The following chapter about the economy of the developing countries concentrates on important issues from the 1970’s and onward which have had an impact on the economy of the developing countries. The debt crisis from the 1970’s and the following structural adjustment programme imposed by international agencies are two issues which explains why the LDC’s are in the economic situation they are in today. A third issue in this chapter is the Indian economy and the actions taken by the Indian Government because of the debt crisis and also the economic situation India was facing back in the early 1980’s. The actions taken were known under the name the New Economic Policy. We conclude the chapter by showing which impact these issues have had on women in India.

6.1. The Debt Crisis

Early in 1970’s the OPEC countries (Organisation of Petroleum Exporting Countries) for different reasons raised the prices of oil. As oil is a very important source of energy for most countries they could still export their oil to e.g. the USA, Japan and Western Europe at an advantage. Because of this the OPEC countries received an increased inflow of export incomes. Some of the money was put into international banks. The money was called "Petro-dollars". The international banks also received money from the USA, which had a large trade deficit. To cover the deficit USA financed it with making more dollars. International banks received so much dollars that the competition between them made the market react in such a way that the value on money fell and the interest rate became lower. There was a lot of money available in the banks at a low interest rate for anyone to borrow. But who should borrow?

The most credit worthy countries, the industrialised west, were for different reasons not very interested in borrowing money. Instead the banks turned to the LDC’s because during the 1970’s a positive economic evolution increased the status of these countries. Compared with the economic development in the industrial countries the LDC’s had a much better growth rate per capita. During the period between 1965 and 1980, the annual growth rate of the Gross National Product (GNP) in the industrial countries was 3.7 per cent (2.8 per cent per capita) and in the LDC’s it was 5.9 per cent (3.4 per cent per capita). Everybody thought it would not be a problem for the LDC’s to pay back the loans borrowed from the international banks.

At the beginning of the eighties the problems emerged for the LDC’s, with repayments of their loans. One thing that happened was that the world trade was going down and this affected the LDC’s negative. Many of these countries were highly dependent on export of one commodity and they were vulnerable to price fluctuations, so if the price of this commodity went down it affected these countries economy very much. The interest rates got higher and the US dollar got more expensive. This also resulted in a stagnating amount of aid from the rich world to the poor. The money that the LDC’s had borrowed was not always used in the country’s best interest. A lot of money vanished out of the country or was not invested in a profitable way. All this meant that the LDC’s had problems in repaying their loans and the result was the debt crisis of the eighties. Mexico was the first country to cancel its repayment to the international banks. Other countries like Brazil and Peru followed this example and the debt crises had started.

6.2. The Structural Adjustment Programme

The economic situation in the world and the debt crisis of the LDC’s forced many of these countries, to accept the strategy of liberalisation and the Structural Adjustment Programme (SAP), that the International Monetary Fund (IMF) and the World Bank were imposing. SAP demands a market economy instead of for example a planned economy. LDC’s hoping for economic aid from the rich world have to accept the terms that SAP sets up to get help. The idea of the Structural Adjustment Programme is that the market will act as an engine of growth in the countries´ process of economic development. The terms of the IMF and the World Bank were:

    1. Devaluation of the official exchange rate and liberalisation of the exchange market.

    2. Skipped price control, or liberalisation of the price formation.

    3. Free trade.

    4. Liberalisation of direct investment.

    5. Restrictive economic policy.

    6. Cut in public expenditure and privatisation of the public sector.

SAP is a process aiming at a fundamental restructuring of the economy. Some of the measures to be taken are to increase the outward orientation of the economy, reduce the role of the public sector and liberalise various sectors to make them more responsive to the markets. When SAP had been implemented for a few years, the poorest group of the society were even poorer than before the introduction of SAP. It was this poor and weak group that were marginalised from the society because they were not strong enough to fight the new harsh climate of market economy. The gap between the rich and the poor has therefore increased as a result of SAP.

6.3. The Economy in India

In the early 1980’s the economy in India started to stagnate and a support for taking away the wide range of controls and regulations, was being heard in Indian society. At the beginning of the development process, early in 1950, these regulations had acted as a motor for economic growth but now they acted as a drag on further growth. A strong lobby was created, argumenting for liberalisation of the economy, both inside the country and in terms of greater openness to foreign investments, as a strategy to encourage rapid industrialisation. Liberalisation of the economy was to stimulate a new era of rapid industrial growth. This new economic growth would also trickle down to other sectors of economy. The lobbyists also argued for the huge domestic market, the top ten per cent of the population (counting around 75 million individuals), and the demand for goods they had never been able to buy. The new strategy would also enable the Indian economy to export more and to get more integrated with the rest of the world economy. India’s economy was at last to get access to the global network of economic resources. The opening up of the Indian economy was soon known under the name of "The New Economic Policy" (NEP).

