I. Introduction

Given the relatively large share of employment in agriculture and allied activities, the sector remains central to India’s overall growth trajectory. Agriculture and allied activities continue to be a key source of livelihoods for a substantial proportion of the population and contribute significantly to national income and employment generation. Over the past decade, however, there has been considerable variation in the growth of agricultural and allied Gross State Domestic Product across states. Understanding the reasons behind these differences is particularly important in the context of structural transformation within the sector. While the key feature of economic development is a gradual employment shift towards manufacturing and services, this transition requires structural transformation within the agriculture and allied sectors, where higher-value allied activities such as livestock, fisheries, and horticulture play an increasingly important role (Negi et al, 2021). This note examines the growth performance of agriculture and allied activities across states over the last decade and a half and examines the contribution of sub-sectors to overall growth. The note goes on to discuss potential factors that may help explain why growth has been faster in some states than in others.

The analysis uses the State Domestic Product (SDP) series from 2011-12 to 2024-25, published by the Ministry of Statistics and Programme Implementation, Government of India. The sub-sectors are crop (agriculture), livestock, forestry, and fisheries. I compute annual growth rates using this series. In addition, I also calculate the contribution of each sub-sector to overall growth in agriculture and allied activities using the sub-sector SDP data. This note summarizes the cross-state growth experience over the past 14 years and decomposes aggregate agriculture and allied growth into sectoral drivers using a baseline-share weighted formula. Each sub-sector’s contribution is calculated as the product of its baseline share and its estimated growth rate. I use 2013 as the baseline year for sectoral decomposition. I group the northeastern states, i.e., Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, and Tripura, into a single composite category in the analysis.

II. Growth patterns across states

I begin by documenting the well-established empirical fact that state-level growth in total domestic product is positively associated with growth in agriculture and allied activities. Despite the declining share of agriculture in aggregate output, the agriculture and allied sector continues to play a critical role in driving overall income growth across states. Figure 1 illustrates this positive relationship, showing that states experiencing faster growth in agriculture and allied domestic product also tend to record higher growth in overall state GDP. This pattern shows the continued importance of agricultural performance for overall economic growth at the state level.

Figure 1: Relationship between growth in total domestic product and growth in agriculture and allied activities across states

Notes: The figure presents the annual growth in total State Domestic Product and growth in sectoral Agriculture and Allied Gross State Domestic Product (GSDP) across states. Growth rates are computed as compound annual growth rates over the 14-year period from 2011–12 to 2024–25, using the State Domestic Product (SDP) series published by the Ministry of Statistics and Programme Implementation (MoSPI).

Figure 2: Growth in agriculture and allied State Domestic Product across states

Notes: Figure presents the average annual growth rate of Agriculture and Allied Gross State Domestic Product (GSDP) across states, measured at constant 2011–12 prices. Growth rates are computed for the 14 years from 2011-12 to 2024-25 using the State Domestic Product (SDP) series published by the Ministry of Statistics and Programme Implementation (MoSPI) and represent compound annual growth rates over the 14 years.

Figure 2 shows that there is substantial variation in the growth rates of agriculture and allied activities across states. While the all-India average is around 4 percent, states like Andhra Pradesh (7.7 percent), Madhya Pradesh (6.5 percent), Telangana (5.6 percent), and Assam (5.5 percent) turn out to be top performers with a relatively high growth in the range of about 5 to 8 percent per annum. Another group of states, such as Chhattisgarh, Karnataka, and Tamil Nadu, has experienced good growth of around 5 to 5.2 percent. A larger set of states has recorded moderate growth in the range of 3 to 5 per cent, including Gujarat, Odisha, Rajasthan, Uttar Pradesh, Maharashtra, Bihar, West Bengal, Jammu and Kashmir, Haryana, and Bihar. At the lower end, some states like Kerala, Uttarakhand, and the Northeastern states have exhibited negligible or low growth over the period, while Punjab (2.1 per cent) and a few other states have seen relatively muted growth.
III. Sectoral composition of growth

Table 1: Sectoral contribution to agriculture and allied growth by states

Notes: The table presents the percentage contribution of individual sub-sectors to growth in Agriculture and Allied Gross State Domestic Product (GSDP) across states, along with the average growth rate of the Agriculture and Allied sector. All estimates are measured at constant 2011–12 prices. Growth rates are computed as compound annual growth rates over the 14 years from 2011–12 to 2024–25, using the State Domestic Product (SDP) series published by the Ministry of Statistics and Programme Implementation (MoSPI). Sub-sectoral contributions are calculated using a baseline-share weighted decomposition, wherein each sub-sector’s contribution is obtained as the product of its baseline share (2013) and the estimated growth rate. Northeastern states, i.e., Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, and Tripura, are grouped into a single composite category.

Table 1 reports the contributions of different sub-sectors to overall growth in the agriculture and allied sector. A key finding is that allied activities like livestock and fisheries have been an important contributor to growth in many states, and their contribution often exceeds the contribution from the crop sector. This aligns with the broader picture that diversification and high-value agriculture will become central to agricultural growth in the future (Birthal et al., 2014; Balaji et al., 2025). It is also consistent with the well documented shift in demand patterns where future growth in demand for agricultural commodities would be driven by high-value commodities such as milk and dairy products, meat, fish, eggs, fruits, and vegetables, rather than by cereals (Singh, 2025). Rising incomes, urbanization, and dietary diversification are therefore likely to amplify the role of livestock and fisheries as engines of agricultural growth, while the relative importance of food crops will continue to decline (Balaji et al, 2025).

A decomposition of growth shows that states with higher overall growth in agriculture and allied activities are also those where livestock and fisheries sectors have made a larger contribution to growth. Livestock has emerged as a particularly important driver of growth in top growing states like Andhra Pradesh, Telangana, Madhya Pradesh, and Rajasthan. The expansion of dairy and animal husbandry has provided a relatively stable source of income, contributing significantly to overall agricultural growth.

Fisheries and aquaculture, while geographically concentrated, have played an important role in some states. States like Andhra Pradesh, Assam, and Odisha, in particular, have recorded strong growth in agriculture and allied activities alongside a rapidly expanding fisheries sector. Despite employing a smaller share of the workforce, fisheries have contributed substantially to growth due to higher productivity and greater domestic and foreign demand.

Forestry has played an important role in some hill and north-eastern states. Forestry has contributed substantially in the Northeastern states, Himachal Pradesh, and Uttarakhand. This partly reflects the fact that these states have relatively large forest resources and therefore have a larger baseline share of forestry value-added in the total agriculture and allied sector.

Figure 2: Relationship between agriculture and allied growth and share of area under cereals

Notes: The figure presents the annual growth in Agriculture and Allied Gross State Domestic Product (GSDP) across states on the vertical axis, along with the proportion of cropped area under cereals in 2013 on the horizontal axis. The state of Kerala is excluded in this figure as an outlier because of its low area under cereals and negligible growth in Agriculture and Allied Gross State Domestic Product over the selected period. Growth rates are computed as compound annual growth rates over the 14-year period from 2011–12 to 2024–25, using the State Domestic Product (SDP) series published by the Ministry of Statistics and Programme Implementation (MoSPI).

In general, the contribution of the crop sector has been relatively modest across many states. Figure 2 reinforces this pattern, showing a negative association between agriculture and allied sector growth and the baseline (2013) share of cropped area under cereals. States with a higher degree of specialization in cereal cultivation tend to exhibit lower overall growth in agriculture and allied activities. This pattern is particularly evident in states with cereal-dominated systems, such as Punjab and Haryana, where crop-sector growth has remained low over the period. The persistence of cereal-centric production in these states is also associated with a relatively high dependence on public procurement mechanisms (Negi et al., 2021; Negi, 2025).

The exception is Madhya Pradesh, where relatively high growth in agriculture and allied activities (6.5 per cent) is largely accounted for by the crop sector. The pattern observed for Madhya Pradesh is consistent with evidence from the literature, which attributes this crop sector-led growth to factors such as expanded irrigation coverage (including canals and tube wells), improved availability of power, and relatively supportive procurement and market conditions (Gulati et al., 2017).

Taken together, these patterns suggest that states with a high concentration in cereal-centric cropping systems have experienced relatively slower growth, while diversification towards non-cereal crops and allied activities has been associated with stronger overall growth in agriculture and allied activities.

