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Empowering Women through Promotion of MSEs

Empowering Women through Promotion of MSEs

By. V. N Prasad*

Considering the size of women population in the world, and recognising that enough has not been done to chanalise the ‘women power’, countries around the world are looking at ways and means to empower them.  India is no exception to this. Empowering women does not mean merely ensuring jobs and a place in political system for a few of them, though this is a welcome step, but going beyond this. It is the uneducated/undereducated, poor and deprived women who really need empowerment.  Their number is quite large and a majority of persons below the poverty line are apparently women. Effective programmes need to be evolved to tackle the issue. Economic improvement of women population not only would help the family but also the economy at large. Encouraging women to become micro and small entrepreneurs (MSEs) can to a considerable extent address the issue.

The Need

Women account for 48 per cent of the total population in the country and in the available social structure, they, in general, are discriminated lot not only economically but also socially. The problem is more acute among the poor. As per Planning Commission, nearly 28 per cent of the total population was below poverty line in 2004-05[1]. That women account for a majority share in this is reflected in the 2001 ‘National Policy for the Empowerment of Women’[1] when it noted:

Since women comprise the majority of the population below the poverty line and are very often in situations of extreme poverty, given the harsh realities of intra-household and social discrimination, macro economic policies and poverty eradication programmes will specifically address the needs and problems of such women……..”

That a vast majority of poor women are based in rural areas is revealed by the observation of the said Policy when it said:

“Consequently, the access of women particularly those belonging to weaker sections including Scheduled Castes/Scheduled Tribes/ Other backward Classes and minorities, majority of whom are in the rural areas and in the informal, unorganized sector – to education, health and productive resources, among others, is inadequate. Therefore, they remain largely marginalized, poor and socially excluded.”

This clearly points out to the need for putting in place the related measures/programmes to address the issue. Rural and urban poor apart, the better off sections of women population do also need support to make more meaningful contribution to the economy.  This segment of women comprise educated, experienced and economically better off and socially empowered than the former.

The available institutional structure for promoting and protecting the cause of women basically comprise a Ministry of Women and Child Development (carved out as separate Ministry in 2006) and the National Women Commission, established as statutory body in 1992.  While these are significant steps aimed at improving the overall welfare of the women, the focus appears to be more in addressing problems from the social angle, and economic approaches appear to be incidental.

Economic Improvement

While solutions to women on social front do boost their confidence, the economic empowerment would not only raise their confidence levels but would also enable them to become part of mainstream economy. While poverty alleviation programmes such as National Rural Employment Guarantee Schemes (NREG), ensuring minimum calories’ intake through subsidized supply of food items, etc. can address the problem to an extent but there is a fear that these would make them dependents and may also encourage corruption at implementation level.  The ultimate objective of a welfare programme should be to make the beneficiary self-dependent and economically independent, so that he/she one day makes economic contribution, rather than be a dependent. Economic empowerment would also enable them to access better education, medical care/facilities, etc. and, thus, climb a step ahead on the social ladder.

Women-owned MSEs

One of the economic approaches, which have been tried with varying degrees of success around the world, relates to promoting women entrepreneurs. According to Ministry of Micro, Small and Medium Enterprises (MMSME), women-owned enterprises accounted for just 10 per cent of the total 10.5 million enterprises in the country in 2001-02.[1] At this stage, I am not going in to the motivational factor: willingly or circumstances (nor any supportive data are available). It is, however, important to know that more than 85 per cent women entrepreneurs were operating as unregistered entities and are apparently based in rural areas[1], perhaps an indication that they are income generating activity for self/family. India also encouraged women to form Self-Help Groups (SHGs), which take up some economic activity, to overcome poverty.

One would commonly find a woman-owned/managed retail trade, tailoring (ladies), vegetable vending, beauty parlors, etc. shops around the country, which suggests that women are more in to low-end activities, requiring less doses of capital.   This does not mean that women entrepreneurs are not in to quality products/services, but their number would be relatively small.  This is borne out of the fact that the average investment in a MSE was only Rs.1.47 lakh, as revealed by the Third Census of Small Scale Industries. There is yet another category of woman who informally takes up business activities like academic and non-academic coaching, fabric painting, making dresses, tailoring, etc. as a past-time activity, and in some cases to supplement family income.