6.4. The New Economic Policy of India

The New Economic Policy was introduced in the summer of 1991 in India. NEP consists of both stabilisation measures and structural adjustment programmes, under an overall umbrella of liberalisation and greater reliance on market mechanism. The Government of India started its new reform with a devaluation of the Rupee, with 22 per cent in 1991 along with abolishing export subsidies and introducing an import entitlement scheme for exporters. The aim of devaluation was to promote merchandise exports. Devaluation has been coupled with a series of trade reform measures aimed at removing quotas, scaling down of tariff rates. These deregulatory measures and efforts at dismantling of tariff and the steps which have been taken to attract foreign- and direct-investment are attempts to make India a part of the world economy.

Other measures taken were cuts in the Government expenditure. In the 1991-1992 budget, 12.3 per cent cuts in food subsidies were carried out. The distribution of grains in 1991-1992 was just 19.1 million tonnes, as compared to an estimated 45.6 million tonnes. This is a fall of nearly 59 per cent. This reduction has been justified on the ground that the public distribution system must target only the poorer groups. But with an estimated population of 200 million people living in severe poverty, it is not an easy task to reach these targeted groups. The NEP is an adaptation of the recommendations of the IMF and the World Bank. India has opened up its market for foreign competition. Multinational companies such as IBM, AT&T, PepsiCo, General Motors and Coca Cola want to invest in India. With a population of 850-900 million people, India has one of the world’s greatest potential market.

6.5. The Economy and its Impact on Women in India

As early as 1974, the Report of the Committee on the Status of Women in India highlighted that the economic policies of growth tended to marginalise Indian women. In India a majority of the women who earn money are working in the informal sector and have not made any major gains in terms of employment. (for further information about the informal sector, see chapter 8.4.) Statistics show a decrease in employment opportunities for women workers in the public sector arising out of privatisation. This increase in unemployment has not been accompanied by a parallel increase in employment opportunities in the private sector. There has been a growth in the informal sector and also loss of employment for women due to technological changes and men substitution of women’s labour and deskilling of women’s work. Girl child labour has increased and there has been an increase in domestic work load of women. The price on food have gone up significantly while women’s wages have declined in real terms.

The prices rise on food is due to the high domestic inflation rates that came about as the economic reforms progressed. Studies have shown that because of NEP women have less access to basic necessities such as food, shelter, clothes and water. The anticipated reduction in social services may mean that women will have to allocate more time to activities that were previously at least partially provided by the State. In the budget of 1991-92 there was a cut in allocation for mass literacy and non-formal and primary education. For girls/women this will reduce the access for them to become educated. The Government have further made a proposal to privatise the education at higher levels and this will also make it more difficult for the woman to get higher education as the families prefer to invest in education of their sons rather than their daughters.

The new economic policies are likely to reduce women’s mobility in two ways. The first being the hike in transport costs arising out of cut back in subsidies. The second impact arises out of the likelihood of women being increasingly pushed into home based productions due to loss of employment outside the home. Such restrictions would have a direct bearing on women’s access to resources and information.


There are many factors affecting a woman’s status in society and what opportunities she has to control and influence her life-situation. The factors we have chosen to consider in this chapter are: laws, religion, traditions, caste and education. Religion, traditions and laws form the basis of a woman’s place in society. Female education shows the inequality between men and women concerning what opportunities they have in life.Women living in Tamil Nadu enjoy higher status than those in other Indian states. For women in Tamil Nadu the age of marriage is relatively high and the women is allowed to remain in close contact with their natal family. Tamil women also have some economic independence, including fewer restrictions on their education and occupational choice. These women exercise relatively more freedom of movement and greater participation in decisions affecting the household than other indian women.

7.1. Laws

The basic document of a country’s legislation is its Constitution. India became independent from the British Empire in 1947 and in 1950 the Constitution was passed in the Parliament. The Constitution states that it is not allowed to discriminate against any citizen because of caste or sex and that all citizens of India have equal rights to vote.

"The State shall not deny any person equality before the law or the equal protection of the laws within the territory of India (Art. 14)."

"The state shall, in particular, direct its policy towards securing equal pay for equal work for both men and women (Art. 39)."

In India many laws have been introduced to secure equality for women. In 1948, the Minimum Wages Act was introduced to, among other things, secure women's rights at the workplace. The Maternity Benefit Act from 1961 prohibits the employer from discriminating against women who are pregnant or that have recently delivered. It is compulsory on the part of the employer to compensate a pregnant woman, for loss of income during her pregnancy. The Equal Remuneration Act from 1976, secures women workers equal pay for the same work as male workers and it also secures equal pay for work of similar nature. This Act prevents discrimination on the ground of sex against women when men and women are being recruited for employment.

