By teaching money management skills early, India can cultivate a generation of financially savvy individuals capable of driving economic growth
As we are about to wrap up 2024, it cannot be underestimated how important financial literacy is with changing trends of the economy, where education is pivotal in determining India’s arrival as an economic superpower. Even now, with the growing financial awareness, only 27 per cent of Indian adults are financially literate; that number drops to a mere 16.7 per cent for students. Recognising the urgency for the skills of financial management, the National Education Policy (NEP) 2020 revolves around putting in place financial literacy from the early days of schooling in the country’s educational system. Teaching children money management skills early in life helps develop financially responsible adults who can make sound decisions benefiting both themselves and the economy. In earlier times, financial education was largely informal. The previous generation was focused on accumulating tangible assets like gold and property. However, India’s banking and financial system has undergone a vast transformation since the 1990s. With SEBI paving the way for new regulated asset classes for the common public - mutual funds, stocks, bonds, REITS and multiple other financial products are available for the common public to invest and grow their capital. The establishment of the Securities Exchange Board of India (SEBI), has instilled confidence in financial markets and led to greater participation in investments. As India progresses towards a digital financial ecosystem, the demand for financial literacy has never been so crucial in navigating opportunities.
Why Financial Literacy Needs to Start Early: Financial literacy goes beyond just education; it is a life skill and mindset that needs to be cultivated from an early age. All the education policies stress encourage students to be mindful and well-read towards financial issues so that they can cope with anything ranging from budgeting to retirement savings. Students with such financial sensibilities provided that they have been exposed practically to these concepts, would be able to cope with investment volatility, financial contingencies and planning for a strong future. Building such a ground is vital for citizens to contribute towards building a balanced economy.
Taking Inspiration across the globe: Switzerland, Japan, and South Korea have leveraged their core strengths—banking, technology, and manufacturing, respectively—to drive economic growth and establish distinct global identities. These unique specialisations have not only accelerated their economic development but also secured their positions as global leaders in their respective domains.
Following their example, India could prioritise financial literacy as a national initiative to enhance its citizens’ saving and investing behaviours while increasing economic participation. This focus could yield significant social benefits: reducing poverty, narrowing income inequality, and improving the quality of life for millions.
India’s abundant advantages—from its tech-savvy youth to its robust educational infrastructure—position it favourably for global leadership in financial prosperity. However, these strengths alone are insufficient. Without proper financial knowledge, even the most talented individuals may struggle to maximise their potential, ultimately hindering economic growth. By combining financial education with India’s technological expertise and expanding educational framework, the nation can nurture future entrepreneurs, investors, and professionals who will not only excel in their careers but also effectively manage and grow their wealth.
A multi-pronged approach can help to establish a financially literate India. The key steps to follow:
Integrating Personal Finance into Curriculums: Personal finance should be included as part of the school and college syllabus so that a strong foundation towards money management & finance for a lifetime.
Nationwide Awareness Programs: Public campaigns on financial literacy will reach areas lacking financially literate communities, effectively democratizing access to that knowledge as well as encouraging wider economic participation.
Leveraging Technology and Partnerships: Public-private partnerships can make financial education accessible and attractive. By using technology, it is possible to cast interactive sessions and impart practical, real-life skills to a broader audience, regardless of their location.
A Call to Action for all of us: It is now time to recognise financial literacy as an indispensable part of our journey towards education and the economic boom of India. Financial literacy, more than a skill, should be regarded as a strategic enabler to achieve personal growth. Through the infusion of financial education across all levels, which range from classrooms to boardrooms, we can unleash a superpower that will help our population bloom and lead us into the 21st century.
(The writer is founder and CEO of StockGro; views are personal)