 All MSEs, irrespective of the gender managing them, face similar problems such as lack of access to finance, information, marketing support, etc. The magnitude and impact of problems, however, are more serious for women entrepreneur due, amongst others, to:

  • Their inability to provide collaterals as they generally lack assets
  • Their inability to network as freely as males
  • Their hesitation to implement/ realise an idea for fear of reactions from family/society and male-dominated machinery implementing the policies and programmes
  •  Family responsibilities, limiting their time for devoting to enterprise management
  • Differences in upbringing. General attitude among parents is to see that their daughters are settled soon
  • Reluctance on the part of parents/male members of family to allow girls/spouses to experiment
  • Lack of family/friend’s support
  • Differences in educational background. Families tend to spend more on the education of a boy than a girl
  • Societal attitude
  • Lack of institutional support –both governmental and non-governmental- particularly in rural areas
  • MSE policies being, generally, gender neutral
  • Ignorance about policies and programmes

Available Policy Push

The forgoing observations about the constraints faced by women entrepreneurs pose many challenges to policy makers in improving the business environment for them.   Presently nothing much is available as policy initiatives to prop-up women entrepreneurship except for some additional facilities/concessions in the overall MSE Policy. Even here, many are not able take benefit of these owing to their being in the unregistered segment of the total MSE sector. MMSME extends following as a part of its ‘women empowerment’ programme[1]:

  • Accessing credit: higher guarantee cover of 80 per cent under Credit Guarantee Fund scheme for MSEs.
  • Marketing support: (i) 100 per cent reimbursement of space rent for participation in international trade fairs/exhibitions under MSME India stall, and (ii) assistance for establishing exhibition centers at central place to display products manufactured by women-owned enterprises. In addition, Small Industries Development Bank of India (SIDBI) too has a programme to support women entrepreneurs in their marketing efforts by extending financial assistance to entrepreneurs and associations and others helping entrepreneurs in marketing[1].
  • Entrepreneurship/Management Development programmes: 50 per cent fee concession.
  • Cluster development: 90 per cent assistance, subject to the maximum of Rs. nine crore, for women-owned/managed enterprises.
  • Skill development: (i) 30 per cent grant, subject to conditions,  to NGOs for promoting women entrepreneurship, (ii)  Rs. one lakh grant for NGOs and training institutes for undertaking training programmes, and (iii)  “need-based” grant for conducting/undertaking research, evaluation and field-based studies, etc. (available during the 11th plan period -2007-2012).

Some Thoughts to Widen the Women Entrepreneurs’ Base

While the above would certainly help women entrepreneurs, much more needs to be done in the globalised and competitive world so that women entrepreneurs’ population increases to international level.  One of the studies of International Labour Organisation placed their number at 25-33 per cent[1].

The policy approach, however, has to make a distinction between ‘survivalist enterprises’ (poverty alleviation) and commercial ventures owned and proposed by ‘better off’ sections of women, since each require a specific treatment.  In case of the former category, they have to be supported and strengthened so that they can continue to generate income for self/family on long term basis, and, if possible, graduate to commercial venture level. And in respect of the other category, they need support in establishing and successfully managing/operating their enterprises, besides coping up with the fall-outs of globalization.

A quick review of the present policy revealed that there are several gaps that need to be filled. To help women take more active participation in the economy via enterprises, both the categories need firstly improved access to financeAlthough MSEs are part of priority sector lending, women entrepreneurs do not get any special facility. Policy makers can consider stipulating certain percentage of MSE lending to women-owned ones as is now available for tiny &cottage units and units with investment below a certain level[1] to ease the problem.  Commercial banks also need to be impressed upon to be more considerate towards women entrepreneurs to build their confidence and make them more communicative. Further, Banks should consider adopting liberal attitude in extending loans to small service and trading enterprises as a vast majority of women entrepreneurs are apparently in these activities.