7.1.1. Implementing laws
In India it is the National Committee on the Status on Women that has the responsibility to supervise that women's rights are being secured in the country. As a preparation before the United Nations Decade on Women 1975-1985 this Committee did a report "Towards Equality" (1974) which revealed what the four decades of planned development had meant for women in the country:

"Our investigation has revealed that the large masses of women in this country have remained unaffected by the rights guaranteed to them by the Constitution and the laws enacted after Independence."

The problem for Indian women is not their legal rights. Indian women have protection by the laws, but the problem is that the laws are not followed in the society. The laws enacted since independence have only reached a very small part of the Indian women. Sida states in its report "India - Country Gender Analysis" that it is only the urban middle-class women who have been affected in a positive way by these laws. One judge of Madras High Court, Padmi Jesudurai, writes in the book "Quest for gender justice" that to reduce the gap between theory and practice the whole society have to make a change of attitudes. Only then may the laws be more effectively implemented and the condition of women more humane. The majority of Indian women are not fully aware of their rights and opportunities. The social system in which the woman has to fight a husband or parents to be able to use her rights complicates things and the literacy level among women is also a hindrance. Women are not encouraged to become interested in learning about their rights and the political awareness is often low.

7.2. Religion and Traditions

India is a mixture of religions, languages and tribes. In India there are 83 per cent Hindus, 11 per cent Muslims, 2.4 per cent Christians and 2 per cent Sikhs. India is officially a secularised country and the Constitution establishes freedom of religion. Religion should not interfere in any way with politics. But religion is present in the whole of the society. Religion and traditions have long formed the lives of Indian women. Religion and tradition are inseparable when it comes to how men treat women. Practices such as sati, bans on widow remarriage and prepuberty marriage were some traditional religion-based rules for women. These rules have been outlawed today and the women have a legal right to divorce and abortion and other rights equal to men. Hindu is the dominant religion in India and we have therefor chosen to concentrate on this religion’s view of women.The basic rules for women’s behaviour in Hinduism can be found in the Laws of Manu, which was written down more than 2000 years ago. The following passages expresses the duties of women and can be found in the Laws of Manu:

"In childhood a female must be subject to her father, in youth to her husband, when her lord is dead, to her sons; a woman must never be independent."

"Though destitute of virtue, or seeking pleasure (elsewhere), or devoid of good qualities, (yet) a husband must be constantly worshipped as a god by a faithful wife."

A woman’s fulfilment and identity formation comes from marriage and motherhood. These are also her roles in life. The dominant norms for the Hindu woman concern her role as a wife. According to the Hindu law, Hindu women do not have the right to work outside the home or the same rights to property as her husband. The female’s place in society is not only expressed in religious laws but also by oral traditions. According to the tradition the ideal woman is always the one under the control of a man and a devoted wife and mother.

There are other social practices based on Hindu orthodoxy which continue to impede women’s secular status. Daughters are not wanted because they are an economic liability with regard to marriage and dowry. The presence of a son is absolutely necessary for performing religious rites such as those following the parents´ death. Also taking care of the parents in old age is considered the sons´ duty. A daughter is an expense, she will never contribute to the family income and after marriage she will take a considerable part of the familys´ income as her dowry. Practices such as the denial of remarriage to widows, polygamy and dowry are still continuing. Some of the social practices have also gained strength in new forms, for example the right to determine the sex of a foetus and the use of the right to medical termination of pregnancy for aborting a female foetus is in a sense a return to female infanticide. In 1981 there were about 934 females per 1000 males but in 1991 this figure had declined to 927.

Majority of the families in India are partrilineal, which implies that property, (land, house etc.) and resources are controlled by men, and are passed on from fathers to sons. Though women under personal laws/customary have a limited right to inheritance a whole array of social practices, emotions, pressures and sometimes plain violence prevent them from acquiring rights over them. As women have lesser rights to property they also have lesser access to credit.

7.3. Caste

The system of castes divides the Indian people into different groups of society. The four main castes (varnas); Brahmins (priests), Kshatriyas (warriors and farmers), Vaishyas (craftsmen and merchants) and Shudras (servants and workers). Among the varnas, there are several subcastes (jatis) which are connected to a certain occupation or a certain geographical area. There are several thousands of jatis in India today. A person is born into his or her varna or jatis and it is not possible to change varna or jatis during his or her lifetime. People outside the caste system are called scheduled castes and they have no varna or jati. Traditionally these people are called untouchables by high-caste Hindus. Mahatma Gandhi called the untouchables Harijans, which means God’s children and it was an attempt to give them a better status in society. According to the law, it is forbidden to discriminate somebody because of his or her caste.

