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Charting new heights: What does it take for women to work in the formal economy?

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India’s female labour force participation rate (FLFPR) has increased marginally from 32.5% in 2020-21 to 32.8% in 2021-22. But is this pace fast enough? How can women’s participation in the labour force increase to match the global average of 47%?

While India continues to have one of the highest increasing GDP per capita growth at 6.3% in 2022 as compared to other South Asian counterparts, some neighbouring countries like Bhutan (53.8%) and Nepal (40%) have a higher female labour force participation rate as compared to India in 2022.

Women can have a tremendously positive impact on India’s economy. By 2025, if the FLFPR of women increases at the same rate as men, it can add USD 770 billion to India’s GDP. But how close are we to achieving this goal?

Policymakers have increasingly emphasised bringing women into the workforce through policies and programs to build their skills while addressing normative barriers that deter women from taking up jobs. Some barriers result from higher dropout rates among girls, limited job opportunities, and wage discrimination. Moreover, social norms around mobility, decision-making, and household responsibilities can also hinder the extent to which women seek employment in the first place. And after childbirth, re-entering the workforce becomes even harder.

Oxfam India research suggests that while similar norms persist in other South Asian countries, there are far more barriers that hinder women going to work in India. A pertinent example is the correlation between increased development rates and higher household income in urban Indian settings, which paradoxically impacts a woman’s ability to pursue work opportunities outside her home. This trend is fueled by societal preferences for women to remain in domestic roles, particularly as their status advances. Alongside challenges related to safety and mobility, additional factors such as the limited availability of white-collar positions for the growing number of educated women contribute to these barriers. In contrast, countries like Bangladesh offer more formal avenues for women’s employment, particularly in expanding international trade sectors

Moreover, the informal nature of many Indian industries, especially manufacturing, inhibits women’s participation in the burgeoning job market, leading to a predominantly male-dominated environment. A significant factor contributing to this situation is that women in India often experience their first pregnancy before the age of 22, assuming primary responsibilities for childcare, especially in urban areas. Consequently, women are often forced to leave their jobs, opt out of the workforce, or navigate the challenge of providing unsupervised care for their children. This emphasis on early years childcare supersedes career pursuits, and urban women, distinct from their rural counterparts, lack the robust community support systems that enable them to balance work and child raising responsibilities effectively.

While women have access to institutional support, it remains limited to rural programs for pregnant women and post-childbirth care. The Pradhan Mantri Matru Vandana Yojana (PMMVY) is a wage compensation program that provides financial support to pregnant and lactating women to improve maternal and child health. Meanwhile, the Janani Suraksha Yojana (JSY) offers financial support and resources to pregnant women for safe delivery and post-delivery care.

Additionally, India has policies that mandate employers to provide on-site childcare facilities under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS). The country also has several policies that authorise childcare for organisations with 50 or more employees. However, most such provisions focus on women in rural areas. Inadequate support in semi-urban and urban spaces remains a missing link for women when they attempt to reenter the workforce post-childbirth.

So, what is the way forward to galvanise women’s labour force participation? One way is to formalize the care economy by investing in the childcare system. Although crèches under the National Creche Scheme understandably reduced during COVID-19, from 18,000+ in 2017-18 to 6,000+ in 2020, available data does not explain if these numbers have shifted between 2021-2023. Increasing crèches at scale will require more childcare professionals, teachers, healthcare professionals, and other associated people. Moreover, if the number of crèches increases, it would enable convergence between upskilling women through government programs, such as the Swarna Jayanti Shahari Rozgar Yojana (SJSRY), which supports women’s self-employment.

Government policies  can prioritise encouraging initiatives, such as starting local childcare crèches. Upskilling programs, such as the National Urban Livelihoods Mission, can train women in specific areas, such as health, nutrition, and education, to evolve them as childcare professionals as a career starting point. India can take note of countries, such as Mexico, that run large-scale subsidised childcare programs to encourage women to return to work.

Another approach would be for the government to incentivise private firms that employ more women with tax rebates and other forms of recognition. Some industry players in the manufacturing sector have 100% women employees. Female employment enables government involvement while allowing industries to direct their corporate social responsibility ventures to benefit their output and productivity rates.

Investing in the childcare ecosystem, building engagements with the private sector and civil society, and creating policies that enable women’s participation in the formal economy can help overcome existing normative barriers and limited economic opportunities. Together, these interventions can chart new heights for women and build milestones for India’s growth story.

