The economic fallout of the Coronavirus pandemic is likely to push women entrepreneurs and workers into a more precarious situation

The Indian government recently announced six specific relief measures for the Micro Small and Medium Enterprises sector under the Atmanirbhar Bharat Abhiyan. They include a redefinition of these enterprises and steps to enable easier access to credit and equity infusion. The true extent of the damage to livelihoods in the MSME sector on account of the Coronavirus pandemic cannot be estimated accurately yet. One thing, however, is quite clear: the presence of single and micro-units – those with up to 10 workers – and the vast informality within the sector has exacerbated the effects of the pandemic.

The fate of female entrepreneurs and workers within this sector needs specific attention. The recently announced measures do not explicitly contain anything specific for them. In this piece, we attempt to highlight why these female entrepreneurs and workers could face greater precarity because of Covid-19.

Female workforce participation on the decline

The Periodic Labour Force Survey, 2017-2018 notes that between 2011-12 and 2017-18, the Working Force Participation Rate declined for both genders in rural as well as urban areas. However, this decline was the steepest for female workers in rural areas. The presence of female workers is quite low in the MSME sector. Of the 11 crore workers that the sector employs, only 24 percent are female. Of these, however, around 52 percent work in rural areas. According to experts, the recent changes in labour laws proposed by various state governments will push more women out of the workforce. The reasons range from the likely suspension of maternity and equal remuneration benefits, reduced accountability of employers, extended working hours, and shelving of doubled wages for overtime work.

As far as ownership is concerned, with only 20.75 percent female ownership, male owners of proprietary MSMEs dominate the enterprise ecosystem. Similarly, male owners dominate small and medium units, wherein the share of women-owned units has dropped to a mere 5.26 percent and 2.64 percent, respectively. Enterprises led by women skew towards relatively smaller firms, with 98 percent of women-owned businesses reported to be micro-enterprises.

Spatial and sectoral concentration of women-led MSMEs

State-wise data on MSMEs owned by women paints a dismal picture. Four states – Bengal, Tamil Nadu, Maharashtra, and Gujrat – account for close to half of all female-led MSMEs in the country. Bengal, which is reeling from the impact of the cyclone Amphan and Covid-19, accounts for almost a quarter of all female-owned MSMEs in the country. Tamil Nadu, which comes second, is reported to have had an estimated revenue shortfall of over 44 percent in the MSME sector during the first phase of the lockdown. Another lockdown extension was likely to increase this shortfall to 60 percent. With the confirmed cases of Covid-19 in Tamil Nadu, Gujarat and Maharashtra soaring higher than in other states, it is essential to highlight the spatial concentration of MSMEs. In light of the pandemic, a joint effort by state and central governments to help these MSMEs run by women is imperative.

According to the last available MSME census, MSMEs led and managed by women are seen to dominate (over 60 percent) the textiles and apparels sector. Last month, the Clothing Manufacturers Association of India reported that in the absence of government support, close to one crore job cuts are likely in the textile industry. The potential impact of the same on women-led enterprises in the sector is expected to be adversarial. There is an urgent need to identify areas where women’s participation is high and followed by specific measures to safeguard them.

Informality as a barrier in access to credit

As per a recent national survey by the IFC, 80 percent of female entrepreneurs seem to prefer personal resources for their financing needs. Only 14 percent of the 605 women-owned enterprises sampled had availed formal bank loans to meet growth financing requirements. In the current crisis, the personal resources that women were more dependent on for their financing needs are likely to fall short of immediate working capital requirements. The lack of direct cash transfers for the same continues to be a cause for concern. While new measures such as the fully guaranteed emergency credit line of three lakh crore rupees have been announced, there is no mandatory provision to disburse a percentage of these loans to women entrepreneurs. In such a scenario, such loans are likely to elude women-led units. The lack of reliable and updated gender-disaggregated data on MSMEs acts as an additional challenge in building a business case for women-owned MSMEs.

Suboptimal performance of schemes targeted at women in MSMEs

It is imperative to assess the performance of schemes tailormade to propel the employment and financial independence in women. In the recent past, central schemes have aimed to spur better outcomes in employment, access to credit, and entrepreneurship assistance to women. These include the Pradhan Mantri Employment Generation Programme, or PMEGP, the MUDRA and the Trade Related Entrepreneurship Assistance and Development, or TREAD, among others.

The PMEGP aims to generate employment in rural as well as urban areas through new self-employment ventures. The scheme provides higher subsidies to women beneficiaries. An average of 15,383 women beneficiaries are added to this scheme every year since it started. But the number is only a fraction of the estimated 80 lakh female entrepreneurs in the country.

TREAD, a programme aimed at the economic empowerment of women through access to credit and training in non-farm activities, has witnessed a decline in the number of women beneficiaries. A mere 56,471 women beneficiaries have been registered under this scheme since 2004-05 (data available till 2016). Literature suggests that women-specific schemes are highly limited in number and have their origin in policies meant for the erstwhile small scale industries. Low uptake of these schemes by women, primarily due to a severe lack of awareness and access to these schemes, is a persistent problem that needs specific attention.

However, MUDRA marks a silver lining in this space. It is lauded for disseminating about 70 percent of loans to women entrepreneurs. The next potential step should be a more comprehensive collection of information of MUDRA beneficiaries, women included. From their employment and demographic profiles to establish firm size, sector and workers’ profiles to location, and other such details (Pandey and Pillai, 2020). It can help build more granular gender-disaggregated data.

The economic repercussions of the Covid-19 pandemic may disproportionately affect women’s productive capacities in the MSME sector. Measures to stabilise growth across commercial sectors must address the specific needs of women, both workers and entrepreneurs. For economic recovery to be sustainable and inclusive, steps at the state level could now include specific rescue packages for sectors with high presence of women, including customised interventions such as online exhibitions. With historically low levels of profit margins, longer breaks of unemployment, and generally higher rates of unpaid and domestic workload, the fate of women, in general, will be tested in the recovery phase.

Anmol Rathore and Amrita Pillai are researchers at the National Institute of Public Finance and Policy, New Delhi. Views are personal.

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