 IV. Discussion and implications

India’s agricultural growth has increasingly been associated with diversification away from staple cereals toward high-value sectors such as livestock, fisheries, and horticulture. This structural shift has been driven by rising incomes, rapid urbanization, and dietary change, along with supply-side investments and technological improvements in production, marketing, and value chains (Birthal et al., 2014; Birthal et al., 2020; Negi et al., 2021). The key observation is that states that have been able to expand allied sectors in line with their natural and geographical advantages have experienced faster growth. Prominent examples include forestry-led growth in hilly and northeastern states, as well as the expansion of fisheries and aquaculture in coastal states and those endowed with favorable water and marine resources.

 In contrast, states where agricultural growth has historically been driven by the cereal sector have generally observed moderate or low growth and now face an increasing need to diversify into high-value crops and greater investment in the livestock sector. Livestock often complements the crop sector through the use of crop residues as feed and manure for soil fertility, while providing income flows. Therefore, livestock and animal husbandry are not merely a supplementary activity to agriculture but are central to enhancing rural incomes and reducing vulnerability, particularly for smallholders (Birthal & Negi, 2012).

States where fisheries have emerged as a major contributor tend to be those that have successfully scaled aquaculture, developed marketing and logistics infrastructure, and integrated with domestic and export markets. Evidence from Andhra Pradesh illustrates how aquaculture commercialization can add to growth in agriculture and allied value-added.

Finally, lower agriculture and allied growth in major agricultural states like Punjab and Haryana is consistent with the view that the rice-wheat production system faces severe constraints, particularly groundwater depletion and rising costs. The literature documents how procurement-linked cereal systems in north-west India have contributed to environmental stress, reinforcing the need for crop and activity diversification (Negi, 2025).

This stock-taking paper assesses the current state of India’s agriculture and rural economy across multiple dimensions.

It begins by documenting shifts in household consumption patterns and nutritional outcomes, then takes stock of major policy instruments including the Public Distribution System, minimum support prices, and input subsidies—examining their scale, functioning, and impacts. The paper reviews the evidence on agricultural diversification, noting the gap between consumption patterns and cropping choices. It surveys critical challenges including groundwater extraction levels, climate vulnerability, environmental impacts of current farming practices, constraints in supply chains and farmer organizations, and India’s agricultural trade performance. The assessment also considers the fundamental structural issue: agriculture’s disproportionate share of employment relative to its contribution to GDP, and what this means for farm incomes and rural livelihoods.

This comprehensive stocktaking provides a foundation for understanding where Indian agriculture stands today and what questions merit deeper investigation going forward.

India has a labour problem: youth unemployment rates of about 10 percent, farm jobs still employing at least 40 percent of the workforce, and a need to create at least 8-10 million non-farm jobs annually to absorb the growing young population (Economic Survey, 2023). At the same time, the proportion of India’s workforce in manufacturing has stagnated at about 13 percent for the last three decades. What explains this stagnation?

After liberalisation, the relative price of capital goods fell sharply following trade liberalisation and import tariff cuts, while real wages rose more moderately. This resulted in a rising wage-to-rental price of capital (w/r) ratio and capital deepening. Indian firms now tend to use less labour per unit of capital than firms in other countries at similar income levels, especially in labour-intensive industries like apparel.

Commensurately, labour’s share of value added in India’s organised manufacturing declined from 28.5 per cent in 1980–81 to 11 per cent in 2012–13. While this mirrors the global pattern of falling relative prices of capital goods and capital deepening, India stands out in having unusually low labour intensity for a low-wage economy. Firm size in India remains small, with almost 80 percent of the non-farm workforce employed in firms with fewer than 10 workers. Even among registered manufacturing firms, the median firm size is around 20 workers.
WHAT DO INDIA’S NEW LABOUR CODES CHANGE?

India has long had a labyrinthine labour law regime—over 40 central and 100 state laws dealing with different aspects of wages, industrial disputes, safety and social security. In 2002, the Second National Commission on Labour had recommended consolidation of labour laws to reduce complexity and inconsistent definitions.

Finally, India’s four new labour codes, notified between 2019 and 2020 and brought into force from 21 November 2025, replace 29 central labour laws with a consolidated framework covering wages, industrial relations, social security and occupational safety. Importantly, the new codes attempt to balance the need for worker protection with ease of doing business.

Some crucial changes which aim to enhance worker welfare: a single definition of “wages” across laws, a national floor wage set by the Centre, minimum wage coverage extended from scheduled employments to all workers, common norms on working hours, safety, welfare facilities and registration for establishments, fixed-term employees (FTE’s) to now receive parity of wages and benefits with permanent workers, and appointment letters are now made mandatory for workers making it possible to track employment histories and nudging formalization. Finally, the codes provide for the creation of a Social Security Fund for unorganised, gig and platform workers. Aggregators (ride-hailing, food delivery, e-commerce, etc.) are required to contribute 1-2 percent of their annual turnover, capped at 5 percent of the amount they pay or owe to gig and platform workers.

Major changes which have reduced compliance costs for employers include: the applicability of standing orders and the requirement for government permission for employee layoffs increasing from 100 to 300 employees, a clearer framework for negotiating with unions, with minimum worker representation, and the removal of restrictions on women working at night or in certain occupations. There has been a substantial reduction in registrations, licences and returns. For example, the Occupational Safety, Health and Working Conditions Code has reduced registrations from 6 to 1, licences from 4 to 1, and returns from 21 to 1; the Code on Wages has reduced forms from 20 to 6 and registers from 24 to 2; and the Industrial Relations Code has reduced forms from 37 to 18 and registers from 3 to 0. Though they still fall short of one registration and one return benchmark for all labour related matters.

Most importantly, there has been decriminalisation of minor offences, with fines and improvement notices replacing prosecution. Size-based regulatory thresholds (10, 20, 50, 100 workers) often triggered additional regulations and inspections and were strongly associated with bribe seeking by inspectors. The new web-based random inspections can further reduce compliance costs for firms. However, serious, repeated or critical breaches are still imprisonable offences.

WHY THESE MATTER?

Evidence over the last two decades has repeatedly underscored that India’s manufacturing growth has been stymied by its extensive labour regulations. Evidence shows that states with more flexible labour regulations have higher output, employment, investment and productivity growth in manufacturing, especially in labour intensive industries. In fact, product-market liberalisation increased productivity in states with more flexible labour laws but had little effect in rigid states, implying that labour regulation constrained firms’ ability to respond to new opportunities. Estimates show that regulations under the Factories Act increase firms’ unit labour costs by almost 35%.

More recently, our research shows that amendments that raised Industrial Disputes Act and Factories Act thresholds from 100 to 300 workers, and 10 to 20 and 20 to 40 workers, along with decriminalization of offences in some states over the last decade (also some major changes implemented in the new codes), increased plant employment and output by 5 percent in states which amended these laws relative to the others. Overall, there is sufficient evidence to show that rigid employment protection legislation and complex labour regulations have depressed firm growth and job creation in India’s organised manufacturing.
WHAT ARE THE POTENTIAL IMPACTS OF THE DEREGULATION?

First, the change that has provoked the strongest backlash from labour unions is the increase in the threshold from 100 to 300 workers for requiring government permission to lay off workers. This is due to fears of employment losses. However, notably, about 15 states, including some large ones like Rajasthan, Madhya Pradesh, Uttar Pradesh, Maharashtra, Andhra Pradesh and Gujarat, had already amended their Industrial Disputes Acts over the last decade (some spurred after the pandemic) and increased the threshold beforehand.

Thus, the effect of this change on manufacturing employment will be marginal in most states. In fact, by spurring firm growth and entry, there will be a net creation of jobs rather than job losses. When separation is costly or unpredictable, firms choose capital-intensive technologies to avoid adjustment risk, even in labour-abundant economies. By making separations more predictable and less binding at lower levels of employment, the codes can reduce the option value of staying small and capital-intensive.

Second, complex regulation and high firing costs act like a tax on labour, raising its effective price relative to capital. Relaxing these, by simplifying compliance and through decriminalization, digital registration, and unified returns, reduces the effective wage component. This makes labour relatively more attractive at the margin than capital. It also reduces harassment, transaction and compliance costs for most firms. Reduction of legal uncertainty can also increase private investment. However, the culture of corruption by officials and harassment of firms needs to change on ground for effective realization of gains. Third, requiring FTEs to receive equal pay and benefits as permanent workers, may reduce the incentive to rely excessively on third-party contractors. However, hiring contractual workers may solve a deeper problem e.g. specialization in core business tasks, training, recruitment etc than simply avoiding regulations and to that extent may have a limited effect.
ARE THESE ENOUGH?