The Indian Government have positive discrimination for low-caste people by allocating a quota for universities, certain government jobs and also for the Parliament. Intercaste marriage is not very common in India, most people find their partner in their own caste. The system of caste affects a woman’s life no matter what caste she belongs to. A woman living in a highcaste family has less chance to move freely than a woman in a low caste family. For the families in the lower castes the income from the woman is very important for survival. Therefore the low caste women have more freedom to move than the high caste women.

7.4. Education

In India, the total literacy-level has risen from 18.3 percent in 1951 to 52.2 per cent in 1991. If you examine the statistics, you will find that the male literacy in 1991 was 64.1 per cent while female literacy was only at 39.3 per cent. This difference of around 25 per cent has persisted from 1961 and continues to increase despite a rise in female literacy from 8.9 per cent in 1951 to 39.3 in 1991. There is a difference in literacy among women in rural and urban areas. In 1991 30.6 percent of the rural women could call themselves literate compared to 64.1 per cent of the females living in urban areas. There are more boys then girls in school at all levels. At the primary level there is 0.63 girl enrolled for each boy. At the middle level there is 0.51 girl enrolled for every boy. At the secondary level, 0.42 girl is enrolled for each boy. When it comes to higher education the figures are lower than this. Drop-outs from school occur when the children have to stay at home to take care of younger siblings or find work to help their parents with the income. Drop-outs from school are a more common phenomenon for girls than for boys. In 1965 the drop-out of girls was 74 per cent and in 1980 it was 40 per cent.

Today, education for women is considered an important tool for acomplishing equality between the sexes. Policy-makers in India have come to accept that an aim of education is to empower women. Empowerment of women is an ongoing process of individual and collective struggle to challenge the unequal power relations between men and women. There is an intimate connection between education and development. The concept of education is the process that enables women to come together to seek knowledge and information which can empower them to control and direct their own lives. As women become more aware of the complex web of factors which have deprived and marginalised them, they begin to identify the ability to read and write as a skill which can contribute to process of empowerment. The ability to read and write also affects women’s opportunities for employment. Studies based on the Census of 1971 in India, found that unemployment was much higher for women than for men on all levels of educational qualifications.


There has been an explosive growth of already overcrowded large cities in LDC’s. Between 1950 and 1970, 42 per cent of the total urban population growth in the LDC’s was in cities of over 1 000 000 inhabitants. Urban population grows in two main ways - first by netmigration, that is, people from non-urban areas moves to town for permanent residence, and second by natural increase, that is, the excess of births over deaths of the residents of the cities.

8.1. Reasons for Urbanisation

In Asia a majority of the people are involved in agriculture and naturally therefore more people live in the countryside. But as agriculture gets more modernised and because lack of land a lot of people have to move elsewhere to make their living. From our studies about Developing Countries, we have learnt about push- and pull-factors. These factors explain why people move from rural to urban areas. Push-factors are when people move from rural areas because:

    1. The birth-rates are too high in the countryside, there is not enough land for the families to provide for their needs.

    2. Modernisation and better technical equipment of the agriculture demands less people working in the fields.

    3. As income increases there has been a change in the consumption of agricultural products and a shift towards other goods.

    4. Lower prices of agricultural products makes the farmers income decrease.

Pull-factors are those factors which makes people move to urban areas:

    1. More opportunities to make a living and earn money.

    2. To get access to better education.

    3. The myth about the town as a place to seek your fortune.

    4. To get access to medical treatment and other kinds of service.

We asked the women in the slum areas whether they had always lived in Madras and if not why they had moved to the city. This is what four women told us:

"I came from my village to Madras because of marriage. After marriage, we moved to Madras. My husband knew a little about vegetable selling and therefore we started a small business selling vegetables."

"I moved to Madras to get work, there are better work-opportunities in Madras. In the village, there are not so many opportunities to earn money if you are landless. If you have a business of your own there are not enough customers to support your business."

"Here, in the big city, the facilities such as water, electricity, factories, shops are much better than those in the village."

"Madras have hospitals. I came to the city because here I have better access to medical treatment."

