Strategic Reforms Needed to Bolster India's Care Economy: Economic Survey 2023-24

The Economic Survey 2023-24 highlights the necessity for strategic reforms to fortify India's care economy. Direct public investment of 2% of GDP could generate 11 million jobs, predominantly for women. The survey suggests subsidizing care services and draws on successful international models from countries like Australia and Brazil.

Strategic reforms are required to build a solid care economy structure in India, as the country faces the challenge of the 'motherhood penalty' with a drop in female labour force participation rate around childbearing years, the Economic Survey 2023-24 said on Monday.

The survey estimated that direct public investment equivalent to 2% of GDP has the potential to generate 11 million jobs in the sector, nearly 70% of which will go to women.

Subsidising care services can be considered, said the survey, asserting that successful international models from Australia, Argentina, Brazil, and the US in this sector may offer valuable insights for India. These countries provide financial assistance through vouchers and tax rebates to care workers based on their income, child's age, number of offspring, etc.

The economic value of developing a care sector is twofold: increasing female labour force participation rate (FLFPR) and promoting a promising sector for output and job creation. According to International Labour Organisation (2018), the care sector is one of the fastest-growing sectors globally, with investments in care services estimated to generate 475 million jobs globally by 2030.

In India's case, direct public investment equivalent to 2% of GDP could generate 11 million jobs, nearly 70% of which would benefit women. Research has emphasized the impact of affordable and reliable child-care on freeing women's time for paid employment, enhancing mental health, and improving children's learning and nutrition. However, empirical studies specific to India are scarce.

The impact of childbearing and child-care significantly affects women's careers, depicted as a drop in FLFPR around childbearing years and income loss. Women are concentrated in farming and informal jobs due to the 'motherhood penalty,' as these workspaces align with personal care responsibilities. Even though rural women spend only 9 minutes more on unpaid care work daily than urban women, higher rural FLFPR is attributed to the flexibility in rural jobs.

The survey recommends strategic reforms, including support for parental leave policies, subsidies for care services, public and private investments in care infrastructure, skill training mechanisms for care workers, and monitoring service quality. It suggests setting up a dedicated Care Sector Skills Council to develop skill training frameworks and collaborate with international training institutes.

Public-private partnerships (PPP) could play a significant role in building care infrastructure, especially institutions for child-care and the elderly. Policies may be formulated to invest in mobile creches in offices, hospitals, and other public areas to encourage women to take up paid employment opportunities, the survey said.

(With inputs from agencies.)