While the above changes make important leaps, some of the provisions carried forward may still make manufacturing in India less attractive than our Asian competitors. For instance, overtime is fixed at twice the nominal wage. The standard overtime rate is typically 1.5 times the regular wage rate across most countries. The ceiling on the number of hours at 48 hours per week for a worker also makes labour more expensive, especially for industries which may experience seasonal demand. China legally sets 44 hours but often sees long hours. Similarly, Vietnam has a 48-hour limit but allows significant overtime (up to 300 hours per year) at a lower wage premium.

To bring some cheer, overtime capped at 75 hours a quarter has now been left to the discretion of states. Since 2020, some states like Haryana, Himachal Pradesh, Karnataka, Maharashtra, Odisha, Punjab, and Uttar Pradesh have increased the ceiling of overtime hours up to 144 hours per quarter. This potentially increases earnings for employees but high over time rates may still deter firms from employing labour beyond the usual 8-hours.

Second, a common national minimum wage floor in India—-generally considered a good idea for ensuring basic income security and reducing inequality—-can increase cost of labour in some states (especially the ones which already have a small non-farm sector). In India, the cost of living varies significantly between urban and rural areas, and across different states. A single, uniform national rate, even as a floor (unless taken as the minimum across the states currently) may be problematic given the large economic disparities.

Lastly, even if the new codes work as intended, manufacturing investment decisions depend on a broader package: logistics, power and infrastructure costs relative to peers, trade policy,export ecosystem, skilled labour, contract enforcement and importantly, land availability with little delays.

Comparative analyses of India’s manufacturing under-performance emphasise that while labour regulation is important, it is only one among several constraints. While the new labour codes improve India’s attractiveness for manufacturing investors at the margin, they are unlikely to be a silver bullet. Their impact will be realised only if accompanied by complementary reforms and credible implementation at the state level.

Key takeaways 

• Unrestricted, and free power supply drives higher electricity and groundwater use. 

• Power use in Telangana rose by over 50% after 24-hour supply. 

• Rice area expanded by 60% in kharif and 30% in rabi, reflecting greater groundwater use. 

• Monitoring wells failed to detect depletion, showing gaps in current systems. 

• Recommendations: Strengthen groundwater monitoring in hard rock aquifer regions and redesign incentives so that power and groundwater are used efficiently.

INTRODUCTION

Electricity is one of the most critical inputs for groundwater-based irrigation in India, where tubewells account for nearly two-thirds of the irrigated area and drive much of agricultural production. Since electricity is supplied to farmers at a monthly fixed cost (implying zero marginal cost) in nearly all states, most states ration the number of hours of supply to avoid overuse of both electricity and groundwater. In January 2018, Telangana became the first state in India to extend free agricultural electricity supply from nine to 24 hours a day. The policy was piloted in three districts in July 2017 before state-wide implementation.  The policy was piloted in July 2017 in three districts. This unique policy shift created a natural experiment to understand the implications of unrestricted electricity supply for power consumption and groundwater, particularly in a region dominated by hard rock aquifers. 

This policy brief addresses three central questions. First, how much did agricultural power consumption increase when rationing was removed? Second, did the policy lead to a rise in water extraction as well as groundwater depth? Third, are current groundwater monitoring systems capable of detecting the change in groundwater availability for farmers? The relevance of these questions is heightened by two factors. First, rationed electricity is the dominant irrigation power policy across India. Removing rationing is therefore a significant policy departure with potential consequences for the power sector, groundwater resources, and agricultural outcomes. Second, Telangana’s geology is characterized by spatially fragmented hard rock aquifers with low storage capacity, making groundwater highly vulnerable to over-extraction and low recharge. Notably, hard rock aquifers account for about 60% of those in India and 20% worldwide. Figure 2 illustrates the fragmented nature of hard rock aquifers. Understanding the effects of twenty-four hour power supply in this context can inform water and energy policy in similar regions across India and other countries. 

METHOD AND FINDINGS 

To evaluate the impact of Telangana’s policy, we constructed a monthly district-level panel dataset covering January 2014 to December 2019 for agricultural power consumption in Telangana and in neighboring districts in Andhra Pradesh, Karnataka, and Maharashtra. We also compiled a detailed monthly panel of groundwater depth from monitoring wells located within 5 to 32 kilometers of the state boundary (see Figure 1 for visual clarity), along with weather variables such as precipitation and temperature. Our methodology comprises comparing outcomes in very similar locations where one location in Telangana (with 24 hour power supply to agriculture) being compared to a close neighbor outside Telangana without that policy. This comparison makes it possible that other factors affecting the outcomes like aquifer characteristics, agro-climatic suitability and other physical conditions are accounted for, helping to isolate the impact of Telangana policy per se. 

Figure 1: Monitoring wells spanning 5 to 32.18 km on both sides of the boundary segments

Notes: There are 1,658 monitoring wells located within 5 to 32.18 km on both sides of the boundary segments, as indicated by red dots within the hatched lines. There are 21 Telangana boundary segments, indicated by blue and black colors. The lengths of the segment curves range from 97 km to 105 km. We exclude the state of Chhattisgarh, located to the northeast of Telangana, because of insufficient data. 

Source: State shapefile is downloaded from gadm.org. Monitoring well data is downloaded from INDIAWRIS.

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The results reveal a huge increase in agricultural electricity consumption following the removal of rationing. Agricultural power use in Telangana rose by approximately fifty-three percent relative to neighboring states, and this increase appeared in two years post-policy, indicating that farmers quickly responded to the availability of unrestricted electricity by increasing their pumping. We also observe a sharp expansion in the area under rice cultivation—a major and water-intensive crop—during both the kharif (60%) and rabi (30%) seasons. This means that groundwater use has definitely increased, since rice cultivation in Telangana relies predominantly on tubewell irrigation. However, when we examine groundwater depth using the government’s monitoring well network, we do not find a statistically significant change in groundwater depth in the two years following the policy, which is robust to accounting for increase in procurement infrastructure, surface water expansion, and a set of robustness checks. Nor do we find evidence of a rise in the fraction of missing observations in the monitoring data, which could have served as an indirect indicator of wells running dry. These apparently contradictory findings—large increases in electricity use and rice area without a decline in groundwater levels in monitoring wells—can be reconciled by recognizing the limitations of the monitoring network. 

Government monitoring wells are intentionally located away from farmer wells to avoid local drawdown effects. In the context of Telangana’s highly localized hard rock aquifers, such wells can be disconnected from the farmer wells that are actually used for irrigation. Consequently, they may fail to detect depletion that directly affects outcomes of economic interest. 

A figure from hydrogeology studies (Figure 2) by Guih´eneuf et al. (2014) and Mar´echal et al. (2018) that focus on the Experimental Hydrogeological Park (EHP) in the Nalgonda district of Telangana and the Maheshwaram watershed near Hyderabad in Telangana, respectively, clearly illustrates the discontinuous/fragmented nature of the aquifer during the pre-monsoon season on a horizontal scale of 200 meters. Additionally, 450 borewells, covering an area of approximately 20km2in Karnataka state (based on a figure from Blakeslee, Fishman, and Srinivasan (2020)), include a mix of active and dry wells with some right next to each other, we infer that the hard rock aquifer even in this small region is not well-connected. Field visit conducted as part of this study in Telangana, confirms this fragmentation in hard rock aquifers. 

Figure 2: Groundwater flow diagram showing discontinuous aquifer in pre-monsoon period 

Source: Mar´echal et al. (2018)
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We did not explicitly examine water trade, as it was not evident from general media. Our field visits to border villages in northern and southern Telangana in December 2022 also did not reveal signs of water trade. However, systematic evidence is lacking, making this an open question for further research.

RECOMMENDATIONS 

First, providing electricity at zero marginal cost without rationing encourages overuse of power in agriculture, which is likely to be economically inefficient and contributes to financial stress for state-owned distribution companies. Alluvial aquifers hold more storage than hard rock, but similar inefficiencies could also arise in them, because zero marginal cost pumping under free or fixed-price electricity and unrationed electricity can encourage over-extraction. Free electricity has become a routine election promise in many states, locking utilities and farmers into unsustainable patterns. Well-designed incentives or pricing mechanisms could help ensure that groundwater is used judiciously while still protecting the interests of smallholder farmers. 

