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Indian Women Can Boost the Economy By 16% In 2025. If We Let Them

18/03/2016 8:19 AM IST | Updated 15/07/2016 8:26 AM IST
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Group of happy Indian business women in a meeting at the office.

India's women are the least productive in the world according to several global studies. And it's not because of lack of talent. The Sixth Economic Census reveals women run only 8% of businesses in New Delhi, a figure that is probably lower in other parts of the country. In fact, an earlier McKinsey study found Indian women contributed just 17% of national GDP, less than half the global average of 37%. By contrast, Chinese women contribute 41%, those in Sub-Saharan Africa 39% and women in Latin America 33%.

That drought-afflicted and conflict-ridden Sub-Saharan Africa performs better than India on many social indicators, as does Bangladesh, is simply unacceptable.

That drought-afflicted and conflict-ridden Sub-Saharan Africa performs better than India on many social indicators, as does Bangladesh, is simply unacceptable. What is it that keeps the talent of half of this country under wraps? This was the thrust of the deliberations at an international conference, "Empowering Women for Sustainable Development" held in the capital on the same day as the release of the Economic Census. Organized by Talentnomics, a global mentoring program based out of Washington and New Delhi that provides leadership training for women in the corporate sector, the conference attracted a number of women achievers from around the world.

As they shared their stories, in defiance of the depressing statistics presented by the IMF and McKinsey, I couldn't help thinking of how different the picture was for some of my college friends in Delhi who had access to better education, finance and an enabling social environment i.e. supportive families. I have several women friends who made a killing in the garment export business in the '80s and '90s when big Western clothing chains were discovering India. These women ran factories, dealt with the complexities of import-export regulations, found buyers and built supply chains becoming very wealthy in the process. Many of them have sons who joined their lucrative businesses. Did they succeed despite, or because, they were women?

According to research by several consulting firms around the world, companies with women in leadership positions and on the board are better run, more profitable and more in touch with what customers want. This should hardly be surprising given that the bulk of global spending is by women. In 2012, Credit Suisse found the shares of companies with a market capitalization of more than $10 billion with women board members outperformed comparable businesses with all-male boards by 26% worldwide over a period of six years.

[A]n organization with 30% female leaders could add up to 6% to its net margin.

Other research on US firms found that mixed-gender boards outperform all-male boards and that the Fortune 500 companies with the highest proportion of women on their boards performed significantly better than firms with the lowest proportion. Accounting firm Rothstein Kass found that hedge funds headed by women outperform those headed by men.

Now, a 2016 report, "Is Gender Diversity Profitable? Evidence from a Global Study", by The Peterson Institute for International Economics and Ernst & Young, shows once more that an organization with 30% female leaders could add up to 6% to its net margin. The study analyzes results from approximately 21,980 global publicly traded companies in 91 countries from a variety of industries and sectors.

Countries like Norway, which pioneered laws mandating half of all members on boards of public listed companies must be women, did not do it out of altruism. They realized it made sound business sense. Norway's insistence that the boards of all publicly listed companies must be gender balanced initially led to resistance and delisting of some public companies but the initial blip didn't last long. Within a decade the number of women on Norwegian company boards rose from around 7% to 40% ...and profits started rising too. Is it a coincidence that Norway offers the best quality of life and is consistently cited by the UN as the best place in the world to be a woman?

When CEOs ask, "Where are the women?" One is tempted to respond, "Look beyond the old boys' network."

But finding enough women to make up the quotas was, and remains, a challenge. Talentnomics is part of a growing trend in global mentoring programs aimed at promoting women for positions of leadership in the corporate world. "If we accept business as usual, it will take 117 years for women to reach the same levels of seniority as men," says Ipsita Kathuria founder and CEO of Talentnomics India. "This will not even happen in our granddaughters' lifetimes."

Realizing the importance of unlocking this potential sooner, the governments of several European countries are following the Norwegian example; India is the only developing country to implement this rule -- albeit with a modest requirement of one woman on the board of every publicly listed company. Even so, 51% of companies listed on the Indian National Stock Exchange did not have women board members in 2015.

When CEOs ask, "Where are the women?" One is tempted to respond, "Look beyond the old boys' network." More women graduate from universities than men, they generally do better academically but they invariably start their careers earning 16-27% less than men. India ranks at a poor 108 out of 145 countries in the World Economic Forum Global Gender Gap index. It has the lowest percentage of working women worldwide. Even within India, the variations are enormous.

If you are raped, murdered, starving, poor, pregnant or sick there may be some government scheme to help you. Otherwise you're on your own, baby.

According to a Female Empowerment Index developed by McKinsey, the most gender equal states in India are Mizoram, Kerala, Meghalaya, Goa and Sikkim; these have the same levels of gender equality as Argentina, China and Indonesia. Bihar, Madhya Pradesh, Assam, Jharkhand and Uttar Pradesh are least equal for women and compare with conditions in Chad and Yemen. Surely, we can do better than this? If there is one issue that can change the future of India it is the empowerment of these women. For they represent 32% of our female working age population.

According to the McKinsey estimate, India could boost its GDP by $0.7 trillion in 2025 or 16% by increasing the female labour force by 10% to 41% by 2025. The message is clear: India has the most to gain of any country by empowering its working women. But does it have the will to do so?

As one of the world's fastest growing economies, India must capitalize on the true potential of its women.

As one woman said at the conference, "The Government of India only recognises women as victims." If you are raped, murdered, starving, poor and unemployed, pregnant or sick there may be some government scheme to help you. Otherwise you're on your own, baby.

As one of the world's fastest growing economies, India must capitalize on the true potential of its women. As the fourth industrial revolution gets underway, it is the knowledge and skills of a country's human capital that will propel it to success. Women are no longer at a physical disadvantage from making the most of their intellectual abilities and skills. It is for the rest of society to level the field.

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