India: Closing the credit gap for women entrepreneurs

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Gaps in regulation, coupled with discriminatory norms and customary law, dilute the impact of constitutional protections


India is home to a third of the world's child marriages

Source: UNICEF

Indian property law is not unified: Regulations governing women vary by state and religion.

Though a general prohibition against discrimination is provided under the Constitution of India and is bolstered by additional laws that are neutral as to gender, the power of Personal Law—as well as continuing customary practices and practical obstacles—maintains continued inequality in the areas under study here. According to Article 14 of the Constitution, the State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India. Article 15 prohibits several forms of discrimination, including genderbased discrimination.

The language in laws researched for this study is often gender-neutral. The Indian Contract Act (1872) and the Specific Relief Act (1963) do not differentiate between men and women. Both Acts use the neutral term "person." Likewise, The Code of Civil Procedure (1908) makes no distinction between men and women.

The Constitution is supported by additional laws countering discrimination. Indian employment law prohibits discrimination on the basis of gender both at the time of recruitment and during employment at the workplace. Under the Equal Remuneration Act, 1976, an employer must ensure equal treatment for women in the workplace. However, these provisions are usually applicable to government bodies only, not private industry. There is no umbrella employment discrimination statute to regulate private sector workplaces in India. Furthermore, the relatively minimal penalties associated with infractions can fail to deter employees from engaging in discrimination, while widespread corruption among labor inspectors often results in failure to adequately prioritize women's interests. For example, the 2013 US Department of State India Human Rights Report noted that employers paid women less than men for the same job, discriminated against women in employment and credit applications, and promoted women less frequently than men.25

On average, women's wages are 30 percent lower than men's wages in a similar position. Female labor force participation is only 29 percent. An estimated 94 percent of the female workforce in India works in the informal sector, and nearly half are sole supporters of their families. Participation is reduced because of social stigma against women working outside of the home. These effects are particularly strong for married women, considering they are primary caregivers.

More than three-quarters of Indian women make their living as farmers, a far higher percentage than men, who seek non-farm jobs, yet less than 13 percent of land is owned by women. "Reservations," a form of quota-based affirmative action that is a primary way of addressing employment discrimination, do not extend to private or agricultural sectors, even though these sectors together encompass nearly 80 percent of the workforce. This is especially noteworthy, as 74.8 percent of women in India are agricultural workers. This helps to explain why more than 80 percent of women in the region are employed in vulnerable jobs, which lack the protection of labor laws.26

A pattern of reforms suggests an increasing commitment, at least in black-letter law, toward land ownership and inheritance rights. Hindu laws as they stand today do not expressly prevent women from applying for, obtaining, or maintaining titles to real or movable property. Of particular importance in this regard is the 2005 Amendment to the Hindu Succession Act of 1956, which placed Hindu daughters on equal footing with their male family members in terms of access to inheritance. The Hindu Succession Act enacted in 1956 was the first law to provide a comprehensive and uniform system of inheritance among Hindus and to address gender inequalities in the area of inheritance—it was therefore a process of codification as well as a reform at the same time. Prior to this, the Hindu Women's Rights to Property Act, 1937 was in operation and though this enactment was itself radical as it conferred rights of succession to the Hindu widow for the first time, it also gave rise to lacunae, which were later filled by the Hindu Succession Act (HSA). However, the prevailing patriarchal model of the Hindu family, as well as general lack of awareness of the aforementioned legislative developments prevents Indian women (in particular in rural areas) from being able to fully benefit from the evolving laws.

Property rights and marital arrangements offer two examples of areas where inequalities persist. Indian property law is not unified: Regulations governing women's status vary by state, and vary significantly by religion, thus the protections afforded by the amendments to law—as in the case of the Hindu Succession Act—do not have universal application. Property rights of Hindu women vary based on whether the woman is a daughter, married or unmarried or deserted, wife or widow or mother. It also depends on the kind of property one is looking at: whether the property is hereditary/ancestral or self-acquired, land or dwelling house or matrimonial property. With regard to the ownership of land and property, the inheritance rights are of significant importance. Despite reforms to the inheritance law being enforced, women were discriminated against with respect to the heritage of parental property. The Hindu Succession (Amendment) Act of 2005 brought further reforms, so that women now have the same status as men with regard to the inheritance of ancestral property. In most Indian families, however, women do not own any property in their own names, and do not get a share of parental property. Due to weak enforcement of laws protecting them, women continue to have little access to land and property.

Divorce also illustrates the lack of a unified legal framework designed to ensure equality. With Hindu, Christian and Parsi marriages, the courts are able to redistribute property in whatever way they consider fair. There are no clear principles guiding the way in which property is redistributed. There is no presumption of equality of division or principle of compensation for financial disadvantage generated by the marriage, for example.

Positive practical developments include evidence that lenders have begun courting women entrepreneurs. The number of women-owned businesses has nearly doubled in the last two decades in India thanks to economic development and a growing focus on "woman power." The good news is that financial institutions have simultaneously stepped up and launched special loans at attractive interest rates to promote women entrepreneurs in the country. These special schemes offer flexibility in terms of collateral security as well as interest rates.

However, in practice, mobility restrictions on women do exist, and are dependent on how the family and community view women's rights. For instance, a single woman asking for a room is often looked upon with suspicion. Data on women's mobility in India indicates that only about half of the women interviewed had the freedom to go to the market or a health facility alone. More specifically, 79 percent of urban women from the highest education brackets and only about 40 percent of rural women without education were allowed to go to the market alone.27 In particular, the prevalence of violence against women makes mobility issues more severe. To cite just one example, in February of 2013, at least 30 women were in desperate need of medical attention following violent protests, but were unable to leave the affected area due to police barricades and threats of violence or arbitrary arrest.28

The major challenge is not the absence of laws, but lack of effective implementation and accountability.

It is critical to unveil social norms that prevail in society that inhibit women's access to financial services, even when legislation does not restrict them. In India, women face discrimination embedded in cultural norms and practices, despite laws put in place to protect them.



25—Source: - pg 47.
26—The 2002 Indian National Sample Survey, Agriculture Census 2005/ 2006, Department of Agriculture and Cooperation, Government of India.


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