Second, there is an urgent need to strengthen the groundwater monitoring system in regions with hard rock aquifers. The current practice of monitoring rest water levels at dedicated observation wells may be sufficient in alluvial regions where aquifers are well-connected but fails to capture changes in economically important farmer wells in fragmented aquifers. A redesigned monitoring regime should also integrate a sample of farmer wells into the network, so that observed water levels correspond to the wells that farmers actually depend on. This should include both depth measurements and information on well functionality, such as whether wells have run dry or have reduced yields. Additionally, digital reporting by farmers, combined with appropriate verification by the government could enable real-time tracking of aquifer conditions and support evidence based decision-making. Without such improvements, policy responses to groundwater stress will continue to be based on incomplete information, risking both underestimation of depletion and delayed corrective action. 

Note: This policy brief is based on our research paper titled—“Removing Rationing: Power Consumption and Groundwater Monitoring in South India” (Forthcoming in JEEM). 

Between 2014 and 2017, seven Indian states amended their regulations to allow women to work night shifts in factories, with the condition that employers provide female-friendly amenities. This article finds that the removal of gender-discriminatory employment restrictions led to an increase in female employment, without negatively affecting male employment. However, the benefits were concentrated almost entirely among large firms. 

Do laws designed to protect women from unsafe working conditions constrain the demand for their labour? This question sits at the centre of global debates about protective legislation in labour markets. Our recent research (Gupta et al. 2025) examines what happened when Indian states lifted long-standing bans that prevented women from working night shifts in factories. Our findings offer important lessons for policymakers seeking to expand female employment, particularly considering the significant labour reforms that have been recently initiated by many state governments. 

The problem: When protection becomes restriction

For decades, Indian law prohibited women from working night shifts in manufacturing, ostensibly to protect them from unsafe working conditions and exploitation. The Factories Act of 1948 restricted women to working only between 6 AM and 7 PM in manufacturing units. Similar laws prohibited women from working night shifts in shops and other commercial establishments. While these laws were intended to safeguard women’s welfare, they inadvertently created barriers to female participation in the formal manufacturing sector. 

This “paternalistic discrimination” (Buchmann et al. 2023) reflects a global pattern. At least 20 countries still prohibit women from working at night, while 45 countries ban women from sectors deemed “unsafe” by lawmakers (World Bank, 2024). These restrictions, however well-intentioned, assume women lack agency to make their own employment choices and that employers are unable to provide safe workplaces for all workers. 

India’s experience is particularly important given its strikingly low female labour force participation rates and the potential for manufacturing to provide formal employment opportunities for women. 

The reform: A natural experiment

In the early 2000s, a series of High Court judgements held that prohibitions against women working at night were unconstitutional because they deprived women of economic opportunities. Following these judgements, between 2014 and 2017, seven Indian states – Andhra Pradesh, Assam, Haryana, Himachal Pradesh, Maharashtra, Punjab, and Uttar Pradesh – amended their regulations, either through legislative amendments to existing laws or through executive regulatory orders, to allow women to work night shifts in factories, though with certain conditions. State governments typically required employers to provide female-friendly amenities such as separate toilets, transportation facilities, mechanisms to prevent sexual harassment, and adequate rest periods between shifts. 

These staggered reforms across states offer a unique opportunity to study the impacts of removing gender-discriminatory employment restrictions. We analyse data from over 290,000 registered manufacturing establishments from the Annual Survey of Industries (ASI), in the period from 2009 to 2018, to understand how lifting these bans affects female employment. We compare changes in firms before and after the reform and use ‘dynamic estimators’ that allow for the impact of the regulatory change to vary over time. We also use ‘synthetic control estimators’ that allow for the construction of a sample of appropriate counterfactual firms. 

Key findings: Size matters

We find that removing night shift restrictions increased female employment – but the benefits were concentrated almost entirely among large firms with 250 or more employees (Figure 1). 

Figure 1. Effects of the reform at firms of different sizes

Notes: (i) These figures show the impact of state-level amendments that allowed women to work in night shifts, on firm outcomes. (ii) Share of female workers is defined as the number of female workers in the firm divided by the sum of male and female workers (panel a). (iii) The extensive margin is measured by a binary variable which equals one when the firm has at least one female worker and zero otherwise (panel d). (iv) The figure plots the estimated average effect of the night shift changes for firms of different sizes: with permanent employees of at least 50, 100, 150, 200, 250, and 300, respectively. (v) The estimation includes firm and industry-year fixed effects. (vi) The bars show the 95% confidence interval for the estimates. A confidence interval is a way of expressing uncertainty about estimated effects. A 95% confidence interval means that, if you were to repeat the experiment with new samples, 95% of the time the calculated confidence interval would contain the true effect. ————————————————————————————

In states that lifted the ban, there was a 3.5% increase in the share of female workers at large firms, a 13% increase in the number of female workers, and a 6.5% increase in the likelihood of a firm employing any female worker. 

Our results are robust to the use of synthetic control estimators that construct a comparable counterfactual group to compare with treated (subjected to intervention) firms (Figure 2). There is no evidence of any trends prior to the reform that could be driving our results. After the reform is introduced, both the share of female workers and the number of female workers steadily increase at large firms. The gradual increase in the effects of the reform over time could reflect the time taken by firms to put in place the infrastructure required to employ women at night. 

Crucially, the increase in female employment did not come at the expense of male workers. We do not find any decline in the number of male workers hired at large firms. In fact, we find an increase in the total workforce at large firms, although the estimated coefficient is not significantly different from 0. In short, large firms may have expanded their total workforce rather than substituting women for men, suggesting the reforms helped firms overcome labour constraints. 

Figure 2. Event study of the impact of the lifting of night shifts (synthetic control estimator)

Notes: (i) These figures show the dynamic impact of state-level amendments that allowed women to work in night shifts in the state on firm outcomes using the Synthetic Difference-in-Differences (SDID) estimator by Arkhangelsky et al. (2021). (ii) The regulatory change was made in the year 0. For control states (not subjected to the reform), the pre-treatment period is before 2014, when the first regulatory change is implemented. (iii) The sample comprises large firms, which are firms that employ at least 250 employees. (iv) All specifications include industry-year and firm level fixed effects. (v) The bars show the 95% confidence interval for the estimates.
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The concentration of benefits among large firms reflects the economics of compliance with the new regulations. While states lifted the outright ban, they simultaneously imposed requirements for female-friendly infrastructure and amenities. These compliance costs created a significant barrier for smaller firms.

Large firms are better positioned to absorb these fixed costs for several reasons: they can spread infrastructure investments across more workers, reducing per-worker costs, and they are more likely to already operate night shifts and employ some women (Chakraborty and Mahajan 2023).

Who responds most: Export-oriented and firms previously hiring females

We further examine which types of firms were most responsive to these regulatory changes. Firms that already employed women were much more likely to expand female hiring after the ban was lifted. This suggests that having existing female-friendly infrastructure and experience managing gender-diverse workforces positioned firms to take advantage of the new flexibility. 

Export-oriented firms showed stronger responses than those focused on domestic markets. Companies operating in competitive global markets appear more willing to hire the best available workers regardless of gender, making them more responsive to the removal of hiring constraints. Firms in high-unemployment areas were also more likely to increase female hiring, likely because they could expand their workforce without driving up wages significantly. 

Broader economic effects

Despite the increases in female employment, we find no significant changes in firm output or profits in the short term. This reflects the relatively small share of women in the overall manufacturing workforce. Even if firms want to hire women on night shifts to ease constraints in recruiting a sufficient number of productive workers, increases in female employment do not immediately translate to measurable productivity gains at the firm level. We also find a slight reduction in capital expenditure by firms: if labour was substituted for capital, then this could explain our finding that total output did not change. However, the extent of substitution is too small for us to find significant effects on profits, at least over the timeframe we are considering. 

Wage rates for both women and men also remained largely unchanged. In some specifications, female wages even decreased slightly, suggesting that the regulatory changes may have also led to an increase in female labour supply. These results are also consistent with our previous result that the biggest increases in employment for female labour took place in labour markets which previous had relatively high levels of female unemployment. 

Policy implications: Beyond simple deregulation

Our findings carry important lessons for policymakers seeking to expand female employment. In particular, while removing discriminatory laws does help increase female employment, the details of implementation matters. The concentration of benefits among large firms suggests that smaller firms need targeted support to develop female-friendly workplace infrastructure – whether through subsidies, shared facilities, or relaxing some of the compliance requirements where they may be unnecessarily onerous. Policymakers should also build on existing progress: since firms that already employ women are most likely to expand female hiring, policies encouraging even minimal initial female employment may have cascading effects. 

