Development Will Not Cure Gender Inequality, Policy Will: Examining the Economic Survey 2017-18

Rahul Lahoti ( is with Azim Premji University in Bangalore, India.
25 May 2018

The arguments and analyses in the Economic Survey 20172018 leave a lot to be desired, especially in terms of recommending policies that the government can take up in order to reduce gender inequality.

It was with great hope that I started reading the separate chapter on gender in the recently released economic survey 2017–2018 (ES or referred to as the survey). Finally, the abysmally low status of women in India would get some recognition by the finance ministry. However, what followed was only disappointment upon knowing that the typical stereotypes on gender were still prevalent among policymakers at the highest level (and the use of pink colour to recognise the women’s movement!), and the low quality of analyses in the chapter. Apart from the data and analyses on son preference, the chapter is misleading and flawed. In this article, I will point out some areas of concern in the analyses and discuss what the ES could have focused on with the aim of reducing gender inequality.

Development Time vs Chronological Time

The ES refers to what it calls a “pervasive problem afflicting assessments relating to gender and other social issues of conflating ‘development time’ and ‘chronological time’” (Economic Survey 2018: 103). The survey argues that gender outcomes are linked to development and hence cross-sectional comparisons in chronological time could be misleading as they do not take into account the development levels of countries.

This argument is deeply flawed on at least three fronts:

Narrow definition: In the survey, development has been defined as either wealth of the households in the country (wealth factor score of the household derived from the a country-specific principal component analysis of asset ownership by the household)[1] or the gross domestic product (GDP) of the country. However, it has been recognised since at least 1990s when the United Nations Development Programme (UNDP) released the first Human Development Index (HDI) that development is multi-dimensional and cannot be measured by narrow measures of ends like wealth or (GDP) (Sen and Anand 1994; Stiglitz et al 2010).

Development and gender: For comparison in development time to be valid, one has to assume a strong relationship between development and gender equality. However, there is overwhelming evidence that the impact of economic growth on gender inequality is weak and inconsistent (Kabeer 2016; Duflo 2012). In fact, the survey itself shows this when it compares Indian states. There does not seem to be any systematic relationship between levels of per capita income and gender norms (north-eastern states that are not the richest do well while Delhi, Haryana and others that are among the richest perform worse).

Development as an antidote: By arguing that one should compare in development time, the survey is implicitly saying: If a country is doing well in development time, then the onus on government and society for policy action is less as gender inequality would resolve automatically, with development as the antidote. The argument suggests that it is acceptable for generations of women to suffer and wait for development to solve their problems, when policy action can help mitigate the inequality as shown by several countries and even by Indian states.

Even if one were to use development time, India performs poorly compared to its peers as documented by the survey. On several of the key indicators[2] that the ES uses, India’s performance is way worse than it should have been, based on the level of development.

Women’s Labour Force Participation

India ranks 136th among 144 countries in women’s labour force participation rate and the situation is worsening over time. Even here, the ES misinterprets the issue. The percentage of women who work has declined from 36% in 2005-06 to 24% in 2015–16 according to National Family Health Survey (NFHS). According to National Sample Survey Office (NSSO) Employment rounds, paid female labour force participation rate (FLFPR) among women in the 25–59 age group has steadily declined since 1987–88. The ES suggests that it could be such with development, FLFPR would naturally increase as suggested by Goldin (1995). However, recent literature has shown that the U-shaped hypothesis that FLFPR decreases initially with development and then increases does not hold as shown by Gaddis and Klasen (2014).

In the Indian context, Lahoti and Swaminathan (2016) tested the U-shaped hypothesis over Indian states and showed that it does not hold. Indian states with a higher level of domestic product do not necessarily have higher levels of FLFPR. Lahoti and Swaminathan find that it is not economic growth but rather the composition of growth that is relevant for women.

One of the reasons the U-shaped hypothesis does not hold is because India did not follow the typical trajectory of development of transitioning from agriculture to manufacturing to services, but rather moved directlt from being an economy dependent on agriculture to an economy dependent on services, without any increase in labour-intensive manufacturing.

The government can play a key role in investing in sectors that are intensive in using the female workforce as shown by Bangladesh. Bangladesh witnessed an increase in FLFPR from 14% in 1990 to 36% in 2010, the decades when it experienced fast GDP growth rates, debunking the myth that growth initially leads to lower FLFPR. This was partly due to the labour-intensive export sector that played a big role in Bangladesh’s growth (Rehman and Islam 2013).

‘Convergence’ Effect?

The ES claims that the improvement in most gender indicators for a unit increase in wealth is higher in India than in other countries. The survey concludes that “even if India is lagging in development time, it can expect to catch up with other countries as household wealth increases” (Economic Survey 2018: 109), but this does not stand upon deeper scrutiny. If the increase in the level of household wealth really reduces gender inequality then one would expect that richer states that have higher average household wealth would be more gender-equal than poorer states. But no such relationship is shown in the survey itself. Richer states like Delhi and Haryana perform worse than poorer states. So, it is clearly not the case that increase in levels of household wealth leads to gender equality. The finding of “convergence” might be driven by interaction between wealth inequality and gender status. Gender status among the richer deciles might be lower but an increase in the levels of income without a change in the relative position might not impact gender status. An absolute increase might not be driving improvement in gender equality, like the survey claims to observe.