8.2. Slum Areas - A Problem of Rapid Urbanisation

In the western countries, most housing is produced either by the state or by special building firms. In the LDC’s the demand for housing is great and the supply so low that many people have very little option but to build their own accomodation. The most single distinctive feature of LDC’s cities is the existence of self-build shelter. The physical growth in these cities has taken the form of uncontrolled slum areas. The word "slum" is a familiar one but it is difficult to define with any precision. Though, slums can be characterized by overcrowding, both within dwellings and within rooms and the sharing of facilities. Physical problems exists because people are squattered together in slum areas concerning for example: inadequate housing, sanitation- and health-problems arise becuase of lack of amenities such as piped or drinkable water and sewage disposal. Social problems also exists with for example: unemployment, ill health, high crime rate, wife-abuse and other family problems. Illiteracy and prostitution are other consequenses for the people living in these areas. In many LDC’s facing problems from rapid urbanisation there are no resources for solving the problems. Even though problems arise after rapid urbanisation, many of the people moving into the big cities gets a better life than they had in the rural areas. The urban areas, and especially the major cities, invariably offer more and better facilities than their rural hinterlands.

One type of slum is the squatter settlement, where houses are built by the people who live in them. These can vary in standard, from the purpose of lasting for a short time to those houses which are to last for longer and are being improved as time goes by. Squatter settlements provide six functions of major importance. They act as reception centres for migrants. They provide housing within the means of the very poor. They provide a variety of small-scale employment. Their social and communal structure provides a cushion for residents durin times of unemployment and other periods of difficulty. They encourage self-helping in improving the standards of the houses. Finally they provide a location within range of possible workplaces within the city.

8.2.1. Slums of Madras
Madras is a big city with an estimated population of 5.3 million and it is growing fast because of an uncontrolled migration. In the state of Tamil Nadu, of which Madras is the capital, about one third of the population lives in urban areas. Tamil Nadu is the second most urbanised state of India. In Madras there are about one third of the city’s population living in congested slums. Most slum areas are not planned. Unplanned areas, like linear slum and scattered hut development have emerged as people just settle down there. The slums of Madras are spread over the whole city, the most congested slum areas are in the city centre or near river/canals and the Bay of Bengal. The slums we visited in Madras were often located near a high standard housing area. Often some women and men from the near by slum worked in this area as servants in a house or they sell some goods or service to the residentials in that area.

8.3. Unemployment

A lot of people who move to big cities come from rural areas and have been working in the agricultural sector. They often have to switch to another occupation, if they find work at all. Finding work is not an easy task as many of them can hardly read and do not have any special skills. The Census from 1985 in India, shows an unemployment rate of 7.3 per cent among women and of 3.3 per cent among men. The total unemployment is not included in this figure as the statistics does not show people working in the informal sector or women working in their home. Women who become unemployed have other options than to go and seek other employment. Some women go back to take care of their family, or work part time or work in the informal sector. Women are not, to the same extent as men, reporting themselves as unemployed to the authorities. The "dark figures" of female unemployment are therefore quite high The World Bank calls this a "Statistical purdah" and says it is a result of making women’s work invisible through the methods of measuring. The work women do are often not shown in economic official reports, the work they perform in their home or in the informal sector is not taken into account in a country’s GNP.

8.4. The Informal Sector

In India the sector of organised work has stagnated and the labour market is more dependent now on the informal sector to get its needs fulfilled. Over 90 per cent of the Indian women workers are engaged in the informal unorganised sector. Of these women only 20.6 per cent are working in urban areas, most of the women in the informal sector are still engaged in the agricultural sector. Statistics show that poor women work 16 to 19 hours per day depending on the seasonal variation in employment, while men work 10 to 14 hours.

The opportunities for employment for poor people living in the slum areas are not so many and the state cannot provide for all the people who do not have a job or a house. Poor people have only themselves to rely on for managing their lives. Because lack of employment and no social security for people in the slums a so-called informal sector has evolved where a lot of people make their living. The informal sector is predominantly small scale, financed by small amount of local capital, indigenously owned and often based on the family and kinship network. Technology is limited and the enterprise is likely to be labour-intensive. Earnings in this sector are on or below the minimum for subsistence and most people engaged in this sector live highly marginal lives.

Women working in the informal sector do not have any protection at all in the laws that regulates the labour market. The conditions of work are often very poor in the informal sector. The women in the informal sector usually set up a business of their own to earn money and becomes self-employed. To be able to start a small business these women are in great need of credit. The government have implemented loans to poor people at low interest rates but these loans have mainly been accessible for men. Women have not even been considered as a potential loan taker, as poor women are not considered credith worthy. They were not thought of as a group that need money to start businesses. The banks in India were nationalised in 1969 with a mandate to extend credit to the poor. Yet little, if any, credit had reached poor urban women.

Picture 1: A woman selling home-made candy in front of her house.