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India's gender wage gap "highest" in world, but financial divide now "narrowing"

By Moin Qazi*
Men and women should own the world as a mutual possession. -- Pearl S Buck
Gender inequality is not only a pressing moral and social issue but also a critical economic challenge. McKinsey Global Institute report finds that $12 trillion could be added to global GDP by 2025 by advancing women’s equality. India continues to fare badly in gender parity and that is bad news because leaving half the population behind would.
The World Economic Forum’s (WEF) Global Gender Gap Report 2018 has found that on average women across the world are paid just 63% of what men earn. There is not a single country where women are paid as much as men. Gender parity is fundamental to whether and how economies and societies thrive. Differences in economic opportunity are so vast it’ll take 202 years to fully bridge them.
India has been ranked 108th among 149 countries in overall gender gap but ranks 142nd in economic opportunity . Gender gap is measured across four key pillars -- economic opportunity, political empowerment, educational attainment, and health and survival.
According to the Global Wage Report 2018-19, the flagship publication of the ILO, women are paid most unequally in India, compared to men, when it comes to hourly wages for labour. On average, women are paid 34 per cent less than men, it has found. This gap in wages, known as the gender wage gap, the ILO report says, is the highest among 73 countries studied by it.
Gender parity is one of the foundational objectives of the United Nations’ Sustainable Development Goals (SDGs).Together with economic payoff, investing in women and girls can transform millions of lives for the better. Currently, the contribution of Indian women to the GDP (17%), is not only far below the global average (37%), but is also less than that of China (41%) and sub-Saharan Africa (39%).
The deck is overwhelmingly stacked against them. Although India has narrowed the divide between men and women in primary education and health sector, it doesn’t measure well in major metrics, including financial access, for measuring gender parity.
India’s gender gap has taken the shine off its strong economic performance in recent years in terms of gender parity India fares low in financial inclusion gender gap (referring to the disproportionate exclusion of women from access to and usage of formal financial services).
India’s flagship financial inclusion programme has significantly changed the demographics. India is now at a tipping point, with sharply narrowing gender gaps in financial access. According to the World Bank’s Global Findex Survey (2017) 80% Indian adults now have a bank account -- 27 points higher than the 53% estimated in Findex 2014 round. Findex 2017 estimates that 77% of Indian women now own a bank account against respective 43% and 26% in 2014 and 2011.
On this basic measure of financial inclusion, females are more financially included than before. The male-female difference, or the gender gap, in account ownership narrowed to 6.4 percentage points in 2017; it was 19.8 in 2014.Gender inequalities in access to formal credit have long manifested in India’s scarce gender-wise financial statistics. For example, distribution of outstanding credit in small borrower accounts shows 24.5% share of female account owners against 72% by men as on March 2017.
Women’s participation in the financial system can have significant benefits in terms of economic growth, greater equality and societal well-being. Access and usage of financial services are levers for increasing women’s participation in the economy.
Experience worldwide shows that when a woman receives money, her entire extended family profits from it, as women make the best use of it .they are in fact one of the wisest investors .We create the most powerful catalyst for lasting social change. For all interventions, the fundamental logic is plain: if we are going to end extreme poverty, we need to start with girls and women.
Financial inclusion offers the power to change families and societies. According to Christine Lagarde, Managing Director, International Monetary Fund (IMF):
“Women, in particular, often bear the brunt of poverty and limited access to economic opportunity, including unfavorable financial access…Inequality is not just a moral issue—it is a macroeconomic issue…Growth has to be more inclusive, and for this, finance has to be more inclusive…to close the gender and inequality gap.”
Closing the gender gap is essential to realizing the promise of financial inclusivity. It is also critical because the business case for women’s financial inclusion is now universally acknowledged. Experience of microfinance providers has shown that women are safe bets for banks; they pay back loans faster, default less often, and bounce checks less frequently. When accessible finance reaches women, the benefits are highly productive and sustainable. The positive economic knock-on effects are obvious.
Savings rates are higher; repayment rates of family loans are remarkable; social cohesion is stronger and enterprise growth is stable. The experience of most microfinance programmes is that low-income women are highly dependable and trustworthy borrowers. This evidence should make us understand that increasing the proportion of female account holders will decrease systemic risk in the economy.
A greater financial inclusion of women can go a long way in closing the gender gap. Financial inclusion of women enhances their self-confidence and places financial decision-making power in their hands resulting in large development payoffs. It is often cited as an essential tool in helping women in particular rise from poverty.
Women are often underserved by traditional financial institutions. In all societies, howsoever oppressed or illiterate women their women are, they remain the stewards of household savings. They require financial products and services that appreciate their experience and perspective.
The theory goes that when you empower women financially they’re able to secure their families’ welfare and create pathways toward education and improved quality of life for their children. Women’s participation in the financial system can have significant benefits in terms of economic growth, greater equality and societal well-being. Access and usage of financial services are levers for increasing women’s participation in the economy.
Women also need legal immunity from debts accrued by their husbands. According to a Harvard Business Review study, women in emerging markets reinvest 90% of every dollar earned into “human resources”— their families’ education, health and nutrition — compared to only 30% to 40% of every dollar earned by men.
There are measurable improvements in child nutrition and education, family health and household sanitation, shelter and general welfare. Changing long-held beliefs, practices and laws may be difficult, but it is the only way to keep price tags off women and ensure them dignity and financial independence.
We do not necessarily need gender-specific policies, but rather policies that work for women. We need an enabling environment that incorporates women’s perspectives. We must understand that financially empowering women generates a multiplier effect in having a substantial impact on the well being of future generations.
Thus, an enabling financial landscape with a blend of a favourable regulatory regime, innovative women-centric products/schemes, enhanced mobility, robust customer protection framework and reformed attitudes towards women will increasingly stimulate women’s foray into the workforce and yield success for the Indian economy.
Lack of financial access has a regressive influence on women. Melinda Gates, co-chairperson of the Gates Foundation says:
“When women have money in their hands and the authority to choose how to spend it, they grow in confidence and power by taking control of their economic future... We already know a lot about how to make sure women have equal access to financial services that can change their lives... When the government deposits social welfare payments or other subsidies directly into women’s digital bank accounts, the impact is amazing. Women gain decision-making power in their homes.”
Digital financial literacy among women can dramatically change the financial inclusion landscape. Women often face several additional barriers, other than the universal constraints that low income communities face: limited access to mobile phones, lower literacy levels, less confidence in using technology, and restrictions on travel or social interaction.
Digitizing government-to-person (G2P) social safety net payments can accelerate onboarding of more women for adoption and use of digital financial services. The state can use these transfers to build familiarity and instill in women the habit of using these accounts.
The President and CEO, Women’s World Banking, Mary Ellen Iskenderun has set the right tone for a more women-enabling financial inclusion agenda: “There is a strong connection between women’s access to financial products and services and greater opportunity not only for that woman herself, her family and her community, but really for the nation as a whole.”
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*Member, NITI Aayog’s National Committee on Financial Literacy and Inclusion for Women

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