Building an ecosystem of collections through BBPS

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Digital payments in India grew phenomenally in the past decade and are expected to rise over USD 10 trillion by 2026. The digitization of bill payments and collections will comprise a significant part of this growth while it improves access to financial services.
BBPS intends to use its standardized, interoperable, and secure payment solution. It, thus, remains at the core of India’s collections ecosystem. It seeks to become the country’s de facto collections platform. In this new white paper, MSC traces BBPS’s journey and examines its potential in the next decade.

Decoding the extent and exposure of financial fraud among DFS customers

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The publication discusses lessons and insights from MSC’s study to decode the extent and exposure of financial fraud among digital financial services’ (DFS) customers. It summarizes major trends in digital fraud, implications for various demographic segments, and the interplay between technology, awareness, and user vulnerabilities. The publication highlights vital lessons for policymakers to design proactive measures, streamline complaint resolution systems, and integrate technology with grassroots outreach for effective fraud prevention. It builds on various stakeholders’ experiences, from victims to financial service providers, and gives a holistic view of the digital financial landscape and its challenges.

The six village story – India: An assessment of the real gap in financial inclusion

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The study uncovered the status of access to banking services in rural India, banking and digital financial services usage, and customer perspectives on the delivery of banking services. This report provides insights on these aspects. The updated version of the report was uploaded on October 6, 2023.

Decoding India’s Digital Personal Data Protection Act

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The Cambridge Analytica scandal of 2018 rocked the world and grabbed headlines as one of the most massive data privacy breaches ever. Cambridge Analytica accessed data from millions of Facebook users without explicit consent and used it for targeted political advertising. The breach stemmed from a personality quiz app that collected data from both users and their Facebook friends. And the numbers were shocking—the breach impacted up to 87 million people. 

India’s new Digital Personal Data Protection (DPDP) Act intends to prevent data privacy breaches such as this. The DPDP Act was designed to counteract such unauthorized data collection and misuse, with strict consent and user rights provisions. It holds promise to bolster our digital security framework and ensure citizens’ privacy.

Over the past years, India has sought to build this system through expert discussions, reports, and the introduction of two earlier versions of the bill in 2019 and 2022. The Indian parliament approved the DPDP Bill in 2023, six years after the important case of Justice K.S. Puttaswamy v Union of India. In the case, India’s Supreme Court established the right to privacy, including personal data protection, as a fundamental right under the Indian Constitution’s “right to life.” The Supreme Court, comprising nine judges, recommended that the Indian Government establish a well-structured system to safeguard personal data. 

This blog outlines the key provisions of the DPDP Act and the exemptions granted to various entities:

Scope of DPDP: The DPDP Act addresses several aspects, much like the EU’s General Data Protection Regulation. It broadly defines “personal data” to encompass various types of information about individuals. Furthermore, this Act applies to all entities that handle personal data, regardless of their size or whether they are private. 

Purpose limitation: The DPDP law sets clear guidelines for the online use of personal data. It permits the use of this data only for specific reasons. The data must be erased once those reasons are fulfilled. Additionally, individuals have rights regarding their personal data. They are entitled to be informed about its use, access it, and request its deletion.

Establishment of Data Protection Board: The Data Protection Board plays a significant role to ensure the proper implementation and enforcement of data protection regulations. The board serves as a regulatory authority that oversees and supervises the protection of personal data in the country. Its key roles and responsibilities will include regulation and oversight, data audits and assessments, handling and complaints, research and development, and penalties. 

Additional responsibilities for significant data fiduciaries: The DPDP Act empowers the government to label certain companies as “significant data fiduciaries” (SDFs). This categorization of SDFs will be based on factors, such as the volume and sensitivity of data they handle and the potential risks to the country. When companies are designated SDFs, they have increased responsibilities. One important responsibility is to assign a Data Protection Officer (DPO) who works in India. This person is the contact for complaints. SDFs must have an independent data auditor who ensures compliance with the DPDP Act and evaluates their data protection measures regularly. 

Data transfers: The DPDP Act currently does not restrict the transfer of personal data outside India. Instead of defaulting to limitations, the Act assumes that data transfers are permissible unless the government specifically restricts transfers to certain countries or imposes other limitations. The Act does not provide clear criteria to impose such restrictions. Additionally, the DPDP Act clarifies that it will not change any existing data localization requirements. 

Consent management: The DPDP Act requires that consent for data processing be “clear, specific, informed, and unequivocal.” Companies (data fiduciaries) must use personal information only for lawful purposes. They can use this data only with the individual’s (data subject’s) permission or for a justified reason. 

Companies must use personal data exclusively for the purpose they inform the individual about. If they want to use it for a different purpose, they need to seek permission again. This ensures companies cannot obtain blanket approvals for multiple uses. Individuals can decline data use at any point, and rejection should be as straightforward as consent. 

