• EconAfterHours

Economic Prowess of Social Inclusion

Updated: Mar 10, 2020

Kritika Sharma from St. Stephen’s College and Simran Panesar from Miranda House

Contrary to Homo Economicus, which showcases humans as rational agents maximizing their satisfaction through optimal choices, Behavioral Economics highlights the importance of social forces in individual decision making. Social norms are the implicit or explicit behavioral expectations in the society which dictate people’s choices, manifesting in a set of ideas such as gender roles. This means that our economic choices are the outcome of not only our individual tastes and financial incentives, but also of societal expectations. While these norms vary across culture and context, in India, there is clear evidence of the existence of stigma and discrimination against LGBTQI communities. Until recently, homosexuality was a criminal offence in India. Although the heinous Article 377 has been done away with, there is a long way to go before the social stigma built up over decades begins to fade. 

The LGBTQ human rights debate has been conventionally understood through a socio-cultural lens. However, the equality and inclusion of these communities is also an important economic concern. A recent World Bank report provides clear evidence about the economic cost of exclusion of LGBTQI people in education, employment, family life and healthcare in India. Professor Lee Badgett, the keynote speaker at the Asian Development Bank seminar (2016) demonstrated how lost productivity from discrimination in workplace, reduced labour force participation, health disparities, HIV, depression and suicide had cost the Indian economy between 0.1-1.4% of its GDP every year. 

A comparison of literacy rates from Census 2011 show that only % of population using ‘other’ gender as compared to % of remaining population are literate, which could be the result of harassment of transgenders in educational environments. When such discrimination results in low or negative returns to LGBTQ people from education, they will be disincentivised from investing in their human capital. 

A 2013 survey of graduate, white collar LGBT workers in India showed that 56% of them faced discrimination in workplace on account of their sexual orientation. Such bias reduces the economic contribution of LGBT workers owing to unemployment, underemployment and demotivation. This further deteriorates the condition leading to falling investment in human capital, health and drives LGBTQ people into worsening conditions of poverty. Workplace discrimination leads to underutilization of the skilled labour force from the stigmatized population and sometimes even results in employing lesser skilled workers from socially favoured groups. This non-utilised, under-utilised skilled group represents a loss to the economy’s output.

Additionally, it is difficult for LGBTQ population to get access to adequate healthcare due to fear of prosecution if details relevant to sexual practices are disclosed. As the result, the rate of prevalence of HIV/AIDs is higher among the sexual minorities in India as compared to the population as a whole. 

It is important to appreciate the interconnectedness of the various forms of exclusion. Discrimination against LGBTQ communities in health, education, employment and the social sphere may end up having an overall effect on the country’s economic output. Better health, increased life expectancies and higher incomes may fuel the incentive for these communities to invest in human capital. Such investment will undoubtedly do away with the dent that has been forced upon the economy due to exclusion.

The heteronormative societal norms in India have created an intertia have have forced strong, negative behaviors against the sexual minorities. A combination of these factors including discriminatory hiring practices, unequal pay and shorter life expectancies mean that LGBTQ people in India might not be earning as much as they deserve, and this could be holding back the Indian economy to the tune of aroun $26 billion each year. By reducing the number of productive years of employment, ,measured in terms of life expectancy, as well as lowering the average wage of an LGBTQ worker, discrimination against sexual minorities has dented India’s economic output. 

However in all of this we often tend to ignore how the market for LGBTQ community can serve to be a boost for economic health of the country. This is especially evident in the case of tourism which has received a push in LGBTQ friendly countries. India has a great potential to tap this market. 

After repealing the archaic article 377, LGBT tourism in India is expected to experience a boom which will eventually lead to a healthier economy. Although the community still faces ostracisation from mainstream and is victim to social exclusion, decriminalisation homosexuality is expected to turn India into one of the world’s most important pink economies.

LGBT travel is one of the fastest growing tourism sectors estimated at around €178 billion. LGBT travellers generally have high spending power and travel relatively often. According to CBI, the Centre for the Promotion of Imports from developing countries, funded by the Netherlands Ministry of Foreign Affairs, British gay men travel twice as often as heterosexual men. Popular LGBT destination Brazil reports that LGBT travellers spend 30 per cent more than other travellers. This makes them an interesting market. Just like heterosexual travellers, LGBT travellers have diverse travel preferences. Beach holidays are a traditionally popular segment. Specialising in LGBT travel can give any destination a competitive advantage. An impressive 82 per cent of LGBT travellers are interested in cultural holidays. Which again, gives India an edge over others?

Although demographics are changing, LGBT couples often have a dual and above average income but no children. This allows them to travel more often, off-season and spend more on travel.

How can India cash on LGBT tourism?

In Asia, Thailand is considered to be the most friendliest LGBT destination. It is followed by China, Singapore, and Japan, meanwhile, India is invisible on the LGBT travel map right now.

With LGBT travellers accounting for five to 10% of global tourists, the Indian economy lost anywhere between 0.1 and 1.7 percent of its GDP because of the law. So what we have here is a lot of untouched scope in the tourism sector.

New age pink tour operators are breaking the barriers to make LGBT travellers feel welcome and bridge the gap between them and the locals. The advantage here is that they can manage travellers better and understand their needs. These operators make sure that services of LGBT or LGBT friendly establishments are used to ensure a comfortable and discrimination-free experience. LGBT tourism tends to blossom during special events such as annual gay pride parades, gay neighborhood festivals and such LGBT community gatherings as chorus festivals and concerts, square dance conventions, sports meets such as Gay Games, World Outgames or EuroGames and conferences of LGBT organisations.

Some of the best LGBT events in India include the Mumbai Pride, Chennai Pride, Delhi, Bangalore and Kolkata Pride which attract huge numbers. It may come as a surprise but luxury Indian hotel groups are actively seeking LGBT business. Many tours and hotel operators are eyeing the LGBT tourism market in India, with many actively training staff to be more accepting and less discriminatory. Cities like Udaipur has a number of gay-friendly restaurants and cafes, Jaipur has LGBT-friendly neighbourhoods and people, whereas, down south, Kerala provides good opportunities for travellers looking for a therapeutic getaway. There’s an added appeal to places that have a developing LGBT scene, like Delhi and Mumbai. Goa is also popular for its welcoming nightlife.

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