By Deepshikha Singh, Managing Editor, Consultants Review
If it was 2000 or 2010, we wouldn’t be arguing about this, but this is 2021, and at a time like today, when economic growth of a country is very important, Financial Literacy has become one of the top priorities for most of the countries. India is home to around 17 percent population of the world with a literacy rate around 74 percent. And what might come as a surprise is that out of the total population, only 24 percent of the Indian population is financially literate. About 76 percent of Indian adults don’t even understand the basics of financial engagements, and what is worse is that 80 percent women in India struggle from financial illiteracy. Without sound financial understanding, one may not be equipped to make the right financial decisions needed to navigate through the difficult times with financial adaptability.
Financial Illiteracy across India
As per ‘Deciphering Financial Literacy in India’ and article published in the Economic & Political Weekly, India also deals with tremendous inter-state difference within the country itself. Metropolitan areas like Maharashtra, Delhi, and West Bengal have financial literacy rates of 17%, 32%, and 21%, respectively while the states like Bihar, Rajasthan, Jharkhand and Uttar Pradesh where poverty is rampant, suffer with low literacy rates. While Goa as a state has the highest literacy rate of 50 percent, Chhattisgarh is lacking financial education and has the lowest literacy rate of 4 percent.
While the journey towards a financially inclusive India is futuristic, Reserve Bank of India (RBI) is continuously striving to ensure financially aware population in India. The Reserve Bank of India (RBI) has launched the National Strategy for Financial Education (NSFE) 2020-25, a strategy which aims at inculcating financial literacy concepts among the people of India, encouraging their active savings behaviour while boosting the participation in financial markets. The prime focus is on ‘5 Cs’ - Content, Capacity, Community, Communication and Collaboration. The NSFE intends to formulate the content for financial education and develop capacity and code of conduct for the providers.
The younger you are when you learn to manage money and invest and prioritize financial planning basics, the wealthier you will be. The simple mantra to financially secure future is to ‘invest early and invest well’
Financial Literacy for All
Today, managing wealth amongst Indian businesses is at an interesting crossroads. Investors have already started to recognise the significance of not only financial literacy but most companies also hiring advisors to provide value and engagement. For most corporate firms, the fundamental issue that bothers them the most is trust, reliability and credibility. Too often, small businesses have limited capabilities to execute transactions, and they rely on other consultants. Ensuring financial literacy for all, even at organizations is seen as an important instrument for the success of small businesses which helps in understanding and evaluating the information needed to make daily decisions that have financial impact on a day-to-day money management. This includes standard business terms like profit, balance sheet, and cost of goods sold along with the understanding of what drives these numbers and the implications this may have on business operations.
From savings to investments, creating wealth or managing debt, a good financial planning is the need of the hour. While one could manage finances personally or get a financial planner on board. Inculcating financial literacy early on is essential. The younger you are when you learn to manage money and invest and prioritize financial planning basics, the wealthier you will be. The simple mantra to financially secure future is to ‘invest early and invest well’. Additionally, financial literacy must also be a part of school and college curriculums because, undoubtedly, more the number of wealthy individuals the healthier the economy of a country, which is good for all.