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Financial Literacy: Compelling necessity in India
“If you want to thrive in today’s economy, you must challenge the status
quo and get the financial education necessary to succeed.” – Robert Kiyosaki
Modern education is widely seen as multidisciplinary and learner-centered in approach besides it greatly enhancing writing, speaking, visualizing, and critical thinking skills and make the learning more engaging.
Technological penetration such as mobile applications, social media platforms, e-learning, podcast, etc makes the swift transmission of information to millions of people a more accessible way.
More
than 70 years after the independence, the Indian economy has shifted tectonic
way from agriculture to food processing, services to defense the progress is astronomical.
Ironically, Indian education yet transformed at snail peace competing far
behind global education institutions even financial education.
The term “Financial Literacy”
understands and learning the fundamental financial concept such as budgeting,
interest rate, debt, saving, inflation, and investment inculcate the aid of the
financial skills to make a sound financial decision. Financial education is
eminent to achieve financial literacy.
India’s dismal position in financial literacy
The key finding of the study by Visa on Global Financial Literacy Barometer in 2012 concluded that despite the country has the highest savings rate among its global peers, the households may not be aware of many options to invest in India ranked 23rd out of 28 markets. Furthermore, Indian families do not frequently talk to their children about money management issues.
On average, Indian respondents discuss budgeting, savings, and
responsible spending with their children just 10 days per year compared with
the global average of 19 days per year.
Another global survey by Standard & Poor’s Financial Services found less than 24% of adults are financially literate in India even lower than Congo, Ethiopia, and Nigeria, etc. Nearly 76% of its adult population does not understand even the basic financial concepts, including risk diversification, inflation, and compound interest.
Major advanced economies including Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States, on average, 55 percent of adults in found financially literate.
Convention stereotypes
about money and belief is another problem among Indian about financial
education. Financial literacy is widely believed to be more prominent in the rich
culture and corporate sector than the middle class.
Way forward
To promote financial literacy in India, the Reserve bank of India (RBI) has launched the National Strategy for Financial Education (NSFE) 2020-25 to develop adequate knowledge, skills, attitude, and behavior, which are needed to manage their money better and plan for their future.
One of the key approaches is to update the content of financial education in the school curriculum for students of Classes VI to X. This will enormously help the student understand the financial aspect help them to the later stage of life. It ought to integrate financial education courses like B.Ed/M.Ed/MA/BSc.
Managing debt to generating passive income, tightening the purse strings to exploring investment options, knowledge of financial literacy is a compelling need of modern times. Imparting financial knowledge at an earlier stage of life by amplifying education initiatives is indispensable to uplifting financial literacy in India.
Lack
of financial
literacy ends up in conspicuous expenditure, excessive debts, low credit score,
financial frauds, fiscal distress,
unproductive investment
decisions, and stressed life. Alan Greenspan famously quoted “The number one problem in today’s generation and the economy is the lack
of financial literacy”.