What Is The Financial Literacy Among Youth
The Importance Of Financial Literacy in India
Moment, India is one of the biggest requests for businesses. Its large population is seen as an asset by transnational pots. India has come to a mecca for Information and Communication Technology with Banglore seen as the Silicon Valley of India. There has been a steady increase in foreign investments and numerous Indian companies have expanded their operations to other countries.
India is snappily arising as one of the most swift-growing husbandries in the world. still, numerous small directors, companies, and Indian enterprises aren’t suitable to succeed. We've developed ourselves in technology and to some extent in product capacity, but the utmost of the Indian businesses fail because of fiscal mismanagement. According to the 2011 tale,74.04 of the total population is knowledgeable, but only many understand the significance of fiscal knowledge.
High Rates of Financial Illiteracy in India
REPRESENTATION 1: Percentage of Financial Literacy in Developed and Emerging Economies.
REPRESENTATION 2: Inter-state Disparities in Financial Literacy (India)
According to the report conducted by the Global fiscal knowledge Excellence Center, only 24 of the Indian adult population is financially knowledgeable. In comparison to another major arising husbandry, the fiscal knowledge rate of India is the smallest. This is due to inter-state differences, lack of formal training, and mindfulness. While another arising husbandry has better fiscal knowledge rates, there’s still a compass for further enhancement.
Tables 1 and 2 represent State and Union- homes-wise situations of fiscal knowledge in India. Metropolitan areas like Maharashtra, Delhi, and West Bengal have fiscal knowledge rates of 17, 32, and 21, independently. States like Bihar, Rajasthan, Jharkhand, and Uttar Pradesh where poverty is rampant have low knowledge rates. The data identifies inter-state differences. While Goa has the loftiest knowledge rate of 50, Chhattisgarh is lacking fiscal education and has the smallest knowledge rate of 4.
A survey was conducted by us to analyze the financial knowledge of the population aged between 16-50 years (urban population). Out of approximately 100 responses, our data is as follows:
Through the survey, we found that 76.3% of the respondents were never taught financial education or management in schools and colleges. The majority of the respondents were 16-40 years old and yet only 53.8% had a savings account. 59.2% of the respondents picked the wrong definition of Investment. Therefore, these responses reaffirmed the need for financial literacy in India.
Need for Financial Literacy and the Benefits of a Financially Literate India
Ever since India’s new profitable programs, Small enterprises have been facing a major challenge. Small manufacturing diligence like batteries, crafts, toys, tires, dairy products, and vegetable oil painting was hit hard due to competition and lack of management debt. Small and medium enterprises employ the largest number of workers( about11.10 a crore) in the country, after the husbandry sector. Yet, numerous enterprises have to shut down leading to workers getting unemployed.
Small enterprises also don’t have important knowledge about formal sources of loans. In the RBI Working Paper Series named “ continuity of Informal Credit in Rural India, ”42.9 of the population adopt plutocrats from informal sources like commission agents and plutocrat lenders. These-institutional sources extend loans at high rates of interest. The enterprises are unfit to manage their finances, hence, landing into the debt trap. With a strong fiscal education, small enterprises and possessors will be suitable to make informed opinions and take advantage of offers available to them.
Managing Income
Individualities and youthful people aren’t suitable to manage their income. There’s a disbalance between consumption and savings. Savings and investments are alien generalities for the maturity of the population. School class has confined information and fiscal education is widely tutored to scholars who want to pursue a career in the same.
In civic metropolises and metropolitan areas like Mumbai and Delhi, individualities are unfit to allocate their spending. According to the data published by The Hindu, while Investment in Fixed means has been adding exponentially, there has been a major lack of financial planning in terms of life and health insurance. utmost of people accumulate piles of cash in their homes, rather than using it on investments. similar opinions are evidence of the lack of financial planning. therefore, the value of the accumulated plutocrat noway increases. With fiscal education, people will manage their finances effectively. India is growing and expanding its base, and a good fiscal education would come as an asset for people to get advanced earning benefits in return.
Financial Literacy in School Curriculum
There’s no doubt that Indian schools need to make financial education compulsory for all. Over the years, the government has initiated policies to improve unsatisfactory literacy rates. However, all the programs initiated have a fundamental problem – a lack of implementation.
PFDRA Initiatives on Financial Education, Insurance Regulatory Development Authority initiatives, SEBI and RBI’s initiatives have all been on paper. An average middle-class Indian or a student isn’t even aware of these initiatives. Thus, financial education needs to be implemented on the grassroots level – Students and Graduates. There’s a need for formal training of teachers on financial education. Finances can be explained easily when students are taught about it by giving real-life examples. Practical knowledge and the right targeting of financial education schemes can bridge the gap of financial illiteracy.
National Strategy for Financial Education Report 2020-2025
The Reserve Bank of India has released a document titled “National Strategy for Financial Education Report 2020-2025.” The prime strategy includes a “5 C’s” approach for increasing financial education in the country. The approach focuses on Content, Capacity, Community, Communication, and Collaboration. The report focuses on creating financially aware and empowered Indians. The Technical Group of Financial Inclusion and Financial Literacy (TGFIFL) and the Financial Stability and Development Council (FSDC) work in coordination to ensure the implementation of the same. These policies are in the right direction to make India: a financially literate country. However, at the same time, they are new and hostile policies. Thus, its progress can be only assessed in the future.
In Closing
In a population of1.3 billion, emphasis on financial education will make a long- continuing impact. Government spending on fiscal education would give them advanced returns. fiscal knowledge is the doorway to effective mortal capital conformation. fiscal chops will help to raise the standard of living and contribute to overall growth. Our labour force combined with good fiscal education would help us in eradicating poverty to some extent. In short, a financially smart India would be a major force in the world.