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Boosting female labour force participation is not just a matter of gender equality but is also an economic imperative.

India’s quest for high economic growth and social equity hinges on an obvious but underrated lever — its women’s workforce. Despite significant progress in education and health care, the country lags in enabling women’s economic participation. A staggering 60% of India’s women of working-age remain outside the labour force, depriving the economy of their contributions. A new study by the writers, titled “Unlocking Women’s Workforce Potential in India: Quantifying the Labour Market Impact of Formalising Part-time Employment and Gender Equality in Unpaid Care Work”, published by the National Council of Applied Economic Research (NCAER), delves into two key barriers to women’s labour force participation: the unequal burden of unpaid care work and the lack of formal part-time employment opportunities. The findings provide actionable insights for policymakers to unlock India’s untapped workforce potential.

India’s female labour force participation rate (LFPR) stands at 37%, well below the global average of 47% and the Organisation for Economic Co-operation and Development (OECD) average of 67%. The reasons are multifaceted, stemming from multifaceted barriers faced by women. A key barrier relates to unpaid domestic responsibilities that women carry disproportionately, such as child-rearing, elder care, and household chores. According to the Time Use in India Report 2019, Indian women devote more than twice as much time to unpaid care work as compared to men, leaving them with limited opportunities for paid employment.

A second barrier that women in particular face is the absence of formal part-time work options. Unlike in advanced economies, where part-time employment is legislated, well-regulated and socially accepted, Indian does not have formal provisions for part-time work. Women who seek flexibility to balance professional and domestic duties often end up in informal, precarious jobs, with no job security or social benefits. This dual burden of paid and unpaid work not only limits a woman’s career prospects but also affects her ability to contribute to India’s economy.

Study and its findings

The writers conducted a study to quantify the increase in female labour force participation rates (LFPR) when these two barriers are addressed. They used the McCall-Mortensen job search model to simulate the impact of formalising part-time employment and redistributing unpaid care work between men and women. They found that addressing just two barriers faced by women could raise the female LFPR by six percentage points, from 37% to 43%.

The study identifies two key interventions. First, formalising part-time employment: introducing formally recognised part-time work contracts with pro-rated wages and benefits would offer women the flexibility they need. Globally, 57% of women in part-time jobs cite flexibility as a key factor. In India, however, the lack of formal recognition for part-time work means that women often face exploitation and uncertain employment prospects. Second, redistributing unpaid care work: gender equality in caregiving responsibilities is crucial in enabling women to participate in the labour force. This requires both policy measures, such as paid parental leave and public investment in childcare infrastructure, and cultural changes that abandon traditional gender roles.

The study highlights best practices from advanced economies that India could adapt. For instance, Scandinavian countries have robust policies for part-time work, parental leave, and subsidised childcare, which have significantly boosted female workforce participation. In France, part-time workers receive the same protections and benefits as full-time employees, ensuring equitable treatment. The European Union’s directives on part-time work, adopted in the late 1990s, mandate equal pay and social security for part-time workers. India’s labour laws, by contrast, remain silent on these issues, perpetuating systemic inequalities

Policy recommendations

The paper’s findings underscore the need for a multi-pronged policy approach. First, formalising part-time work: India must define and formalise part-time employment. This includes setting hourly minimum wages (the smallest unit for defining minimum wages in India is per day and not per hour), ensuring job security, and providing access to social security benefits. Formalising part-time work would create a structured pathway for women to enter the workforce while balancing caregiving responsibilities.

Second, investing in care infrastructure. Public and private investment in affordable childcare and eldercare facilities yield many benefits to private companies and the macroeconomy, as international studies have shown (Council of Economic Advisors, U.S) .Such measures would not only reduce the caregiving burden on women but also create new employment opportunities in the care economy.

Third, promoting gender equality in caregiving. Policies such as paid parental leave for both parents and tax incentives for shared caregiving responsibilities can help redistribute unpaid care work. Awareness campaigns to challenge societal norms and promote gender equity are equally important.

Fourth, flexible work policies. Employers should adopt flexible work arrangements, such as remote work and adjustable schedules, to support employees with caregiving responsibilities. This move would also be in the self-interest of companies because their output and productivity can be expected to increase.

Boosting female labour force participation is not just a matter of gender equality, but is also an economic imperative. Research by the International Monetary Fund estimates that closing the gender gap in labour force participation could increase India’s GDP by 27%. Higher female LFPR would lead to greater household incomes, improved standards of living, and enhanced economic productivity.

The ripple effects extend beyond the economy. When women participate in the workforce, it shifts societal perceptions of gender roles, inspiring younger generations and fostering a culture of equality. Moreover, women’s financial independence contributes to better health and education outcomes for their families, creating a virtuous cycle of development.

