 2020, COVID was unfortunate), this has been without major participation from a key demographic: women.

Capital Formation

According to the Sixth Economic Census, a staggering 79 percent of women-run businesses are self-financed. However, with an increased participation, successful entrepreneurs will be able to mobilise savings through different securities and increase the rate of effective capital in use towards increasing productivity of the nation.

The extent of the positive impact of such increased capital formation can be best witnessed in the report titled “The Effects of Capital Formation on Economic Growth in India: Evidence from ARDLbound Testing Approach”.

Standards Of Living

According to the March 2014 edition of Worldwide journals, women have often been termed as “innovative”, “survivalists” and “workaholics”, and thus, directly, and indirectly, are the reasons for some of the luxurious products you and I enjoy. In fact, computer software as we know it will not exist if not for the contributions of a particular woman, Lady Ada Lovelace.

“According to the sixth economic census, a staggering 79 percent of womenrun businesses are self-financed”

With 90 percent of women involved in micro enterprises, and the manufacturing sectors, comes a reduction in the scarcity of essentials and introduction of new products and services available to the public. This increase spending and directly ties in with the next factor we are looking into - GDP and PCI.


India, on an average (barring the 2020 outlier), has a GDP growth rate of 6.5 percent per annum since the dawn of the 21st of century. However, women account for only 17 percent of GDP in India, a stark comparison to the global average of 34 percent. According to Annette Dixon, World Bank’s VP for South Asia, if only 50 percent more women were to participate more actively, the average would easily be upto 9 perent.

Women entrepreneurs also can convert idle resources like land, labor, capital etc. and increase the Per Capita Income, which is another major indicator to economic growth.

Employment Generation

Ofcourse, with an increase in entrepreneurship comes the associated increase in employment. Provided with the right opportunities, women can be the key drivers behind India’s economic growth. Currently, there is a tendency for womenfolk to go chasing after employment rather than creating opportunities and being a successful entrepreneur (admittedly, comes with several challenges).

In India, approximately one in every 15 people looking and capable for employment is unemployed as of Jan 2021, and with more employment opportunities, comes more production, more spending, and increased economic growth in extension.

If you think women entrepreneurs’ impact in the economy is limited to just these 4 factors, think again. There are other socio-economic impacts, including a decrease in regional disparity, innovation in the workplace, credit and currency stimulation, etc. Of course, this article is based just on the economic standpoint, as empowering women should be considered as the right thing to do more than anything else.

However, opportunities and finance continue to elude women over the years. Not to fault our country or the government, which currently has over 27 schemes in place, but this is in no way enough to empower women and correct centuries of oppression. Chauvinism, sexism and patriarchy continue to be common themes in India, and education of future generations to rid the society from these moral evils becomes necessary. Despite these challenges, successful women entrepreneurs do exist, and continue to act as an inspiration to the future generation. To quote the former United States of America’s first lady, Michelle Obama, “No country can ever truly flourish if it stifles the potential of its women and deprives itself of the contributions of half of its citizens.”