India must boost female workforce participation to reach high-income status by 2047: World Bank

India's ambitious goal of becoming a high-income country by 2047 may remain out of reach unless it significantly increases the participation of women in the workforce, warns the World Bank in its India Development Update report.

The report, released 3 October, underscores the crucial role of female labour force participation in driving India's economic growth.

According to Dhruv Sharma, a senior economist at the World Bank, India's current growth rate of around 6–6.5 per cent falls short of the 8 per cent needed to achieve high-income status by 2047. He emphasised, "You can't get there if a large part of your workforce — females — are not participating."

The World Bank's report revealed that while both male and female worker–population ratios (WPR) showed modest increases in January–March 2023 compared to the previous year, the rise in the female WPR was primarily driven by an increase in the share of women in unpaid work. The report also highlighted that the quality of women's jobs in India is significantly lower than that of men, and the proportion of women in regular salaried employment in urban areas is declining.

Auguste Kouame, the World Bank's country director for India, emphasised the importance of raising the female labour force participation rate and noted that India has made substantial investments in women's education. "India has done well by educating girls and women. It is now time to use their skills and brainpower to power the economy towards becoming a high-income country," he said.

The World Bank aims to work with all stakeholders to increase India's female labour force participation rate from around 25 per cent to an average of 50 per cent for emerging market economies.

In addition to the workforce participation challenge, the World Bank's assessment of India's fiscal situation is relatively positive. Kouame expressed confidence in India meeting its fiscal deficit target for the year, indicating "almost zero risk" of not meeting it despite the upcoming elections. India's government has set a target to reduce its fiscal deficit to 5.9 per cent of GDP in 2023–24.

The World Bank has forecast a general government fiscal deficit of 8.7 per cent of GDP for this year, down from 9 per cent in the previous year, which aligns with the government's estimate.

Regarding India's medium-term fiscal deficit target of 4.5 per cent of GDP by 2025–26, Kouame stated that the Bank had no opinion on whether the target would be met but noted that the trend was moving in the right direction. He also suggested that there could be positive surprises due to the growth dynamics, robust Goods and Services Tax (GST) collections, and increased government capital expenditure.

Despite external challenges, the World Bank has maintained its growth forecast for India in the fiscal year 2023–24 at 6.3 per cent, reflecting the country's resilience within a demanding global environment. The Bank expects India's growth to increase slightly in the following two years to 6.4 per cent and 6.5 per cent.

As India continues on its path to economic development, addressing the gender gap in the workforce remains a critical factor in achieving the nation's high-income aspirations by 2047. The World Bank's recommendations highlight the need for concerted efforts to empower and engage women in the Indian workforce to drive economic growth and prosperity.