Challenges to implementation

While the benefits of these interventions are clear, their implementation poses significant challenges. Deeply ingrained cultural norms often resist change, making it difficult to redistribute caregiving responsibilities. Employers may be reluctant to adopt flexible work policies without government regulation. Additionally, the informal nature of India’s labour market, where over 80% of workers are employed, complicates the formalisation of part-time work.

Addressing these challenges requires coordinated efforts from policymakers, employers, and civil society. The government must take the lead by formalising labour reforms and investing in care infrastructure, as is common in many advanced economies. Employers should recognise the business case for diversity and flexibility, which have been shown to improve employee retention and productivity. Civil society organisations should continue to play a crucial role in raising awareness and advocating for gender equality.

As the country aspires to become a developed nation by 2047, harnessing the potential of its women’s workforce is essential. By formalising part-time employment, redistributing unpaid care work, and promoting gender equality in its society, India can unlock a brighter, more inclusive path for its society today and for future generations. The time to act is now.

Aakash Dev is an Associate Fellow in the Center on Gender and the Macroeconomy (CGM) at the National Council of Applied Economic Research (NCAER), India. Ratna Sahay is a Professor at the National Council of Applied Economic Research (NCAER), India and a Non-Resident Fellow at the Center for Growth and Development, Washington DC. Views are personal.

Perhaps US efforts to cut off China’s access to advanced semiconductors will be more successful than analogous restrictions on tech exports to France in the 1960s. But we now have at least one data point – DeepSeek – that suggests otherwise.

BERKELEY – Starting in October 2022, the late, lamented (by some) administration of President Joe Biden implemented restrictions on US exports of advanced semiconductors to China. A classic “dual use” technology, these chips power generative AI and supercomputers used in weapons systems, cyberattacks, and surveillance. Equally, they can enhance the ability of companies to compete internationally – in this case the ability of China’s high-tech firms to compete with their American rivals.

In its final months, the Biden administration doubled down on these restrictions, adding high-bandwidth memory chips and chipmaking tools to the list of prohibited items. Donald Trump’s administration, dominated by China hawks, is poised to ramp up these measures still further.

China has retaliated with export controls on rare earths and related materials used by American producers. But the more serious threat is that China will accelerate the development of its own capacity to design chips and build chipmaking equipment. If China closes the technology gap faster than it otherwise would have, then US export controls will have proven ineffectual or even counterproductive.

It’s hard to predict the success or failure of China’s efforts. But it may be informative to look to the past, where some of the most relevant history comes from, of all places, France in the 1960s.

French politicians and businessmen at the time perceived an economic threat from the United States. This was the era when the journalist and politician Jean-Jacques Servan-Schreiber warned that France could become an economic vassal of the US. Servan-Schreiber was worried about the invasion of Europe by US multinationals, with General Electric’s 1964 acquisition of the French computer company Machines Bull a prime example.

In addition, French President Charles de Gaulle objected to US dominance of NATO and refused to put France’s forces under joint command with other alliance members. Ultimately, he withdrew France from NATO’s integrated command.

This was the context of America’s decision in 1964 to deny licenses for the export of advanced IBM and Control Data Corporation (CDC) computers to the French Atomic Energy Commission. These giant mainframe computers could have been used for calculations enabling France to build a hydrogen bomb, which only the US and the Soviet Union possessed at the time. A thermonuclear capacity would have allowed France to pursue an independent defense policy in disregard of US wishes. Reverse engineering IBM and CDC machines also might have helped reinvigorate France’s commercial computer industry and overcome the sad dismantling of Bull.

Such was the background of the delightfully named Plan Calcul launched by the French government in 1966. The government envisaged investing more than one billion francs – about €1.5 billion today – in the French computer industry in the program’s first five years. Half would be provided by the state in the form of research subsidies for private firms, and half by the firms themselves.

To help the companies finance their share, the state extended subsidized loans and guarantees. An agency attached to the prime minister’s office coordinated the plan, which entailed merging two French companies to create a national champion, Compagnie internationale pour l’informatique (CII).

Plan Calcul was championed by de Gaulle himself, who saw a world-class military and a world-class economy as equally important for securing France’s status as a global power – for restoring its “grandeur.” One cannot but be reminded of the aspirations of Chinese President Xi Jinping and his personal role in efforts to advance China’s high-tech supremacy.

Ultimately, Plan Calcul failed to make France a leader in high-speed computers. The government’s technocrats, instead of working harmoniously with the private sector, micromanaged CII’s affairs, keeping for themselves the roles of bankers, entrepreneurs, supervisors, and clients. They focused not on commercial markets, where CII would have felt the chill winds of competition, including from IBM, but on government procurement contracts, where CII could stay fat and lazy. Rather than supporting the private sector, the government’s interventions impeded its progress.

Moreover, when forming their national champion, the technocrats excluded Bull, the firm with the most expertise, since it was now in foreign hands. Rather than complementing one another, national security and economic imperatives worked at odds with each other.

