An initial “big push” of cash, productive assets such as livestock or items to trade, basic banking services and continuous handholding and mentoring to use these assets can lead to lasting changes in income and savings, as documented by experimental studies conducted in low-and-middle-income countries using the Graduation approach.

The Government of Bihar launched its flagship Satat Jeevikoparjan Yojana (SJY) programme in 2018 for the poorest households in the state to help them set up their own enterprises by providing them with the “big push” support for the first few years.

Graduation Approach — that underpins SJY — is a livelihoods programme that researchers affiliated with the Abdul Latif Jameel Poverty Action Lab have found to be effective in lifting households out of extreme poverty in 15 countries. People receiving the programme earned more, ate more, and were healthier. The effects of the initial “big push”, in some cases, can persist for almost a decade.

A series of surveys we conducted between 2020 and 2022 showed that women under SJY were insulated from the worst economic shocks of the pandemic thanks to the businesses they were able to set up.

Through the mentorship and the assets they received, women were not only able to start their own businesses to cater to local demands but were also making day-to-day business decisions without seeking the advice of their husbands or other male members of the family.

While these businesses were small — mostly shops selling vegetables, snacks, groceries and beauty products — they opened up possibilities for a secured and prosperous future. The average annual earnings almost doubled in less than two years for many of these women, encouraging them to reinvest their profits back into their businesses to expand it.

So far SJY has reached approximately 136,237 “ultra-poor” women across all 38 districts in Bihar and continues to engage with them regularly.

There are a few key lessons that emerge from our work in Bihar.

First, anti-poverty policies need to be in sync with the living conditions of the poor because they are not a homogenous group.

Official poverty statistics do not fully capture the different ways people experience poverty. The “ultra-poor” households — the most vulnerable among the poor population — struggle to meet even their most basic needs, earning just about enough only to buy food. Health emergencies or unexpected life events can be ruinous for them as the risk of income loss looms large at all times. The need for extensive and more sustained government support is much greater for this group.

Second, self-employment is a much better option for a sustained livelihood — and for a more dignified life — for the poorest of the poor people, including women. That’s because most of them depend on insecure and fragile livelihoods, and income is often irregular or seasonal. It is vital that we acknowledge these realities while making policies to lift women out of extreme poverty.

Third, spurring self-employment among women is not just about financial independence and empowerment. It has other far-reaching benefits, which can accrue to future generations.

The women in our study sample feel much more confident today in stepping out of their house to engage with the wider community. Our latest survey found that approximately 90 percent of them are active members of self-help groups, women’s organisations that are playing a leading role in the fight for greater gender equality in many parts of rural India.

In fact, children — the growth engines of an economy — seem to be the biggest beneficiaries of improved financial outcomes of women. Several studies in India and elsewhere have shown that women tend to put back a higher share of their earnings in the household and, as a result, their children tend to be healthier and better educated.

There is a growing consensus that women must be able to perform productive work for a country to prosper — both socially and economically. The widening gender gap in India’s workforce caused by the Covid-19 pandemic should serve as a sobering reminder.

A semblance of normalcy is finally returning to India after two harrowing years as the economy slowly opens up amid a lull in fresh Covid-19 cases; though it will take time before it starts in full swing. For that to happen, India must not leave behind its women. Now would be the time to lay the foundations for a truly inclusive economy.

Lipika Kapoor is a Research Manager at the Abdul Latif Jameel Poverty Action Lab. Jyoti Prasad Mukhopadhyay is an Assistant Professor of Economics at IFMR Graduate School of Business, Krea University. Shagun Sabarwal is the Director of India Program and Global Monitoring, Evaluation and Learning at WomenLift Health.