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Priority Sector Needed for Women-Led Rural Enterprises: World Bank | Economic and Political News

Posted on by darion

Recommends institutional reforms to support the growth and contribution of women’s entrepreneurship

self-help group for women, workers
Representative image

Shikha Chaturvedi New Delhi

According to a World Bank study, India needs to allocate a special priority sector to rural enterprises run by women to facilitate their access to credit.

The study notes that the proposed initiative will promote women-owned, growth-oriented businesses to increase women’s labour market participation (FLFP).

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“While micro-enterprise financing is included in the priority sector, loans are mainly provided to enterprises at the upper end of the spectrum (i.e. enterprises with turnover closer to ~5 crore). Lending to women-owned enterprises is not currently prioritised. There is a need to further sub-segment the micro-enterprise category, focusing on growth-oriented, women-owned enterprises, to encourage commercial banks,” says a World Bank working paper authored by Arshia Gupta, Alreena Renita Pinto and Balakrishnan Madhavan Kutty.

The authors pointed out that efforts by the government and non-government sectors in India to support women’s enterprises have focused largely on basic survival enterprises, rather than identifying and actively supporting enterprises with growth potential. “Women-owned growth enterprises are also important actors that can address the decline in FLFP in rural India by creating more employment opportunities for women,” they said.

The study also recommends the introduction of commercial loans for growth-oriented women-owned businesses, which, in addition to meeting credit needs, will help establish the creditworthiness of the business for future loans.

She suggests investing in digital accounting and payment solutions and building the capacity of women-owned businesses to adopt them. This will enable tracking of business cash flows, which can be used to develop financial products.

“Learning from international experiences, degree programmes could also be developed for enterprises that have a solid track record of repaying microloans into mainstream commercial finance. Adopting digital solutions will help develop sector-specific benchmarks for assessing enterprise performance, providing tailored support services and lending. District-level data analytics could inform key stakeholders, including banks, about the opportunities and risks associated with them. This will enable data to be used in decision support systems, not just for centralised policy implementation,” the report added.

The study further recommended institutional reforms to support the growth and contribution of women entrepreneurship. It highlighted the need to strengthen decentralized incubation centers, develop associations of women entrepreneurs and improve routes to institutional procurement. These reforms aim to provide targeted support and resources, enabling women entrepreneurship to contribute to job creation and income generation.

Commenting on the report, Rituparna Chakraborty, Co-founder, Teamlease Services, said that growth-oriented businesses yield greater benefits than survival-oriented businesses and giving priority status as a sector lender to women-led growth businesses would go a long way in creating jobs and economic development.

“Initiatives such as giving priority sector status to women-owned enterprises have a much greater impact on improving employment opportunities for women than programmes such as MGNREGA,” she added.