But if Plan Calcul was a damp squib, this was not because the US export-control regime was effective. Firms like IBM pushed back against the loss of business and were able to obtain exemptions. Information flowed freely between IBM’s plants in the US and France, where, as the CIA observed, it could be accessed by local scientists. When the latest computers were unavailable, the French were able to substitute them with slightly older versions.

Thus, France acquired the hydrogen bomb in August 1968, successfully testing a device in French Polynesia. In the end, US export controls only briefly delayed the geostrategically inevitable. Perhaps America’s latest resort to export controls will be more effective. But we now have at least one data point – DeepSeek – that suggests otherwise.

Barry Eichengreen, Professor of Economics and Political Science at the University of California, Berkeley, is a former senior policy adviser at the International Monetary Fund. He is the author of many books, including In Defense of Public Debt (Oxford University Press, 2021).

After maintaining the status quo for nearly two years, the RBI has lowered the policy repo rate by 25 basis points, lowering it from 6.5 percent to 6.25 percent. The cut-first in five years- is justified, whether one looks at India’s own record over the last few years or its record relative to the rest of the world.

The top bank had raised the policy rate to 6.5 percent in February 2023, when GDP growth rate for the year was 7 percent and inflation had peaked at 6.7 percent. The rate did not seem too high the following year when growth accelerated to 8.2 percent and inflation moderated to 5.4 percent. However, the rate seemed unjustifiably high with growth projected to decelerate to 6.4 percent and inflation to moderate to 4.8 percent during the current year.

India’s inflation rate has moderated in comparison to other countries too. It was several times higher than those of the advanced economies (AE) or the global average prior to Inflation Targeting (IT). Currently it is close to the AE average and lower than the global average.

It would be erroneous to argue that an inflation rate of 4.8 percent would be inimical to growth, warranting continued tightening. No clear trade-off between growth and inflation has been established empirically at moderate levels of inflation. The trade-off is more evident at very low or very high levels of inflation.  But an inflation rate of 4 percent, 4.5 percent, or 4.8 percent has little impact on growth.

A pertinent question to ask at this juncture, when the IT regime is in its 9^th, and the RBI is in its 90^th year of existence, is: how might IT, and RBI evolve, going forward?

Both warrant a fresh look.

After the initial success of IT, it was equally important to upgrade the necessary ingredients for a successful regime. These included a relevant and updated CPI basket; more accurate forecasts of inflation and growth to guide monetary policy; better measurement and management of the households’ inflationary expectations; and improvement in the transmission of monetary policy.

Disappointingly, most of these key ingredients have lagged: The RBI has been chasing an inflation target based on a dated price basket. It has often missed its forecasts by a large margin. The inflationary expectations of households have remained misaligned. And the transmission of monetary policy has not improved adequately.

An obvious way forward would be to address each of these key distortions to maintain the sanctity of the IT framework; as well as to minimize frictions with other constituents of the policy-making establishment. Some Suggestions are below.

Review Inflation Targeting

It would be prudent to conduct an independent review of IT to address the following questions: Is an inflation target of 4 percent still appropriate? Should India narrow down its inflation tolerance band of 2-6 percent? Should it move from targeting an inflation level within a band, to just targeting a narrower band of say 4-6 percent, with no explicit point target?

Revise CPI basket  

This will help to better deliver the mandate of monetary policy. Other countries revise their baskets every 1-5 years, but India has not done so since 2011. This is despite the fact that in the interregnum, the per capita income has tripled and the shares of both agriculture and food in the GDP have declined substantially from their erstwhile levels. In view of such a transformation, its current weight of food in consumption is likely only 30-35 percent rather than 45.8 percent.

In fact, it would be sensible to commit to review and revise the IT framework and the CPI basket every 3-5 years.

Strengthen RBI’s technical expertise   

The RBI’s technical expertise ought to be strengthened, especially its forecasting models; and the measurement and management of the inflationary expectations of households.

The RBI is often referred to as a full- menu central bank. Besides setting the monetary policy, it performs several other crucial tasks, such as, regulating the banks and parts of the NBFC segment; managing the debt of the Centre as well as of the states; and responding to the external conditions through the management of the exchange rate, foreign exchange reserves, macro prudential measures and capital flow measures. Each one of these functions matters for the health of the economy.

Yet, it is the setting of policy rates that attracts its maximum attention, especially since it adopted IT. Seemingly, the decision-making and engagement process around IT has partially crowded out its other functions.

RBI needs to strengthen all its functions to become the central bank of a ‘Viksit Bharat’. Among other things, the RBI ought to initiate a review of its supervision and regulatory frameworks, ensuring timely and gentler pre-emptive measures rather than reactive and excessive actions.

RBI has been a great institution and has evolved in keeping with the times. It needs to continue to evolve in accordance with the needs of a larger, faster-growing, a more internationally integrated, and a more complex economy.