The experience of these seven Indian states offers a glimpse of the economic costs of gender discrimination – even discrimination that is arguably well-meaning in intention. Our research provides an example of one such discriminatory legislation that constrains firms from hiring females who are able and willing to take on productive work and suggests that removing such distortionary regulation could reduce the economic gap between less developed and more developed countries. 

This article was originally published on Ideas for India.

India is currently at a pivotal moment in its economic and demographic trajectory. In 2025, Indiais estimated to overtake China as home to the largest working-age (15-64 years) population inthe world (Deshpande and Chawla, 2023)1. However, it is yet to tap into the full potential of this‘demographic dividend’. A large share of its prime working-age population remains out of thelabour force. As of 2023-24, nearly two-thirds (64.4 per cent) of India’s women (aged 15 years ormore) were not part of its labour force—i.e. they were neither working nor looking for work, datafrom the Periodic Labour Force Survey (PLFS) shows. Among men of the same age group, thecorresponding share was 22.5 per centi.

The picture remains sobering even among those with high levels of education. In 2023-24, amongwomen (aged 15 years+) who had a postgraduate or higher degree, only half (51.1 per cent) werepart of the labour force (among men, this share was 89.4 per cent)ii. Among women of theworking-age group (i.e. 15-59 years) who had received formal vocational or technical training,again, only 58.1 per cent were part of the labour force (either employed or unemployed) and 41.9per cent were not looking for workiii.

Among the women who were in the labour force and employed, over two-thirds were self employed, not necessarily as entrepreneurs and employers but primarily as own-account workersor unpaid helpers. Self-employment was high for men too, but women were more likely to beengaged in this form of employment. Only a small share of those in employment were in regularwage employment or running firms where they employed others. Agriculture and the primarysector remained the predominant employers of India’s workforce, especially the femaleworkforce.

A consequence of these skewed and gendered labour market patterns has meant that the Indianeconomy is unable to benefit from the potential of some of its most qualified and productiveworkers.

While gender gaps in the workforce are common around the globe, India’s case remainsconspicuous given the quantum and persistence of these gaps. With a female-to-male labour

force participation rate (LFPR) ratio of 42.6 per cent in 2024, as per the World Bank’s data basedon modelled estimates from the International Labour Organization (ILO), India trailed the globalaverage of 69.6 per cent by a significant distance. This ratio was similar at the turn of themillennium (40.8 per cent), and it worsened in subsequent years, before recovering.

Economists have often explained women’s labour force participation as having a U-shapedrelationship with economic development (see Jayachandran, 20202 and Goldin, 19943 asexamples, though there are some disagreements as well). Female LFPR tends to be higher at lowlevels of income but declines as incomes rise, and rises again at higher levels of income. This istrue both at the household level and at the level of the larger economy.

In India, however, the impressive economic growth of recent decades hasn’t translated intoincreased economic participation or opportunities for women. In fact, female labour forceparticipation witnessed a drop before recovering in recent years. Research has pointed to variousreasons behind this—from the lack of non-farming employment opportunities, decline inmanufacturing employment4 and occupational segregation leading to lack of adequateopportunities5, to the relative increase in wages of men leading to women reducing their laboursupply to supplement household incomes (the counter-cyclical nature6 of women’s labour forceparticipation). Even the recent increase in female labour force participation has been drivenlargely by an increase in self-employment7, primarily in rural areas, and not by regular wage orsalaried employment.

Beyond adversely impacting India’s ranking on various global indices, these skewed labourtrends have serious consequences—they hold India back from tapping into its full economicpotential, prevent firms and companies from benefiting from our entire talent pool, limitwomen’s lives and freedoms, and adversely affect not only the overall public culture but also thesocio-economic outcomes of both women and households.

WHAT CAN PUBLIC POLICY DO?

Several industries and occupations have kept women out or on the margins for decades, if notlonger. When women’s presence remains scarce in any arena, it becomes a barrier in itself,discouraging others from entering since women are more likely to join spaces where otherwomen are already present. Public policy can create the conditions to break the status quo, enabling a critical mass of women to enter and participate in activities from which they havebeen traditionally excluded on an equal footing.

There are multiple ways to do this: First, public policy must ensure women do not face any legalbarriers to accessing work opportunities. Second, policies could make it mandatory for employersto ensure a minimum representation of women and/or implement specific policies that aretargeted at women, such as mandatory paid maternity leave, providing transportation to femaleemployees, etc. While designed with the intent to promote women’s workforce participation,these can also sometimes lead to resistance from firms or create negative incentives for them tohire women (with female employees seen as having higher costs), leading to fewer women gettinghired (for instance, see Beneerjee, Biswas, and Mazumder, 20248 and Gupta, 20249, who look atthe unintended consequences of maternity leave in India, or Bhalotra et al. [forthcoming]10 onthe unintended impact of legislating to handle workplace sexual harassment). Third, instead ofthe former approach that places the onus of addressing supply-side constraints on firms, publicpolicy can help create the enabling conditions and infrastructure that make it easier for womento access economic opportunities. Kowalewska (2020)11 finds evidence that public policies canenable a critical mass of women even without placing hard mandatory requirements on business,but rather, by adopting a ‘soft’ voluntary regulations approach. However, the success of thisapproach depends on the broader public provision for women-friendly policies.

THE FOLLOWING SECTIONS IDENTIFY SOME POLICY MEASURES THATCAN HELP INDIA CLOSE THE GENDER GAPS IN ITS LABOUR MARKETS:

REMOVE LEGAL RESTRICTIONS:

Even though India’s Constitution envisages equality of opportunity for all, various laws restrictwomen’s full and equal access to employment opportunities. In 2022, there were more than 50acts and 150 rules in India preventing women from accessing employment opportunities, as perAnand and Kaur (2022)12 in their report, ‘State of Discrimination’. These laws impose limitationsand restrictions on employers hiring women, and often pertain to either working at night or inwork that is seen as hazardous, arduous or morally inappropriate. In subsequent editions, theState of Discrimination report found that while some states have eased some restrictions, manyof these continue to persist. The most recent edition finds that the 10 most populous states inthe country prohibit women from working in 217 different factory jobs13.

The Union Government’s Economic Survey 2024-25 also recognises this barrier, noting that‘labour laws intended to protect the rights of women workers have, more often than not,discouraged hiring by creating systemic barriers to their entry into the workforce’. Removingthese restrictions is a necessary first step to dismantling demand-side barriers that keep womenout of the workforce. While workers deserve protection from exploitation, the role of publicpolicy is to facilitate enabling conditions that ensure safe and humane workspaces for all, andnot discrimination rooted in paternalism, which prevents one half of the population fromaccessing work opportunities on an equal footing.

FACILITATE ACCOMMODATION CLOSE TO THE WORKPLACE:

While India has recorded staggering economic growth in recent decades, it has not translatedinto the availability of high-quality employment opportunities for everyone. Some of this hasbeen attributed to India’s shift from the primary to the tertiary sector, without the middletransition. Manufacturing also has the ability to create large numbers of jobs for women. Womencomprised over a third of India’s manufacturing workforce in 2023-24, and their share within theworkforce has seen an increase in recent years, as Nileena Suresh’s analysis14 of PLFS data shows.However, they are more likely to be working in informal manufacturing rather than in organisedmanufacturing, where they comprise just over a fifth of all directly employed workers—a sharethat has remained largely stable over time (Dhamija, 2023)15.

Setting up large factories and industrial clusters—ones that can generate significantemployment—requires large tracts of land, which is often available on the outskirts of cities andat a distance from residential areas. For women, this distance can become a barrier to accessingthese newly created job opportunities. Providing accommodation to workers close to theworkplace can not only help dismantle that barrier for women but also help factories andenterprises attract a larger pool of workers in general, making them more competitive. Chinapioneered this model of the ‘dormitory labour regime’, allowing its factories to tap into labour(though it also meant a lowering of freedoms for the workers)16. Several East Asian economiesfollowed in its footsteps (see Sheng and Shrestha, 199817; Nguyen et al., 201618; Ramadhani andManaf, 202019).

