Speaking on the need for introducing the plan, Atul Kumar Gupta, president, ICAI says, “India is home to around 17% population of the world and the literacy rate here is around 74%. While, out of the total population, only 24% population is financially literate. This reveals the pressing need to educate the masses about finance and savings.”
He, however, adds that there has been a marked improvement in the understanding of financial concepts by rural India in the last five years. Only 15 % of the population was financially literate in 2013 as compared to the 24% today, he says.
Anticipating a boost due to NSFE in the economy, Ashish Garg, president, ICSI, says the strategy will act as a game-changer in creating financial literates which will further serve as a key component in building the country’s economy.
“The initiative of the government and Financial Sector regulators that aims at building a financially educated and independent nation will definitely act as a game-changer. Financial literates will play an important role in building a strong Gross Domestic Capital Formation (GDCF) which is a key component in a nation’s economic development,” he says.
Garg underlines that though the foundation of modern banking was laid in the country in as early as the 18th century, a large portion of the savings is still in the unorganised sector. “Despite having the world’s 10th largest and Asia’s oldest stock exchange, low per capita income, education inequality, non-banking habits and informal borrowing and lending, ruled the country for years. Thus, it is imperative for the country to now optimise its resources and boost the economic and financial backbone of the nation,” he adds.
Benefits of inclusion at an early level
The plan recommends the introduction of the financial curriculum in schools and colleges. The move to inculcate financial awareness at an early age is expected to benefit the people in planning their investment properly at a later age, says Gupta.
“Students would be exposed to the basic fundamentals of capital markets and different areas of investment in the school. This would help them plan their investment well once they start earning. Also, they would over a period of time learn to analyse the performance of companies to decide whether or not to invest in shares of those companies,” he says.
The introduction of financial education at an early level will also help the students to identify whether to narrow down to the same career in future or not. As currently, they are able to take this decision only when they are undergoing graduation, he adds.