From care infrastructure to women’s work: What the Budget signals

India has begun to acknowledge an inconvenient truth about its economy: growth cannot be sustained without bringing more women into paid work. The Union Budget 2026 reflects this realisation in part through investments in the care sector and allied health services. But it still stops short of confronting the central macroeconomic blind spot—unpaid care work that holds back female labour force participation (FLFPR).

Women’s work sustains households, enables labour markets to function, and underpins economic activity, yet it remains largely invisible in national accounting. Until this invisibility is corrected, India’s efforts to raise FLFPR will remain partial and fragile.

The care burden GDP ignores

Time-use data makes the imbalance stark. According to the Economic Survey 2025–26, over 40 per cent of women of working age are engaged in caregiving activities, compared to just over 21 per cent of men. Women spend nearly 140 minutes a day on caregiving and over six hours daily on unpaid work overall, almost three times as much as men. This unpaid labour does not show up in GDP, but its economic value is substantial. In effect, the economy is being subsidised by women’s unpaid time, and this subsidy comes at the cost of their participation in paid work.

The result is a persistent gap in labour force participation. Despite recent improvements, women’s participation remains well below its potential, especially in urban areas and in higher-productivity sectors.

To its credit, the Union budget does take steps towards recognising care as an economic concern. Paragraph 54 announces the creation of a strong care ecosystem, with 1.5 lakh caregivers to be trained in the coming year. Paragraph 53 commits to expanding training capacity for allied health professionals, with a target of adding 100,000 professionals over five years.

These measures matter. Care services and allied health are female-intensive sectors. Formal training and certification can convert informal, poorly paid work into stable employment while easing care pressures within households. But these initiatives operate at the margins of a much larger problem. What the Budget does not do is to recognise care itself as productive economic activity or treat its unequal distribution among women and men as a macroeconomic constraint. Care remains framed as a sectoral intervention, not as a structural foundation of labour markets.

What the evidence tells us

Recent macroeconomic research strengthens the case for a more fundamental shift. A paper for NCAER, co-authored by the writer and Prof Ratna Sahay and published in the Economic and Political Weekly, models the impact of redistributing unpaid care work and formalising part-time employment. The findings are striking: equalising the care burden between men and women, combined with legally protected part-time work, could raise India’s female labour force participation rate by around six percentage points.

This is not a marginal gain. A six-point increase would bring millions of women into the workforce, boosting output, household incomes, and fiscal revenues. The mechanisms are straightforward. When care responsibilities are shared more evenly and flexible, formal work options exist, and women are far more likely to enter and remain in paid employment. India’s labour laws and macro policy framework still assume a worker unencumbered by care, an assumption that fits male employment patterns far more than female ones.

Including unpaid care work in national accounts would not merely improve measurement; it would change incentives. If care were recognised as economic output, investments in childcare, eldercare, and disability care would appear not as social spending but as productivity-enhancing infrastructure.

This shift would also strengthen the case for public provision. International evidence shows that investment in care services generates high employment multipliers, particularly for women. It also frees up time for paid work, creating a virtuous cycle of participation, income growth, and tax revenues. At present, India relies heavily on households, and within them, women, to absorb the costs of care. This model depresses labour supply, reinforces gender inequality, and limits growth. Treating care as a public good rather than a private obligation would align social policy with macroeconomic objectives.

Raising female labour force participation is often framed as a social goal. But it is a growth imperative. As India’s demographic dividend matures and labour shortages emerge in key sectors, excluding women from the workforce is no longer economically tenable. The Budget’s care-related initiatives are a start, but they need to be embedded within a broader strategy that includes publicly funded childcare and eldercare services at scale; legal recognition of formal, protected part-time work; incentives for employers to support care-compatible work arrangements; and systematic measurement of unpaid care in national accounts. 

Without these, gains in FLFPR will remain contingent on individual households’ ability to cope rather than on durable institutional support.

India’s growth story increasingly depends on women’s work, paid and unpaid alike. But as long as unpaid care remains invisible in GDP and marginal in policy design, women’s participation will stay constrained. Recognising care as economic infrastructure is not about symbolism; it is about unlocking labour supply, productivity, and long-term growth. 

The writer is Associate Fellow, NCAER. Views are personal.

(Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.)