In an advisory issued to employers with the intent of boosting women’s participation in theworkforce, the Ministry of Labour and Employment recommends that every large and micro,small, and medium enterprise (MSME) employer should ‘collaborate to build or facilitatecommon working facilities and/or dormitories/working women hostels’. This would help reduce travel times for the employees and enable employers to include more women in their workforce.The guidelines also recommend attaching childcare and senior care facilities to these hostels.

In its 2024 report ‘SAFE Accommodation—Worker Housing for Manufacturing Growth’, NITIAayog highlights the importance of investing in such residential facilities. It notes:

“A key challenge in this growth trajectory is ensuring the availability of a sufficient workforce in a single,centralised location. Given the population density and scale of operations, manufacturing relies heavilyon migrant workers. This situation presents a complex dilemma where the development of factories hingeson the availability of accommodation, yet the demand for housing relies on the existence of factories.Inadequate accommodation near industrial hubs contributes to high attrition rates, low productivity, andworkforce instability. Moreover, this prevents workers, particularly women, from migrating in search of better employment opportunities, thereby impacting the manufacturing sector’s competitiveness andundermining the sector’s growth potential.”20

The report also identifies potential regulatory reform to pave the way for more working housingthat could help expand the worker supply for India’s factories.

In 2024, the state of Tamil Nadu joined hands with manufacturing firm Foxconn to build aresidential complex catering to over 18,000 women workers in the company’s factories inSriperumbudur. This was the first residential complex of this scale built by a state governmentfor a private manufacturer. The company followed it up with dormitory facilities for its factoryworkers in Chennai later that year. Women comprise the bulk of the company’s employees inIndia.

While women-only residential facilities can enable women to enter and remain in the workforce,they may also come with limitations in some cases. One, firms are likely to invest in these onlywhen they largely depend on women workers. Where the share of women is low, companies mightnot find it cost-efficient to invest in such facilities, and consequently, women’s participationmay continue to remain low. Second, such facilities might work better for younger women,particularly those who are not married or don’t have children. Women with partners and/orchildren may want to live with their families rather than on their own.

Building residential facilities that cater to all workers and/or allow families to move in togethermight be a way to avoid these limitations. These will allow firms to attract more women across the age spectrum and build a bigger pool of workers in general. Allowing families to live togetherwhile accessing employment will incentivise workers to remain in the workforce longer, as sucharrangements allow workers to better manage their professional and personal lives together.Building such residential facilities also creates backward and forward linkages, boosting localeconomies and widening the geographic spread of economic development beyond a handful ofcities.

Hostels for working women

In addition to investing in accommodation facilities close to upcoming and existingmanufacturing units, building working women’s hostels can be an important way to supportwomen in accessing employment opportunities that are located at a distance from their homes.Working women’s hostels have existed in India for decades. Satyogi (2023)21 traces their originsto 1972-73—as women sought work in Indian cities, the challenge of safe accommodation andsecurity emerged, and in response, such hostels were developed by voluntary organisationswith funding aid from the government. In subsequent years, public policy evolved to increasetheir budgetary allocations and expand their coverage.

Currently, the government runs the Sakhi Niwas scheme. Whereas earlier the scheme was runas a grant-in-aid initiative where funds were released to states and union territories (UTs) forthe construction of new hostels or expansion of existing ones, in its current form, the schemeis being run as a demand-driven, centrally sponsored scheme. Now, states and UTs assess theirrequirements and submit their proposals, and once approved, the funds are released.

There were 523 functional Sakhi Niwas hostels spread across the country at the end of 2024,and 5.29 lakh women had benefited from these between April 2014 and December 2024, as perthe Women and Child Development (WCD) Ministry’s website. However, not all states havesuch facilities; Bihar, Goa, Ladakh, Punjab, Tripura, Uttarakhand, and West Bengal do not haveany hostels as per the WCD Ministry data. Increasing the availability of such hostels can helpmore women access work and educational opportunities. The Union Government allocated INR5,000 crores to the scheme for the construction of hostels in FY 2025.

While government-run hostels are affordable, they can suffer from long construction delays,limited services, and poor management or quality. Private accommodation with betterfacilities may be unaffordable for many. The state of Tamil Nadu runs its hostels—the ‘Thozhi’hostels—via an innovative public-private financing model that can address both thesechallenges. The state provides the land and partial grants, and the Tamil Nadu Shelter Fundco-finances the construction of these hostels. The fund conducts an open bidding processwhere private operators can bid to operate these hostels. The result has been hostels that aresafe but also have modern infrastructure with quality services, allowing women to chooserooms based on their budgets. The hostels also have creches and facilities for those withdisabilities (World Bank, 202422).

INCREASE THE AVAILABILITY OF PUBLIC TRANSPORT:

Residential facilities close to the workplace are one way to make jobs more accessible to workers,especially women. Reliable, safe, and affordable transport is another. Men and women commutedifferently, and this has implications for their ability to participate in economic life. As perCensus 2011, nearly half (45.2 per cent) of working women did not travel to work; among thosewho did, walking was the most common mode of travel. Buses were the next most used mode oftransport. Among men, nearly three-quarters of the workers did travel, and while walking wasthe most common mode for men too, they were less likely than women to be doing so. The nextmost common modes were bicycles and two-wheelers, and buses were the fourth most commonmode. Women were also more likely to be travelling shorter distances. It is in this context thatthe availability of affordable, regular and safe public transport assumes salience for women.

In recent years, several states have made bus travel free for women. Field reports (see exampleshere, here, here, and here)23 suggest that these are helping women, especially those from low income households, in various ways—from better access to markets for small business owners toimproved savings for daily-wage earners and greater independence for women. Women’s use ofbuses has increased substantially across states where such schemes have been introduced.However, to ensure that their full benefits are harnessed, there is a need to increase investmentin public transport. In several cities, there is a lack of sufficient number of public buses andtrains, leading to overcapacity that not only creates safety hazards for all but also leads to a bias

and backlash against women riders24. Increasing the availability and frequency of buses isessential to ensure the success of these initiatives. To specifically support working women, thegovernment could consider hub-and-spoke models that cater to their needs. Round-the-clock availability of good public transport that is equipped to ensure the safety of women can helpwomen access jobs that may be located at a distance or where work shifts spill over to very lateor early hours. In the absence of such public facilities, the onus lies either on women themselvesor on individual firms to arrange for safe transportation, and not all organisations have therequired resources or commitment to do so. As a consequence, women end up missing out onpotential employment opportunities.

INVEST IN CHILDCARE INFRASTRUCTURE AND POLICIES:

Given that women tend to shoulder a disproportionate share of childcare-related work, theavailability of quality and affordable childcare services has been recognised as a critical factor ininfluencing women’s ability to participate in labour markets around the world (see, for example,Kowalewska, 202025; Clark et al., 201926; Chaturvedi, 201927; Anukriti et al., 202328). Recognising its importance, India has taken essential steps to make such services available to workingparents, especially working mothers.

In 2017, India amended the Maternity Benefit Act, 1961, directing all establishments with 50 ormore employees to arrange a creche facility at their office premises. The act also directsemployers to ensure women can visit these facilities up to four times a day.

Additionally, India has been running the National Creche Scheme to provide daycare facilities tochildren aged six months to six years (beyond six years, the Right to Education Act makes schooleducation a right for children aged 6-14 years). The creche scheme was launched to supportwomen’s labour force participation, and the WCD Ministry guidelines envisage creches to belocated near homes or the place of work of mothers (ideally at a walkable distance of 0.5-1 km).The creches are being run at Anganwadi centres, and along with providing a safe space to hostchildren while parents are away, they are also expected to provide nutritional and learningservices for the young children.

For the majority of India’s women who work either in informal employment or are self-employed,these creches can provide the necessary support as they manage the dual demands of theiremployment and their role as parents. However, despite existing for some years now, the crechescheme is yet to translate into the availability of services for India’s women. For instance, therewere 11,395 approved Anganwadi-cum-creches as of 28 February 2025, but only 1,761 (~15 percent) were operational, WCD Ministry data shows. In several states, not a single creche wasoperational.

In addition to the creches supported by the WCD Ministry, Karnataka’s Koosina Mane crechesprovide another childcare model, specifically for women workers in rural areas. In 2023, the stategovernment announced that it was setting up Koosina Mane (or children homes/creches) in 4,000gram panchayats that would cater to women working under the Mahatma Gandhi National RuralEmployment Guarantee Act (MGNREGA). In addition to supporting mothers, the creches wereenvisaged to create new job opportunities for women. While creches are usually run by the WCDMinistry, the Koosina Mane creches are run by the Department of Rural Development andPanchayat Raj.

