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There was a time in India when financial education was restricted to the financial shelf in bookstores.

Today, the game has changed largely due to internet penetration and the availability of affordable data, leading a whole new group of consumers to the digital economy.

Retail participation in the Indian stock market has increased dramatically over the last two years.



Between April and November 2021, the two depositories, Services (CDSL) and National Securities Depository (NSDL) added 28.6 million new accounts.

According to a survey by S&P, more than 75 per cent of Indian adults do not adequately understand basic financial concepts. The gap is more when it comes to women, standing at 80%.

While India is moving towards bridging the financial literacy gap, multiple challenges prevail. The first is information overload and data paralysis.

With so much raw content floating on everyone’s screen, it is hard to pick the right signal from the noise.

Information presented online is often presented in a fragmented manner, and there is lack of credibility.

With around 50 per cent of the 1.37 billion population in India having internet access and almost 70 crore having a smartphone today, why is democratizing financial education important?

Bridging the urban-rural divide

Rural residents face numerous constraints in accumulating assets from their savings. Lack of financial literacy and available investment avenues make it challenging for rural investors.

A considerably large part of the rural savings go into informal savings avenues like gold, chit funds, real estate, and most predominantly bank deposits.

Institutionalization of such savings can improve their efficiency by promoting better allocation among different areas, sectors, and economic activities. This is where financial literacy and education plays a paramount role.

Digital financial services companies need to start communicating with the rural markets in a language they understand, a channel they relate to and using influencers they connect with.

The objective of literacy programs conducted by various stakeholders needs to address the concerns of small investors, such as “what and where” to invest so that they can secure their future effectively.

As savings and investment of individuals in an economy are the two variables by which the strength of an economy can be measured, democratizing access to financial education will unlock a plethora of opportunities and investment streams for rural India to enhance their savings.

Elevating the role women investors can play for accelerated economic growth. Low financial literacy is exacerbated by patterns of vulnerability among specific population subgroups.

Most women fail to take charge of their own money and are dependent upon their parents or husbands for managing their finances.

Moreover, due to factors like less risk appetite and limited investment knowledge, women prefer traditional methods of savings and investment with low returns such as FDs, gold ornaments, provident funds etc over volatile instruments such as stocks and Mutual funds.

Despite women being more savings-oriented, by traditional methods, their wealth lies idle in bank accounts and tends to lose value over time owing to inflation.

Additionally, social conditioning, patriarchy, steep gender-pay gap, and pink tax disproportionately impact Indian women financially.

Today, India has the largest number of single women in its history. Hence, there is a need for financial autonomy and there’s never been a greater need for financial education and awareness.

Studies have shown that women have a shorter span of working careers owing to family needs, have greater life expectancy than men and are paid less compared to men for the same work profile.

These factors arise the need for women to develop healthy investment habits for a secured future. Encouraging women to invest will not only ensure the financial independence of women but also increase the flow of money to the financial market, and the time is now.

More capital investment will ensure increased production of goods and services, which will boost the country’s economic growth.

Empowerment of India’s youth by making them financially independent

As a country with one of the largest young populations in the world and a booming economy, youngsters in India expect a brighter future.

As a result, today’s young investor shows an unprecedented degree of financial prudence. Modern investment portfolios like crypto, stock market, US stocks, etc have played a major attraction point for the young Indians to begin their investment journey.

However, there is still a long way to go and a dire need to inculcate financial investment habits amongst India’s youth today. Including financial education as part of the school, the curriculum is a fair and efficient policy tool. Financial education is a long-term process.

Building it into curriculums from an early age allows children to acquire the knowledge and skills to build responsible financial behaviour throughout each stage of their education.

Financial education would also encourage increased participation amongst the youth in the financial markets to meet financial goals and objectives, develop credit discipline and availing credit from formal financial institutions as per requirement, and improve the usage of digital financial services in a safe and secure manner.

The way forward for financial literacy and what works

To be effective, financial literacy initiatives need to be large, scalable and consistent. Schools, workplaces, and community platforms provide unique opportunities to deliver financial education to large and often diverse segments of the population.

Furthermore, stark vulnerabilities across the country make it clear that specific subgroups, such as women and young people, are ideal targets for financial literacy programs.

Financial education is a crucial foundation for raising financial literacy and informing the next generations of consumers, workers, and citizens. A key lesson is that when it comes to providing financial education, one size does not fit all.

In addition to the potential for large-scale implementation, the main components of any financial literacy program should be tailored content, targeted at specific audiences.

In today’s world, financial literacy should be considered as important as basic literacy, i.e., the ability to read and write. Without it, individuals and societies cannot reach their full potential.

(Co-authored by Harsh Jain (Co-founder & COO, Groww) and Hena Mehta (Co-founder & CEO – Basis)


(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)

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