Ideas for a better Budget: Women’s health, maternal leave and safety for economic growth

The pandemic-induced health and economic crisis meant that 2020 was a tough year for India. Two successive quarters of GDP contraction officially brought the Indian economy to a recession. The country’s performance also deteriorated relative to neighbours such as Bangladesh. In fact, the International Monetary Fund (IMF) projects that Bangladesh’s real per capita GDP will surpass India’s real GDP per capita in 2021.

Finance Minister Nirmala Sitaraman, due to announce the Union Budget for 2021-22 on February 1, must surely be searching for high growth ideas. As economists working on India and Bangladesh, we contrast the role of working women when comparing the different growth stories of Bangladesh and India. According to the International Labour Organization (ILO), 36.4% of women above 15 years are employed in Bangladesh in 2020, up from 24.7% in the 1990s. In contrast, for India, the trend of women’s participation in the labour force was reverse — currently 20.3%, down from 30.3% in 1990.

We have three key suggestions to unleash the productive capabilities of women that can lead to higher economic growth and help meet India’s development goals. These proposals are not charity, but investments that lead to higher national income, and can potentially be earned back by the government through future taxes.

First, the Covid-19 pandemic underscored the need for investment into better and universally affordable health care. A healthy population means productive labour, leading to greater economic output. Improving the public healthcare system will ensure that the current health crisis does not increase existing gender disparity in knowledge of and access to affordable health. Priority spending on women’s health will increase individual income, spur spending and boost economic growth.

Providing opportunities for deliberate family planning, healthy mothers before, during, and after childbirth, and the health and productivity of subsequent generations can catalyze a positive cycle. Indeed, research across several countries found that women’s health is tied to long-run productivity globally.

While the country already has a decentralized system for community engagement of health workers, government expenditure is low at 1.29% of the GDP or Rs 1,944 per person. We recommend improving and expanding the scope of existing public health service delivery by hiring more qualified doctors, timely disbursal of funds towards salaries, and allocation of resources for improving public hospital amenities.

Second, women’s labour force participation in urban areas drops during their 20s as childcare and family responsibilities limit participation in income generating activities. In 2017, India passed the Maternity (Amendment) Bill which increased the right to paid maternity leave for working women from 12 weeks to 26 weeks, but only to those working in the formal sector. On similar lines, NREGA offers child-care provision for women working on-site in rural areas, but these child-care sites are mostly dysfunctional. In fact, a 2019 paper titled “Workfare and Infant Health: Evidence from India’s public works program” found that women’s work owing to NREGA lowers child’s survival rates, as women face a time trade-off between income generating activities and child care.

Government-sponsored maternity and paternity leave can retain talented women in the economy and increase their productivity. Under the current maternity benefit act, paid leave is only for those women who worked for at least 80 days within the past 12 months, with no paternity leave policy. Given existing gender workplace norms, this disincentivizes private firms from hiring women. Anecdotal evidence from Bangladesh factory workers suggests that most factories do not grant women paid maternity leave, which forces women to leave their jobs and rejoin only when their children are older.

A parental leave policy sponsored by the central government would retain talented women in the workforce and allow the country to significantly boost growth, while also correcting for gender norms on household chores that disproportionately fall on women.

Third, women in India face significant physical dangers in the public sphere – and this has a large impact on their work, income and consequently on the national economy. According to the National Crime Record Bureau’s Crime in India report for 2019, crime against women has increased by 7.3% between 2018 and 2019.

Experiencing gender-based violence or fear of the same may significantly alter women’s decision to enter the workforce. A 2020 study on “Media reported violence and labour supply” found that in urban areas, an increase in 3 media reports of local physical and sexual assaults (per lakh people over a three-month period) reduces the probability of a woman employed outside her home by 5.5%. Similarly, a 2018 paper reported that the fear of sexual violence increased the mental costs of traveling to work, and thereby reduced the chance of women accepting jobs far from home by almost 3.8 percentage points.

Jobs with night shifts or long hours disproportionately leave out women. Retaining these women in the labour force will not only improve representation in the workplace, but also to improve the pool of talent available to employers. The cost of additional policing, gender-sensitivity training of police, safety measures in public areas, and judiciary reforms for speedy cases resolution is low compared to potential productivity gains from retaining more women in the workforce.

The Finance Minister, in this Union Budget, should allocate adequate funds to specifically bring about these reforms.

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