Missing Out

The Economic Survey and the union budget need to be reviewed not only for what they say but also what they leave out, and on this front both come out way short on what they could have done.

Policy responses: The survey does not suggest any policy responses for the rampant gender inequality it documents, but blames it mostly on the society (social norms). It is a way of holding everyone responsible but at the same time holding no one in particular responsible.

If the ES was really concerned about gender inequality, it could have recommended policy changes that the government can undertake easily. But it did not do that and the budget rejected several basic demands and reduced allocations for important programmes.

Setting fair rules: Feminist economists define assets (broadly defined to include financial, physical and human capital), rules (laws mostly defined by the state), norms and preferences as structural factors (all of which are partly endogenous) that play a key role in determining gender relations in the society. The state can play a key role in setting rules that govern a society and provide incentives to make assets, norms and preferences less discriminatory for women. The rules include various laws, such as rules on how marital property is divided upon dissolution of marriage, rules on who can apply for divorce, rules on inheritance of property by daughters and wives, rules against discrimination in hiring and wages in the market. Such rules will help improve the bargaining power of women, not just within the household but also in the marketplace. The Marriage Laws (Amendment) Bill, 2010 (Kakkar 2013) did away with the requirement of mutual consent for divorce and also introduced provisions for sharing of movable and immovable property upon marriage. Overall, it would have improved the bargaining power of women. But this bill was allowed to lapse by the current government, when the ES could have recommended that this bill be passed. 

Equal pay for equal work: The state can influence asset distribution through rules as well as by setting an example on how it pays female employees it hires. The requirement of equal pay for men and women working in Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) for the same amount of work, the gender pay gap in rural works has declined and women participate in higher proportion in MGNREGA than men. But the government undervalues and exploits more than 7,00,000 women working as Accredited Social Health Activists (ASHA) across the country. ASHA are the backbone of the National Health Mission and responsible for a range of activities that includes: home-visits, antenatal and neonatal care, delivery escort services, advice on contraception, breastfeeding and immunisation, drug provision for tuberculosis, caring of children with diarrhea or pneumonia, and organising village meetings for health action. However, most are paid a paltry sum as an honorarium, ranging between Rs 1,000-1,500 per month and even that is not paid on time. ASHA workers have been demanding increase in wages to at least match minimum wages, allowances for travel, conversion of ASHAs working over 10 years to permanent employees, mostly reasonable demands if we are to treat them as human beings with rights and value the critical care they provide (Mathew 2018). Ideally, the ES should have recommended this, but it failed to mention it. 

Benefits and incentives: Maternity benefits became a legal entitlement under the National Food Security Act (NFSA) in 2013, but it has not been implemented fully yet. Under the law, all pregnant and lactating mothers are entitled to at least Rs 6,000 per child as benefits. This is meant to provide income to mothers in the unorganised sector, while they take care of new-borns and increase their bargaining power. Even though this law has been in place since 2013, promised by the Narendra Modi government over a year ago (Sen 2017), and 60 economists wrote a letter to the finance minister to request him to provide the legal entitlement (Scroll 2017), the ES does not mention or recommend it and the budget has not made the necessary allocations to fulfil this legal requirement. In fact, the budget reduced the allocation for maternal benefits by Rs 300 crore.

Better data collection: In 2016, according to National Crime Records Bureau (NCRB), India recorded 106 rapes a day, 2,167 gang rapes, a conviction rate of only 9% in cases of crime against women. Sexual harassment outside the house is rampant in India, though there is very little data collected on it. The ES could have referred to the existing data or asked for better data collection or pulled the government up on non-usage of funds under the Nirbhaya Fund, but it chose to do none of these. The survey, despite opting for the pink colour in support of women, remains silent on the issue of safety of women and sexual harassment.

There are several other things, such as, an increase in allocation of widow and old age pension, stricter implementation of the requirements for crèches at workplaces, disclosure regulations about the gender composition of workforce and average wages by gender at different levels in public and private sector, support for paternity leave legislation pending in parliament (PTI 2017) that could have been suggested as policy changes by the ES, but none of these are addressed.

The budget does take some steps such as a decrease in Provident Fund (PF) employee contribution for new women employees to 8% from 12%, an increase in target of Ujjwala scheme from Rs 5 to 8 crore (though not all funds were spent last year), and a promise of increase in micro-credit loans for women. However, these are “peanuts” compared to what could have been achieved, had they taken the aforementioned into account.

Welcome Development But More Can Be Done

A separate chapter delving into the status of women in the ES is a welcome development, and one that should be a regular feature of the survey. The arguments and analyses done in the survey leave a lot to be desired. The survey could go further than just talking about taking collective responsibility, but also recommending policies that the government can take up in order to reduce gender inequality. Perhaps it is time to move away from what Maithili Sharan Gupt expresses is the reality for most women in India: “Woman, this is your life story, Mothering your role, sadness your destiny.”

Rahul Lahoti ( is with Azim Premji University in Bangalore, India.
25 May 2018