While some companies do support their employees with childcare leave and support either outof compliance or voluntarily, relying on firms to provide such support comes with limitations.First, while creches can cater to male and female employees who are parents alike, firms may seethe costs of complying with such mandates and providing such facilities as additional costs ofhiring women, jeopardising women’s employment. Second, and more importantly, even whenfirms make such infrastructure available to their employees, the large majority of women end upnot benefiting because they are working in the informal sector, as casual labourers or in smallerfirms. Investing in more public infrastructure of care can provide essential support to all workers,especially women who continue to shoulder the bulk of caregiving responsibilities across the country. Public provision of such infrastructure and services also reduces the compliance costson individual firms and reduces the costs of hiring women.

GUARANTEE A MINIMUM LIVING WAGE AND EQUAL WAGES TO ALL WORKERS: Equal pay for equal work is envisaged in the Indian Constitution as one of the Directive Principlesof State Policy. In 1976, India passed the Equal Remuneration Act, which specified that it wasthe duty of the employer to pay equal remuneration to men and women workers for the samework or for work of similar nature. Since 1948, India has also had a law that envisages payingworkers a minimum wage. In practice, however, women’s earnings tend to be lower than thoseof men across employment categories, and their average earnings remain meagre, far below theminimum wage.

In the April to June 2024 quarter, women in regular wage and salaried employment earned INR17,034 on average, as compared to INR 22,375 for men29, data from the PLFS 2023-24 shows.Those working as casual labourers earned INR 306 per day (compared to INR 459 for men), whileself-employed women earned only INR 5,803 on average each month compared to INR 16,723 for

men. These numbers must be read keeping in mind that women are most likely to be self employed, an employment category that has been on the rise in recent years, indicating theoverall low earnings of women workers in India. India ranks among the bottom 10 countries onthe indicator ‘Wage equality for equal work’ in the World Economic Forum’s Global Gender GapIndex for 2025.

Several research studies have noted the persistence of wage gaps. Using data from theEmployment and Unemployment Surveys (EUS) of 1999-2000 and 2009-10, Deshpande, Goel, andKhanna (2018)30 found that women in regular wage and salaried jobs earned less than men, andmuch of the wage gap was discriminatory. Further, they found that while the wage-earningcharacteristics of women had improved relative to men in the period, the discriminatorycomponent of the wage gap had increased as well. They also note that gender wage gaps werehigher among low-wage workers compared to high-wage ones, and that this ‘sticky’ floor hadbecome stickier for women over this period. Duraisamy and Duraisamy (2016)31 had similarfindings—that women at the bottom of the distribution faced higher wage discrimination andthat it had increased over the years (1983-2012).

When women’s earnings are lower, they have fewer incentives to continue working and theirlabour force participation remains precarious. While the law envisions wage parity, ensuringthere is no wage discrimination in practice is essential. One nudge for this could be increasedtransparency—in some countries, for instance, companies are required to disclose their genderwage gaps. This simple requirement can bring in some accountability and create incentives forfirms to ensure they pay their workers equally, regardless of gender.

Additionally, while the law provides for minimum wages, ensuring a minimum living wage for allcan enable better living conditions for all workers, as well as help women who tend to beovercrowded in low-paying roles and industries. The ILO defines32 a living wage as ‘the wage levelthat is necessary to afford a decent standard of living for workers and their families, taking intoaccount the country’s circumstances and calculated for the work performed during the normalhours of work’. Essentially, a living wage allows a worker to meet their basic needs and live withdignity. Ensuring workers are paid a living wage and not just a minimum wage can help narrowthe gender wage gap, especially for those at the lower end of the wage-earning spectrum (Chenand Xu, 202433; Majchrowska and Strawiński, 201834; Kahn, 201535). The Asia Pacific Forum onWomen, Law and Development (APWLD) argues that industries often keep wages low to cut costsand stay competitive, and many of these industries, such as textiles, tend to employ women inlarge numbers36. Moving to a living wage paradigm can help. Evidence also indicates that organisations that pay workers living wages see higher retention and longer employee association.

ENSURE SAFE WORKPLACES:

Safety at the workplace should be non-negotiable, but for women, bullying, harassment, andsexual violence are common experiences at their workplaces. Such violence is a serious violationof their dignity and fundamental rights, and a very real barrier to their ability to participate inthe workforce.

In 2013, India passed the landmark Sexual Harassment of Women at the Workplace (Prevention,Prohibition and Redressal) Act—commonly referred to as the POSH Act—to address this. The actdefines what constitutes sexual harassment at the workplace and includes unwelcome acts orbehaviour that could be either direct or implied in this definition. It also has a wide definition ofthe workplace and covers workers in the unorganised sector, domestic workers, and any placevisited by an employee in relation to their work.

While the enactment of the law has been a significant step towards creating safe workplaces, itsimplementation leaves much to be desired. Another major lacuna has been the gap in using data to improve the implementation of the act37. Even though the act makes it mandatory foremployers to report data on cases reported and resolved, this data has not been used tounderstand the landscape of violence and its redressal. It would be very useful to use learningsfrom this data to understand compliance, identify firms that are not following the law in its fullspirit, and influence safety policies going forward. It should also be supplemented withemployer-employee surveys to complement and supplement the learnings. As noted in aprevious analysis (Chawla, 2024)38, ‘if the day-to-day experience of women at workplaces has theshadow of sexual harassment looming large, it is a continuous emotional and psychologicalburden that takes a severe toll on the well-being of women, and significantly diminishes theirability to work productively’.

ENSURE ADEQUATE SANITATION FACILITIES:

A news report in June 2025 highlighted the case of women workers at a construction site in theNational Capital Region who were removed from their jobs because they wanted to use thetoilet39. The report pointed to the lack of toilet facilities on such sites, creating serious issues ofhealth and dignity for women, and how they cope with the same. This was not the first time sucha gap had been highlighted in the press40. While policy initiatives such as the Swachh Bharat

Mission have led to increased and improved sanitation facilities at the household level (whichcan improve the labour supply of women41), access to toilets at the workplace remains a seriousand common barrier for women, especially those working in informal and precarious forms ofemployment.

Various government laws mandate the provision of toilets for workers, and yet, numerous fieldreports and lived experiences of women paint a different picture. The lack of toilets poses healthrisks42 for women, leading to discomfort43, infections44 and health concerns45, and safety risks asthey are forced to defecate in the open. As a consequence, it negatively impacts their economicproductivity and they are pushed to miss work days or work fewer hours46. Ensuring all womenworkers have access to clean and functional toilets is a simple intervention that can improvetheir workplace experience and productivity significantly. In their research using data from the73rd round of the National Sample Survey Office (NSSO), Posti, Khare, and Kumar (2023)47 foundthat access to toilets had a positive impact on the share of female workers in an informal firm.

Along with ensuring that individual firms are complying with the law, making available cleanand functional public toilets in markets, public spaces, and places that are easy for workers toaccess can help. It also reduces compliance costs on individual employers and firms, especiallysmall ones that lack adequate resources and infrastructure. More importantly, these createservices for floating worker cohorts that don’t have fixed workspaces but that have to movebetween locations constantly, such as street vendors, gig economy workers, drivers, deliveryagents, etc.

INVEST IN MODERN AND JOB-RELEVANT SKILLS TRAINING:

Women tend to be over-represented in certain sectors and roles, and many of these tend to paylower wages (see Suresh, 202548; Das et al., 202349; Dhamija, 202350; Mondal et al., 201851).Because of this gendered traditional presence, younger women and men often end up aspiringfor similar jobs and work as their senior peers, perpetuating the cycle and solidifyingoccupational segregation. Breaking the cycle at the level of skilling and vocational training canbe disruptive, building a bigger supply pool of female candidates for traditionally male

dominated roles. However, women are less likely to receive any form of formal or informaltraining as compared to men, and even when they do, they are more likely to get trained intraditionally female-dominated sectors.

