Among major economies, India enjoys a unique demographic advantage. A large share of its population is poised to enter their working-age years, and India’s age-dependency ratio—the share of economically dependent people compared to the working-age population—will be one of the lowest among major economies.
To further capitalize on this 20-year window of favorable demographics, India needs to boost its female labor force participation rate (LFPR), writes Chaitra Purushotham, Bengaluru head of Goldman Sachs Research. Just bringing the overall labor force participation rate to previous peak levels can add about 1 percentage point to India’s potential growth, all else being equal.
We talked to Purushotham about why the female share of India’s workforce has remained low over the decades, why it has now started to rise, and what implications that holds for India’s economy.
Could you describe the trends behind India’s broad, 20-year window of favorable demographics?
India’s demographic transition is unfolding more gradually and over a longer period than we’ve seen in many other Asian countries. The main reason is that both birth and death rates are declining at a slower pace in India. As a result, over the next two decades, we believe India will have one of the lowest dependency ratios among major economies. That means there will be a relatively small proportion of people who are either under 15 years or over 65 years compared to the working-age population (15-65 years). We believe this will create a powerful window of opportunity for the country.
At present, how does women’s participation in the Indian labor force compare to that of developed and emerging economies?
Right now, women’s participation in India’s labor force is significantly lower than what we see in major developed and many emerging market economies. According to the International Labour Organization, only about 31% of working-age women in India are in the labor force, relative to 54% in other major economies. Official Indian labor statistics show a higher participation rate, possibly because they count unpaid women workers who assist in household and other non-farm activities.
Declining fertility rates will eventually impact India’s labor force. How can the participation of women in the workforce offset that, and what kind of economic impact could we project by raising female participation?
Well, as fertility rates decline, the pace of growth in India’s labor force will naturally moderate. However, one way to offset the economic impact of this demographic shift is to boost women’s participation in the labor force. We think creating more employment opportunities for women and encouraging their entry into jobs can potentially raise female labor force participation. Based on our prior estimates, just bringing the overall labor force participation rate to previous peak levels can add about 1 percentage point to India’s potential growth, all else being equal.
Could you help us understand the two or three major factors behind this low participation rate?
There are a few major factors driving the low participation of women in the labor force in India.
First, Indian women shoulder a disproportionate share of domestic and care-giving responsibilities. On average, women spend about 8x more time each day on these activities relative to men — which leaves them with much less time for employment. Second, deeply rooted social norms and gender roles often restrict women’s occupational choices and limit their access to the workforce. These norms reinforce the expectation that women should prioritize homemaking and caregiving over careers. Third, practical barriers such as concerns about safety—including crime—coupled with a lack of robust public transport connectivity make it even harder for women to work away from their residence.
Lastly, there are noticeably fewer women role models in many sectors and communities. When women do not see other women succeeding in diverse careers or leadership positions, it can dampen their aspirations and reinforce the perception that certain opportunities are out of reach.
Despite the low female LFPR, the rate is rising, as you say in your report. Could you outline some of the trends behind this?
On a positive note, the overall status of Indian women is improving largely owing to a focus on promoting education, well-being and providing access to basic amenities. It is encouraging to see an uptick in women’s participation in the labor force over the last few years. A big part of this rise is attributed to rural India, where an increasing share of women are engaging in self-employment, particularly in agriculture.
The rise of self-employed women is an important trend, largely driven by initiatives focused on financial inclusion, greater digitization, enhanced skill development, and improved infrastructure. When we look at corporate India, although women are still under-represented in Indian listed companies, the numbers are improving gradually. The Information Technology (IT) sector leads the way with a 34% share of women employees (in line with what is observed globally) and has added one million women employees in India over the past decade.
In a survey of women entrepreneurs, what did respondents cite as the biggest improvements aiding their entrepreneurship journey? And what are the key challenges that remain.
A survey of women entrepreneurs from the Goldman Sachs 10,000 Women program helps us understand what is driving their entrepreneurial journeys, the progress they have seen in the entrepreneurial ecosystem, and the challenges they continue to face. About 65% of respondents identified training and mentorship as the key areas of improvements that have positively impacted their ventures—though it’s worth noting that their participation in the Goldman Sachs 10,000 Women program has likely helped in these areas.
When it comes to challenges, access to funding remains the biggest hurdle for women entrepreneurs. Research indicates a persistent gender gap in startup funding, largely driven by unconscious biases against women. For example, male entrepreneurs are around 60% more likely to secure funding than their female counterparts. While government initiatives have improved access to capital, a significant gap still exists that needs to be addressed. Interestingly, respondents also highlighted the availability of a skilled workforce as both a key area of improvement and a continuing challenge.
What do you see as the next steps to improve female LFPR in India?
There’s still a long journey ahead. We believe building a robust care economy, which includes a network of childcare centers and an elder care ecosystem will likely be key. This would have twin benefits of freeing up women’s time to pursue paid employment opportunities and will also create employment opportunities for the ‘care work’ services sector. At the same time, a shift in corporate India’s policies including equal parenting leave policy will help more women to participate in the labor force. Other next steps include capitalizing on the broadening digital connectivity in India that offers greater flexibility for women. Finally, building well-connected public transport networks which are safe, reliable, affordable and that provide last-mile connectivity will help women to travel for work opportunities.