If someone opts out, their data must be deleted unless a specific law mandates its retention. The DPDP Act would allow individuals to grant, review or deny data use through a “Consent Manager” which will be registered with the data protection board. Consent Managers are tasked to ensure compliance and manage individuals’ data preferences.

Grievance resolution: The DPDP also allows people to seek grievance resolution, which means the company should provide an easy way to complain if customers feel their data was shared or processed without consent. The law does not specify the turnaround time for companies to respond to complaints. This decision will be made through separate rules, and various companies may have different timeframes. The DPDP gives customers the right to “appoint a nominee,” which allows individuals to select someone to act on their behalf if they cannot do so themselves.

Fine and penalty: The DPDP Act removes section 43 A of the IT Act, 2000, which provides for compensation if a company leaks an individual’s sensitive personal data or information. DPDP imposes fines on entities, including companies, banks, and even government data handling agencies, if they process citizens’ online data beyond the lawful purpose. These organizations can only use citizens’ online data for “legal reasons.” If they break the rules, they could face penalties that range from INR 50 crore to INR 250 crore (USD 6 million to USD 30.2 million), and their platform might be blocked. 

The DPDP outlines specific responsibilities for users. Individuals must not impersonate others when they provide personal information, not omit crucial details when they submit personal data for government documents, and refrain from false or trivial complaints. Failure to adhere to these responsibilities may lead to fines up to INR 10,000 (up to USD 120). 

Data protection for minors: The DPDP Act establishes important responsibilities on how to handle children’s personal data. It defines “children” as anyone younger than 18 years. The Act mandates that companies that handle data cannot process children’s data in a way that might harm their well-being. The Act also makes it illegal for companies that handle data to track or monitor children’s behavior or show them specific ads.

Exemptions: The law has some exceptions for government entities and includes specific exceptions. For example, the government is permitted activities related to national security, relationships with other countries, public order, and those that prevent crime. The law also says that Indian companies do not have to follow some important rules, such as giving people the right to see or delete their data if they handle data of people from outside India and have a contract with a foreign company. These Indian companies mainly have to focus on keeping the data secure. Personal data processed for research, archiving, or statistical purposes will also be exempted.

Significantly, the Act does not distinguish between sensitive and non-sensitive personal data and does not limit processing data outside the country unless the new rules identify specific restricted areas. 

Conclusion

The DPDP Act is a concise document that uses simple words and illustrations to explain the provisions. This is a big change from the long and complicated ways data protection laws have usually been written. The DPDP represents a major effort to enhance online privacy and ensure data security in India. It intends to transform the privacy domain by emphasizing transparency, explicit consent, data minimization, and adherence to usage restrictions. Companies must allocate resources to understand and implement the DPDP Act’s provisions and anticipate associated compliance costs. 

Companies can navigate the new regulations more effectively by adapting to these changes. While both houses of the parliament have approved the DPDP Bill, its specific rules will become clearer once it is enacted. This will occur when the government declares the official date for the law’s enforcement.

Daily diaries: Reimagining how we generate insights to optimize cash-in, cash-out (CICO) agents

Posted on by MSC

Anant runs a cash-in cash-out (CICO) agency business in a rural part of Bihar state in eastern India. He works for one of the country’s largest nationalized banks. Unlike many CICO agents, Anant has no side business—the agency business is his only source of income. On the other hand, Yusuf from Bogor, Indonesia, runs his CICO agency alongside a mobile accessories business. Yusuf’s agency business accounts for around one-fifth of his total revenue. Ira is a FinTech agent from the same locality as Yusuf. She runs her agency business alongside a laundry shop, but it yields negligible income.

Anant, Yusuf, and Ira are among the estimated 18.4 million[1] CICO agents worldwide. Alongside traditional banking agents, the CICO community now has new-age agents, such as FinTech agents in Indonesia, mobile financial services (MFS) agents in Kenya and Bangladesh, and electronic money issuer (EMI) agents in Côte d’Ivoire and Senegal.

Yet how much do we really know about CICO agents? What do we know about their challenges and the support they need? MSC’s Agent Network Accelerator (ANA) program, which ran from 2013 to 2018, was designed precisely for this purpose—to increase the global understanding of ways to build and manage sustainable agent networks and identify factors that drive their success or failure. The multi-year research program covered 31,500 agents across 14 countries in Asia and Africa.

We have little nuanced data on the agents’ rapidly changing landscape worldwide.

