Evaluating Public Policy Interventions for WomenEntrepreneurship and Inclusive Growth in India
Author: Utsa Basu Das
The strategic promotion of women entrepreneurship (WE) is crucial for achieving inclusive and sustainable economic expansion in India. Amidst strong macroeconomic growth, the rise in the Female Labour Force Participation Rate (FLFPR) to 41.7% in 2023-24 confirms an accelerating shift toward formal economic activity. The Government of India has responded with a multi-tiered policy architecture focused on financial inclusion and capacity building. Key schemes, notably the Pradhan Mantri MUDRA Yojana (PMMY) and the Stand Up India (SUI) scheme, have achieved macro-level success in credit dispersal, with PMMY alone disbursing loans to 4.24 crore women entrepreneurs in FY 2023-24. However, analysis reveals critical implementation deficits, including low capital absorption rates in scaling-focused schemes and persistent socio-cultural barriers that restrict high-impact entrepreneurial growth. The case study of Dr. Blossom Kochhar demonstrates that success in knowledge-intensive sectors is often dependent on strategic niche innovation and integrated business models that prioritize specialized skill development, offering valuable lessons for refining future policy strategy.
Introduction: Framing Women’s Entrepreneurship and Policy Rationale
Context and the Growth Imperative
The economic empowerment of women has been established as an indispensable strategy for translating India's robust economic growth which saw the Gross Domestic Product (GDP) expand by 8.2% in FY 2023-24 into widespread and equitable prosperity. This focus is reinforced by significant demographic trends, particularly the projected growth of India's working-age population to exceed one billion within the next decade. The sustained rise in the Female Labour Force Participation Rate (FLFPR), which increased substantially from 23.3% in 2017-18 to 41.7% in 2023-24, signals a structural shift led predominantly by women in rural areas moving toward entrepreneurial and formal economic activities. Fostering women-led entrepreneurship is thus viewed not merely as a social developmental goal but as an economic necessity for scalable job creation and inclusive growth, with access to formal finance serving as the foundational enabler.
Theoretical Foundations of Policy Intervention
Current public policy dialogues reflect an academic shift away from generic Small and Medium Enterprise (SME) support towards targeted entrepreneurship policy. This contemporary framework aims to address institutional and financial market failures, such as liquidity constraints, that specifically inhibit the formation and performance of "high-impact entrepreneurship". Policy interventions in India, particularly large financial inclusion schemes, are generally framed within a developmental economic perspective.
This approach employs a strategic governmental role to promote formalization where traditional finance mechanisms have historically failed, aligning with the objective of addressing liquidity constraints that plague new business formation. While neoclassical views prioritize market efficiency, the Schumpeterian economic framework centrally positions innovation and entrepreneurship as the dynamic engine of growth, justifying state intervention to ensure policies catalyze scalable, growth-oriented ventures beyond mere survival-level self-employment.
The Policy Architecture: Government Initiatives for Women
Entrepreneurs
India's policy framework utilizes a multi-pillar approach, blending massive financial inclusion schemes with targeted capacity building programs to address both capital and human capital deficits.
Financial Inclusion Schemes
Pradhan Mantri MUDRA Yojana (PMMY)
PMMY is the cornerstone of the government's micro-enterprise financial inclusion strategy, designed to provide collateral-free loans up to ₹10 lakh to women entrepreneurs. These loans specifically target non-corporate, non-farming, and non-agriculture-based micro-enterprises headed and managed by women, typically featuring flexible repayment tenures of three to five years. The scheme is structured into three distinct product categories based on the maturity stage of the enterprise:
Stand Up India (SUI) Scheme
Launched in April 2016, the SUI scheme represents a distinct policy intervention focused on promoting entrepreneurship among Scheduled Caste (SC), Scheduled Tribe (ST), and women entrepreneurs. The scheme mandates banks to facilitate loans between ₹10 lakh and ₹1 crore to at least one woman borrower per bank branch. The loan’s purpose is strictly for setting up a new or "Greenfield" enterprise in the manufacturing, trading, services, or allied agriculture sectors. By focusing on larger ticket sizes for new ventures, SUI is positioned to foster growth-potential businesses and address mid-level capital constraints, differentiating it from PMMY’s micro-focus.
2.2. Capacity Building and Ecosystem Support Initiatives
Financial aid is complemented by initiatives that address non-financial barriers:
Trade Related Entrepreneurship Assistance and Development (TREAD)
Scheme: Overseen by the Ministry of Women and Child Development, TREAD aims to enhance the technical skills and entrepreneurial capabilities of women who lack access to formal credit channels. The model utilizes Non-Governmental Organisations (NGOs) as intermediaries, providing them with a government grant of up to 30% of the total project cost, with the remaining 70% financed as a loan. The grant is used by the NGOs for critical activities such as training, counseling, and securing marketing tie-ups.
