WEReport : Ease of Doing Business for Women Report

Launch of Thinkthrough Consulting's report highlighting state specific mechanisms to help women entrepreneurs conduct business in India.


THE BACKGROUND
As per the last MSME census held in 2008-09, women owned setups accounted for about 9 percent of businesses in the Country. The previous MSME census concluded in 2000-01 had pegged the same estimate at about 10 percent. This clearly highlights that at a time when the country should pushing towards increasing women's participation in entrepreneurship, the ground reality is contrary to what is desired/required. The absence of women from entrepreneurship signifies a huge opportunity being missed. More importantly, their participation is not only important for economic reasons but is a crucial step towards a more inclusive workforce. Women owned businesses tend to employ more women employees (when compared with men owned businesses). Further, numerous research studies have concluded that women entrepreneurs (and women employees) use a higher percentage of their income to invest in this family's wellbeing and their children's future.

Sample studies since 2008-09 suggest that the percentage of women in business remains below double digit estimates and many argue that the percentage has further deteriorated since the last MSME census. Moreover, women entrepreneurs are mostly restricted to home based businesses or micro and small businesses. Very few entrepreneurs have been able to grow their businesses to a medium or large scale of operation.

The government has shown keen interest in supporting women to gain a more equitable positioning in society and has launched numerous initiatives and schemes in this direction. The entrepreneurship space is not devoid of such gender prioritization in the policy space. However, spurring women's participation in the entrepreneurial space is a complex task as their ability to develop and realize such an aspiration is constrained by a plethora of inter-linked and often reinforcing factors. These factors can be household related, community centric and/or market based. Further, they can be demographic, social, cultural and/or economic.


THE NEED
Understanding, accepting and responding to these barriers is crucial for creating an enabling environment to enter the workforce as entrepreneurs. However, this can only be done once there is a clear understanding of where the country stands vis-à-vis the multitude of barriers faced by women aspiring to enter the entrepreneurial space. Currently, the recently concluded ease of doing business report in India is being used to guide policy dialogue around entrepreneurship facilitation. However :

  • Ease of doing business reports do not carry a gender lens and this makes it difficult to ascertain how various barriers to doing business manifest themselves after factoring in the gender of the entrepreneur.
  • Further, the grids and questions used for determining the ease of doing business are not sufficient for capturing a number of socio-cultural barriers that constrain women entrepreneurs i.e. the methodology used does not have any space to record variance around 'exclusion' of certain groups/communities.



THE CONSTRAINTS
At the same time, one must respect that creating efforts towards creating an 'Ease of Doing Business for Women in India' is likely to be constrained by the general lack/absence of data on the various barriers that need to be accounted for. As a result, the index, would need to be built using a host of proxy (instrument variables). Further, just as in the case of the recent ease of doing business report for India, the index would need to be developed under an approach where separate scores can be computed for each State. India is noted for a country with socio-cultural diversity, with considerable differences in the economic position of various states. As a result, the policy needs of aspiring women entrepreneurs would tend to differ from state to state. Developing state wise ranking will help in understanding these needs while helping in identifying opportunities for south-south learning between states.


THE SOLUTION
In an ideal case scenario, an 'Ease of Doing Business for Women in India' should be based on primary data to be collected from a representative sample from each state. The ability to use such an approach would allow direct measurement of the magnitude of various barriers; the time taken to complete various important business inception processes; and would enable an analysis of the same while highlighting the difference between men and women entrepreneurs. However, the same would be a cost and time intensive approach and currently, the priority should be to make a start and lay the foundation for such an index by developing a preliminary matrix for measurement that can be built upon during subsequent years.

  • The index will be developed on the basis of a factor analysis where the validity of each indicator or proxy indicator (instrument variable) will be checked. Indicators which have a statistically valid relationship with percentage of women in business will be considered for the index.
  • Subsequently, a panel of experts will be consulted to determine the weights that should be assigned to various indicators. Most of the variables under consideration will be outcome centric; i.e. indicators that directly determine the likelihood of women taking an entrepreneurial route to livelihood. As a result it would be relatively easier for the panel of experts to associate weights to each indicator. Given that the experts will be assigning weights on the basis of their normative judgement; an analytical hierarchical process will be used to translate their normative judgement into quantitative weights. This will cut down on normative bias and consulting a fair number of experts would help in obtaining aggregate weights which would be closer to reality.



BROAD CONSTRUCT OF THE INDEX
The factors affecting women's ability to take an entrepreneurial route to livelihood can be a result of the gender imbalance that exists in the country; the traditional norms and values that relegate women to a secondary position in the society; challenges related to acquiring adequate training and exposure; limited access to finance & limited financial literacy; gender discrimination in the market; difficulties in finding suitable employees etc. Many of the challenges faced by women are gender neutral but tend to have a magnified negative impact on their ability to start an enterprise.

Enabling Factor

Ideal Indicator

Proxy Indicator

Education and Skills

Level of education
Percentage with formal skills training

Gross Enrolment Ratio at Secondary Education Level

Work Experience

Percentage of women entrepreneurs with past work experience

Women’s workforce participation rate

Access to Finance

Percentage of women entrepreneurs with an active loan
Percentage of women entrepreneurs with a bank account

Percentage of women with a bank account

Family Support

Percentage of women entrepreneurs reporting sufficient support from home
Time use estimates for women entrepreneurs

Percentage of households reporting violence against women
Average fertility rate

Membership of Business Association/ Cluster

Percentage of women entrepreneurs with membership of professional associations
Percentage of women entrepreneurs with businesses that are a part of a cluster

Percentage of women members at leading chambers of commerce (MSME)
Percentage of women holding membership of SHGs

Formal Entrepreneurial Skills

Percentage of women entrepreneurs with training on inventory mgt.
Percentage of women entrepreneurs with training on advertising

Women entrepreneurs as a percentage of enrolment at Entrepreneurship Development Institutes

Security

Percentage of women entrepreneurs reporting local markets to be safe
Percentage of women entrepreneurs reporting their workplace to be safe

Crimes against women as a percentage of total number of crimes reported in the city

Social Acceptance

Percentage of women entrepreneurs reporting that their community accepts their role
Percentage of women entrepreneurs reporting ease of access to government offices

Disguised women employees as a percentage of total number of women employees
Percentage of women holding public office

Notes:

  • The aforementioned list is only illustrative and needs to be made more exhaustive/representative after a factor analysis of indicators and proxy indicators selected through careful literature review and research
  • Data against various indicators will be adjusted to a scale of zero to one by keeping the ideal response at 1 and the worst response at 0; adjusting state wise data onto this scale.
  • The weight for each 'enabling factor' and for each indicator nested under the same will be arrived at the through an analytical hierarchical process that will engage with a series of experts

 

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