Sample this: only 24.5 per cent of women in the working age group (15-59 years) had receivedany form of vocational training (formal or informal), as per PLFS 2023-24, in comparison with44.9 per cent of men. This share was only 18.9 per cent among younger women (aged 15-29years), while 33 per cent of younger men had received such training. The most common field ofvocational technical training was Information Technology and Information Technology EnabledServices (IT-ITES). Among men who had received any form of vocational or technical training,37 per cent had received training in IT-ITES, and among women, the corresponding share was28.4 per cent. After IT-ITES, for women, the next most common fields were textiles andhandlooms, apparel (27.6 per cent), beauty and wellness (7.2 per cent), healthcare and lifesciences (5.9 per cent), and office and business-related work (5.5 per cent). For men, the nextfour most common fields were electrical, power, and electronics (13.5 per cent), office andbusiness-related work (6.5 per cent), healthcare and life sciences (4.4 per cent), and mechanicalengineering (capital goods, strategic manufacturing) (4.3 per cent). (Note: these shares excludethe ‘Other’ field).

The need to invest in skilling women in non-traditional and modern vocations is particularlyimportant given the ongoing tectonic shifts in the world of work. With digital technologies,robotics, and artificial intelligence disrupting long-established roles and creating new ones, thecurrent moment presents an opportunity to accelerate the process of correcting the gender skewin several industries. Training women in these new-age skills and technologies can open upseveral new avenues for them—from logistics and manufacturing to green energy, the gigeconomy, robotics, and more. But getting younger women to be interested in theseopportunities—traditionally held by men—will not be easy. On one hand, there is a need toensure a steady pool of women who are enrolling for and participating in such upskillingprogrammes. On the other hand, it is important to reach out to young women along with theirfamilies and communities, and spread awareness about the possibilities.

Under its Skill India Mission, the Indian government runs several initiatives to train youngpeople in various vocational and industrial skills, such as the Pradhan Mantri Kaushal VikasYojana (PMKVY), Jan Shikhshan Sansthan (JSS), National Apprenticeship Promotion Scheme(NAPS), and Craftsmen Training Scheme (CTS), delivered through various Industrial TrainingInstitutes (ITIs) spread across the country.

As of 30 June 2024, India had 15,034 ITIs spread across various states. Over 300 of these wereexclusively for women. The share of skill training institutions exclusively for women was betteramong India’s National Skill Training Institutes (NSTIs). Of the 33 institutions, over half (19)

were exclusively for women. However, women remained a minority among those enrolled in theITIs. In the academic session 2022, women comprised only 14.1 per cent of those enrolled in ITIs,while men made up the other 85.9 per cent of students, an analysis of data from the Ministry ofSkill Development And Entrepreneurship’s NCVT-MIS-ITI Dashboard shows (while 46 per centof the total available seats remained vacant). Further, the top three trades in which students wereenrolled remained different for male and female students: electrician, fitter, welder for men, andcomputer operator and programming assistant, electrician and sewing technology for women.

In comparison, women comprised 80.4 per cent of the beneficiaries trained under the JSS schemebetween FY 2021-22 and 2023-24. However, they were mostly trained in beauty or apparel related skills. In a response52 to a question in Parliament, the Ministry of Skill Development andEntrepreneurship observed:

‘JSS scheme is offering courses which may be preferred by women such as Beauty Care Assistant,Assistant Hand Embroider (Phulkari / Chickankari / Kashmiri / Zari Zardozi / Kantha), BeautyCare Assistant, Assistant Dress Maker, etc. These courses are having [the] highest enrolment ofwomen beneficiaries.’

Similarly, the government runs several vocational training centres exclusively for women, butthe courses they offer largely fit traditional occupational stereotypes, mostly related to beauty,tailoring, secretarial roles, etc.

Barriers that prevent women from accessing economic opportunities, such as distance and lackof safe transportation and accommodation, also limit their access to these opportunities (NITIAayog, 202353). Additionally, there are financial constraints, lack of awareness, a tedious admission process that requires access to digital devices and services, as well as a lack of gender sensitive cultures and infrastructure at the ITIs that prevent women from enrolling in thesecourses (Ministry of Skill Development and Entrepreneurship, 202054). The predominance oflimited vocations and technical skills is another barrier preventing women from accessing skillsthat would enable them to access good-quality and better-paying jobs. Addressing these barriersand enabling women’s access to skilling opportunities, especially ones that can help them accessbetter jobs, should be a priority for public policy.

Traditional economics attributes low labour force participation to supply-side and demand-sidefactors. The supply side includes factors that impact women’s ability to ‘supply’ their labour orbe available for work, such as health, educational attainment, skilling, domestic responsibilities,etc. On the other hand, demand-side factors are linked to the ‘demand’ for women’s labour—theavailability of jobs, safe workplaces, remuneration, etc.

India has made remarkable progress on women’s education enrolment and attainment and onfertility and health outcomes (the supply-side factors). These have been accompanied byimpressive economic growth and development in recent decades. Yet, these gains have nottranslated into women’s economic participation to their full potential. There is not only aquantitative gender gap in our labour markets, but women are also far less likely to be in regular

wage employment, and their average earnings remain lower than those of men acrossemployment types. This is despite the fact that the gap in educational attainment has virtuallyclosed, and girls and young women consistently have better educational outcomes than men.Yet, women continue to shoulder a disproportionate share of unpaid domestic and caregivingwork that consumes the bulk of their time. On average, an Indian woman spent 236 minutes eachday on unpaid domestic work for the household in 2024, while an Indian man spent only 24minutes. These are some of the widest gender gaps in the world55.

While governments should not dictate how a household is run, public policy can help build andnurture the right infrastructure and services to alleviate this disproportionate burden on women.India has enacted several landmark policies in this direction—from mid-day meals to Anganwadicentres, and maternity and childcare leave. But beyond these supply-side factors, demand-sidebarriers remain very real roadblocks to women’s economic participation. These barriers preventwomen from altogether entering or thriving in the workforce.

Beyond outright legal barriers, organisations and firms tend to keep women out in myriad ways— from gendered hiring ads and biased recruitment processes to unsupportive work cultures,limited opportunities for growth, wage gaps, and lack of safety. While some of these are rootedin an explicit bias against women (such as assumptions that women won’t be able to do somework or are likely to drop out), others may be due to unintended or covert biases (for example,research evidence has shown that simple design choices regarding how job ads are worded orhow recruitment processes are structured may have implicit gender biases). In addition, otherbarriers may arise due to increased compliance costs when hiring women. The very laws that arebrought in to support women in the workplace end up jeopardising their prospects.

From helping ease supply-side constraints to dismantling these demand-side barriers, there is alot that public policy can do. Not only will these help women access more opportunities, theywill also make our labour force more competitive, productive, and allow us to unleash the fullpromise and potential of our young and ambitious population.

KEY RECOMMENDATIONS:

● Remove legal restrictions: Eliminate laws and policies that restrict women fromcertain jobs. Focus instead on creating safe, accessible and non-discriminatoryworkplaces for everyone.

● Invest in modern and job-relevant skills training: Instead of training women in alimited set of vocations, skilling programs for women should include modern, job relevant skills, including in traditionally male-dominated fields. This creates a largerpool of qualified female candidates for diverse roles and sectors.

● Provide accommodation near manufacturing units: Build or facilitate residentialcomplexes and dormitories near factories and industrial clusters. This removes amajor barrier for women living far away, attracts more workers, and helps all workersbetter manage their professional and personal lives.

● Invest in hostels for working women: Increase the availability of safe, affordablepublic hostels. Explore innovative public-private partnerships, like Tamil Nadu’s“Thozhi” program, to expand options.

● Increase the availability of public transportation: Invest in more frequent, safe,and available public transport. Implement hub-and-spoke models and round-the clock services to support working women with varied work shifts.

● Expand childcare infrastructure: Increase the number of operational public crechesin both urban and rural areas. Instead of putting the onus on individual employers,investing in public childcare infrastructure is crucial, especially for women who workin the informal sector, in smaller firms or in casual labour.

● Substantially increase the availability of clean and functional toilets: Along withensuring that individual enterprises provide sanitation facilities for their workers, it isimperative to provide clean and functional public toilets in public spaces. Thesecreate services for workers who don’t have fixed workspaces such as street vendors,gig economy workers, drivers etc.

● Ensure equal pay and a living wage: While laws for equal pay exist, wide genderwage gaps persists. Public policy should enforce wage parity – making it mandatory todisclose gender wage gaps can be one way. Further, shifting the focus from aminimum wage to a minimum living wage can help since women tend to beoverrepresented in low-paying roles.

● Enhance workplace safety: Safe and harassment-free workplaces are a fundamentalrequirement for women’s sustained participation in the workforce.

There is a need to ensure that the Sexual Harassment of Women at the Workplace (POSH) Act is beingimplemented in letter and spirit. Using compliance data to understand and improvethe law’s working is essential.