Similarly, authorities can earmark a portion of SME fund, managed by SIDBI, for empowerment of women entrepreneurs. It may be interesting to note that Bangladesh has decided to set aside at least 10 per cent of 300 million USD fund received from Asian Development Bank for small and medium enterprises’ promotion for women entrepreneurs[1].

While Microfinance is available to women, the total -as designated by the term- is limited and is generally seen as poverty alleviation programme.  For any expansion of activity, they would require additional funds.

Secondly, start-ups need care and handholding services till they become confident that can be on their own. In this respect, Incubators can play a significant role. But unfortunately the concept has yet to catch up in the country. Some women entrepreneurs’ associations such as Association of Lady Entrepreneurs of Andhra Pradesh (ALEAP) and Association Women Entrepreneurs of Karnataka (AWAKE) and some other agencies have established incubators for women entrepreneurs. The MMSME needs to encourage NGos and other industry associations to provide such services by extending financial support to them.

Thirdly, enterprises are to be supported by business development services (BDS). The term connotes provision of a host of non-financial services such as training, information, marketing support, networking and product development and lobbying. MSEs, in general, are ignorant about the sources of diverse information required to operate an enterprise successfully. Since the BDS market is yet to develop in the country, more industry associations and NGOs can pitch in to provide the required services. The existing schemes of MMSME to strengthen MSE Associations need to be widely disseminated.

Besides, District Industries Centers (DICs) can play a significant role in meeting the needs of women entrepreneurs. It would of great help to them if a separate ‘women entrepreneurs’ Cell’ are established in DICs.  At national level, similar ‘Cell’ can be created in the MMSME.  This becomes all the more important in view of their inability to network.

Fourthly, efforts should be made to bring unregistered enterprises into fold of registered ones so that a large section of entrepreneurs can avail of the available policy concessions and benefits.

Fifthly, the available marketing assistance programmes of MMSME and SIDBI are limited by their scope and coverage, as already noted above. Only a small fraction of women entrepreneurs, who is in to relatively high-end products, and those registered can avail of such support, while a vast majority of them remain without any assistance.  What they, particularly rural-based entrepreneurs, need is support in their day-to-day sales. They can be helped in participation of ‘weekly bazaars’, organising local ‘exhibition-cum-sales’, etc.  by the proposed cell of DIC and in providing financial assistance to extend credit to their customers by taking necessary precautionary measures.  Here, dedicated/committed NGOs can be encouraged by the authorities to step in.

Lastly, organnsing awareness camps, sensitation of family members, followed by ’follow-ups’ at certain intervals to sustain motivation can educate   large sections of women, particularly based in rural areas, that entrepreneurship is viable approach to address their problem.  ‘Targeted training programmes’ can subsequently be organised for motivated ones to venture in to business activity.

The above ideas can, possibly, help in making women economically strong and assist them in playing a part in the economic growth.


 The focus of the present women empowerment programmes, apparently, is more on addressing social issues/concerns. Although the ‘enterprise’ route is recognised as tool to economically empower women, the largely gender-neutral MSE policy in India has a very few women-specific initiatives, benefiting only a small section of women and is, thus, unable to motivate more women to join the brigade.  The entrepreneurial activity for some women is an economic necessity, while for others, a pure business venture- though their numbers would be small, each, however, require a specific treatment.  There is no doubt that economic betterment would lead to the lasting social betterment.


About the author*

Mr. V. N Prasad is an economist and SME expert. He has  vast experience working on  projects related to micro, small and medium enterprises.  He is the Principal Advisor Institute for Enterprise Research & Development(IERD), Editorial Advisor, GSME News.  Formerly Senior Economic Advisor, World Association for SMEs. He can be reached at vnpj@yahoo.com

Micro Finance

The Journey of Indian Micro-Finance: Lessons for the Future

by Ramesh S. Arunachalam 

This book is an objective view of the functioning of the microfinance sector and addresses issues such as lack of regulatory framework and rigidity with which state actors approach it.

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