Need for Financial Literacy in India

Financial literacy refers to the financial skills and knowledge needed to make educated decisions about how to manage resources and income. In a nutshell, it’s the ability to make a sound financial plan. The key to achieving your financial objectives and bringing wealth into your life is to stick to your financial plan. However, as any financial adviser will tell you, the pillars of a solid financial strategy are wealth building and savings. Sound financial planning is managing your income in such a way that it meets your wants and ambitions while also building money for the future and providing a comfortable buffer in case of an emergency.

The fact that India’s financial literacy lags behind that of many other countries are troubling. According to a global poll, India houses roughly 20% of the world’s population, however, only about 27% of the Indian population understands basic financial principles! Since independence, governments have worked to encourage financial literacy because it is linked to financial inclusion, which in turn helps to nurture the country’s economic progress.

Importance:

India is one of the largest business markets in the world. Multinational Corporations view its vast population as an asset. India has emerged as a global centre for information and communication technology, with Banglore dubbed India’s Silicon Valley. Foreign investments have steadily increased, and many Indian enterprises have expanded their operations to other nations. India is quickly becoming one of the world’s fastest-growing economies. Many small producers, companies, and Indian firms, on the other hand, are unable to prosper. We have progressed in technology and production capability to some level, but most Indian firms fail due to financial mismanagement.

Small businesses in India have been facing a big problem since the country’s new economic policies were implemented. Competition and a lack of debt management have harmed small manufacturing companies such as batteries, handicrafts, toys, tyres, dairy goods, and vegetable oil. After the agriculture sector, small and medium enterprises employ the most people in the country (about 11.10 crore). However, many businesses are forced to close, leaving workers jobless. People, particularly young people, are unable to handle their finances. The ratio of consumption to savings is unbalanced. For the vast majority of people, saving and investing are foreign notions.

Ways to Encourage Financial Literacy:

1. The government, as well as all other stakeholders, should work to promote unbiased, fair, and well-coordinated financial education.
2. There is no doubt that all students in Indian schools should have a financial education. The government has implemented efforts to improve unsatisfactory literacy rates throughout time.
3. Financial education should be a part of financial organisations’ good governance, which should foster accountability and responsibility.
4. Important life planning factors, such as basic savings, debt, insurance, and pensions, should be the emphasis of financial education programmes.
5. These SEBI-certified resource persons conduct workshops for various target sectors on topics such as savings, investment, financial planning, banking, insurance, and retirement planning, among others.

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