A lot has happened since the closure of the ANA project. The COVID-19 pandemic changed the world permanently, and a new set of agents have emerged. Markets dominated by MFS agents have seen the entry and growth of banking agents, whereas markets dominated by banking agents have seen the entry of new-age agents. Data from the supply side that compares different agent types is absent, as are industry benchmarks for their performance, network size, and agent management practices, among other factors.

However, a deeper knowledge gap persists. Financial service providers need to understand the following if they wish to help CICO agents:

And all of the knowledge gaps outlined above need to be explored for each agent type so we can understand the needs and behavior of each type and design solutions accordingly.

A nuanced and lean approach for continual agent network assessment

Traditional surveys that provide a snapshot of the situation fail to capture the dynamic and volatile nature of the agency business’s economics, primarily in terms of its evolution over time and the effects of seasonality. Aspects related to the management of agency business relative to the core business of the agents (for non-dedicated agents) are often overlooked, even though these have huge implications on the overall agent sustainability. And, of course, running large-scale surveys on agents over time is a resource-intensive exercise.

However, we can make optimal choices on cost and time with the right data collection strategy that involves technology, instrument, and agent sampling, among other aspects, alongside study outputs and outcomes. These choices would optimize the duration of data collection and how quickly data is made available for review, among other aspects.

We can uncover critical insights if we use the Financial Diaries method to track the financial transactions of different types of agents over time—banking vs. FinTech vs. MFS, male vs. female. These insights would include: (i) the differences among the various types of agents; (ii) how the DFS business and other non-DFS businesses interact for non-dedicated agents; (iii) how they cope with the dynamic nature of the business; (iv) the challenges they face; and (v) the supervision and support they receive. These insights captured over time give a sense of how seasonality affects these aspects of the business.

This diaries approach is a nuanced research tool that can bridge all the data gaps if we have a suitable sample of different agent types. Traditional diaries research is resource-heavy, but a technology-driven approach, where diarists enter their daily data through an app, can reduce costs. It saves money by reducing the number of field researchers needed for data collection.

In MSC’s technology-driven Agent Diaries approach, the role of field researchers is limited to handholding and quality control since the diarists themselves upload the data. The data upload is almost real-time, as the diarists upload data daily. Thus it gives the research team more time to check data quality and make course corrections through re-training in the early phase of the research.

What have we learned from the Agent Diaries pilots in Indonesia and India?

MSC piloted the Agent Diaries approach with a small sample of agents in Indonesia and India. In Indonesia, we ran the research for 18 weeks with eight CICO agents—three Laku Pandai banking agents, two G2P banking agents, and three FinTech agents. The research pilot highlighted how the use cases and volume of transactions varied across agent types, how volatile the income of different agent types was, and the association between agents’ gender and the clients’ gender division. The data also indicated the trends are consistent over time. The insights helped us derive specific recommendations for service providers and regulators to manage volatility and utilize female agents more effectively.

In India, we focused the pilot on BC Sakhis—female CICO banking agents—members of self-help groups. We ran the research pilot with six CICO agents, comprising five BC Sakhis and one male banking agent. The research highlighted the differences in the income of male and female agents, pointed out the lack of use cases, and highlighted recommendations for service providers.

In India, we used a traditional approach of paper-based data collection by the agents and subsequent digitization of that data by field researchers. However, in Indonesia, we used a technology-driven lean approach. MSC’s DatIn app was specifically designed for data collection in diaries research. As agents are tech-savvy and digitally literate, they handled the Android application with ease.

We used this technological capability by asking the agents to enter their daily financial data on the DatIn app. After initial training and a few days of support, the data collection exercise became smooth, and the field researcher’s role was mostly limited to quality checks.

We are currently developing a feature in the DatIn app so that the diarists can see their income and expenses data in a graphical form in the app itself to understand how their business is doing. This feature will incentivize the agents to use the app to enter their daily data.

In our experience, a field researcher in a large-scale diaries research can handle around 25 diarists comfortably if they visit each diarist once in 15 days. However, if diarists do self-entry of data then the field researcher’s role becomes limited to handholding and data quality assurance. The majority of the handholding work can be done virtually as well. As the field researcher would not have to do any data entry work, they can cover around 50% more diarists on a given day, assuming the diarists are not widely scattered. Hence, we can cut the data collection cost by half using technology than a traditional diaries data collection approach.

To conclude

The Agent Diaries research approach can unpack nuances and also be implemented in a resource-optimized way. Multi-country, multi-year research using the Agent Diaries approach can prove crucial to help the new agent types to grow. And each stakeholder—regulators, financial service providers, agent network managers, and the agents themselves—will benefit from it. See more of our work on Agent Diaries and related research here and here.

[1] MSC estimates