Prof. DM Deshpande
The question of placing a reasonable economic value on homemaker’s contribution had defied a solution for decades. There has been no dearth of appreciation and praise for what a house wife does in the normal conduct of household chores.
Starting from housekeeping, preparing and serving all meals, taking care of the elderly and those ailing in the family to managing the household budgets, a homemaker carries out all functions and responsibilities often with dexterity, speed and with a very high level of efficiency. And most importantly, as ‘a mother is the first teacher of a child’- she strives hard to educate her child.
Add to all this love affection and dedication the homemaker’s contribution to the household has no parallel. Not surprisingly, therefore, her job is compared with that of a CEO in a corporate set up.
Emotionally, it is almost impossible to quantify her ‘work’ in monetary terms. It is, perhaps, even deemed inappropriate if a price were to be placed on mother’s love and affection. Yet, in the modern world that we live in, there will be circumstances where the need for a definitive economic value of a homemaker’s contribution is felt.
One such need came up before the highest court in a case of awarding compensation to the kin of a homemaker killed in a road accident. Earlier too, there are recorded instances of similar nature where judges of courts right up to the high courts have decided the quantum of compensation based on ‘estimates’ bordering on guess work.
In some older cases, compensation money was based on a paltry notional figure of Rs 3,000 per month. Obviously the Supreme Court felt that it was too low and was not adequate to compensate for spousal care. More importantly, the court recognised the need for setting a new, fair and equitable benchmark.
The judges made a reference to the very early work of the economist Sir Cecil Pigou who recognised the value of work done by a homemaker; ‘work remains work, whether done at home without pay or performed at a factory for wages’. Pointing out the contradiction he said, wages paid to a cook is counted in national income whereas if he marries her, then the same unpaid work will not reflect in the GDP!
Even in the present case, which is more than 25 years old, the Motor Accidents Claims Tribunal awarded Rs 2.42 lakh in the year 2003. Much later the Punjab and Haryana High Court revised and enhanced the compensation payable to Rs 8.43 lakh in December 2024. It may appear to be a much higher amount but actually it is not so. Compounding at a rate of 8 per cent annually, the value of Rs 2.42 lakh would fetch Rs 11.93 lakh in the 21 years between 2003 and 2024. The value goes much higher to Rs 17.49 lakhs if compounded at 10 per cent per annum.
The family then approached the Supreme Court which has set a new norm for award of compensation in such cases of accidental deaths. It raised the compensation payable to Rs 62 lakhs. In the process of arriving at the final figure it fixed the economic value of home maker’s contribution at a minimum Rs 30,000 per month and also that the same will increase by 10 per cent after every three years period.
The amount covers three core aspects of a homemaker’s duties and responsibilities-household management, maternal support and spousal care. The court judgment has corrected ‘decades of economic erasure’ of domestic unpaid work. Economists have estimated the number of hours spent on household work at 15 per cent to 16 per cent of GDP at the rate of Rs 3.6 lakh annually per homemaker.
Though it is notional, in quantum and size its contribution is comparable to the major sector of the economy. In case of an employed woman, her salary would be added to this base figure the court observed. The judges have also lifted the social status by calling her a ‘nation builder’ and that they help build ‘human capital’.
Further, the bench has pointed out a central contradiction in our society; while we call the homemakers ‘dependent’, actually, the household functions because of them and every other person in the family depends on their contribution.
While the image and status of women who do not work outside their homes goes up, it will also have other implications. Immediately, it will lead to higher third party insurance costs. Third party reserves may rise by 5 to 8 per cent while the award in the event of the death of a homemaker may go up from Rs 5 to Rs 10 lakhs to Rs 50 to Rs 80 lakh.
The Supreme Court’s verdict is limited only to cases relating to claims under the Motor Vehicles Act. Yet, since the benchmark has been laid down by the highest court, it may be used to argue cases of maintenance and alimony in family law disputes. The SC judgment has set a precedent, though with a caveat. Its impact on the insurance industry is without doubt; how it will be argued and extended, if at all to other areas, will be interesting to see in the coming months.
The author has four decades of experience in higher education teaching and research. He is the former first vice-chancellor of ISBM University, Chhattisgarh