Mahila Coir Yojana (MCY): This highly specialized, sector-specific self-employment program implemented by the Coir Board provides self-employment opportunities to rural women artisans. The scheme facilitates the conversion of coir fibre into yarn using motorized ratts, offering subsidized spinning equipment after women complete mandatory skill development training. This enhances productivity, improves working conditions, and increases income in coir production regions.
Women Entrepreneurship Platform (WEP): Managed by NITI Aayog, WEP serves as a digital aggregator and ecosystem builder. It provides a comprehensive "continuum of support" addressing four key needs: training, access to finance and markets, mentoring, and support services, serving as a repository of information on over 70 central and more than 400 state-level government schemes.
Case Study: Dr. Blossom Kochhar and Aroma Magic
The journey of Dr. Blossom Kochhar, the pioneer of aromatherapy in India and Chairperson of the Blossom Kochhar Group of Companies, provides critical insights into overcoming market and structural barriers through strategic innovation and integrated capacity building.
The Genesis of a Pioneering Enterprise
Dr. Kochhar established Aroma Magic around 1993, successfully institutionalizing her passion for natural essence and healing. Her venture required the creation of an entirely new market niche, introducing aromatherapy and the science behind essential oils for wellness and emotional well-being into an ecosystem previously dominated by conventional beauty concepts. Her progression from an initial, informal operation to formalized factory settings illustrates the entrepreneurial challenge of institutionalizing a knowledge-intensive business in India. Aroma Magic’s competitive strategy is founded on a core commitment to purity, sustainability, and natural body care, aligning the brand with the "go green" ethos. This strong brand identity and emphasis on ethics (eco-friendly and cruelty-free products) successfully mitigated direct competition from mass-market beauty brands.
Integrated Business Model for Human Capital
For a pioneer in a non-traditional field, credibility and specialized knowledge become critical substitutes for traditional financial collateral or established business networks.
Dr. Kochhar built consumer confidence not just through product quality but through her extensive personal expertise (over 35 years) and ongoing educational efforts concerning holistic healing. A distinctive feature of the Blossom Kochhar Group’s success is the integrated operation of the manufacturing business (Aroma Magic) alongside its educational arm, the Blossom Kochhar College of Creative Arts And Design (BKCCAD). This educational component directly addresses the universal barrier cited as the "lack of entrepreneurial skills and knowledge". By consistently generating skilled human capital and providing market knowledge internally, the group creates a self-sustaining ecosystem that provides a tangible example of addressing human capital deficits internally, mirroring the aspirational goal of government capacity-building schemes like TREAD.
Conclusion and Strategic Recommendations
Synthesis of Policy Achievements and Implementation Deficits
Indian government initiatives have achieved significant policy success in macro-level financial inclusion through PMMY, ensuring massive capital dispersal (4.24 crore beneficiaries) and driving formalization and employment growth. Furthermore, mechanisms like SUI have demonstrated the capacity for targeted policy mandates to successfully counter gendered funding bias in higher-value lending segments.
However, the transition from borrower (supported by micro-credit) to builder (leading high-impact growth) is severely constrained. The effectiveness of capital deployment is hampered by bureaucratic friction, particularly the low sanction-to-disbursement rates in schemes aimed at scale (SUI). Moreover, persistent socio-cultural barriers, including gender bias and the dual burden of work-life balance, fundamentally limit entrepreneurial capacity and networking opportunities. The concentration of women-led businesses in low-margin sectors underscores the urgent need for policies that actively incentivize diversification and innovation.
Strategic Recommendations for Policy Enhancement
Based on the quantitative performance analysis and the qualitative lessons derived from the Dr. Blossom Kochhar case study, the following policy refinements are proposed:
Streamline Bureaucracy and Enhance Capital Absorption: The government must prioritize procedural simplification, technology integration, and clear documentation standards to drastically improve the sanction-to-disbursement ratio in mid-to-high value schemes like SUI. Addressing these operational gaps is essential for translating capital availability into effective business scaling.
Mandate Integrated Support Systems: Policy must move beyond debt provision to actively mandate the integration of structured, long-term mentorship, specialized training, and market linkage services directly into financial schemes. Successful models, such as Dr. Kochhar’s combination of product business and educational institution, demonstrate that sustained growth requires capital to be accompanied by significant human capital development.
Counter Socio-Cultural Barriers through Dedicated Networks: Government and industry partnerships should be leveraged to actively counteract implicit gender bias and structural exclusion. This includes promoting women-specific angel investor networks, accelerators, and mentorship programs led by successful pioneers to empower women entrepreneurs to acquire essential negotiation and leadership skills required to challenge traditional perceptions and secure respect in business settings.
Incentivize Sectoral Diversification: Specific, targeted policy incentives such as enhanced subsidy components or further concessional rates for the Tarun category of PMMY and SUI should be introduced for women-led enterprises entering high-impact, high-technology, and R&D-intensive manufacturing and services sectors. This refinement is critical to shift the current sectoral concentration and foster the Schumpeterian growth necessary for India's long-term economic goals.
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