An efficient capital market and banking system play a very crucial role in the economy in a globalised world. It is not only the efficiency of manufacturers to make quality products that is important in the growth of a nation, but also factors like currency rates, interest rates and other economic indicators that play a very crucial role in business. India has survived the subprime crisis of 2008 and is also withstanding the strains appearing in Western economies.
In fact, India has shown to the so-called votaries of economic liberalisation that we have a conservative, but a strong banking system and regulators have been able to use levers of balance to keep the crises under control at home.
On the one hand, when India is growing, there is another Bharat that is emerging which does not have potable drinking water, electricity and modern agricultural tools to increase productivity and income. While we have a savings rate of around 34%, enough capital is not going into the banking and capital market, which is hindering capital formation and, in the process, not generating employment and financial inclusion. If this isn?t addressed, it will make the development useless.
As India has to grow and become an economic superpower, we as teachers, have to think as to how the foundations for this has to be laid where people are financial literate. Higher management education cannot be provided to all as the feedstock for this to happen is not very large. For a healthy and vibrant nation, academic institutions have a formidable task of increasing the financial literacy and creation of a student class that is not only financial literate, but also helps the institute in knowledge creation and its dissemination. The old system of knowledge dissemination, where one had to read subjects because they are being taught for so many decades, has to change. We need to make the education system more contemporary. In all post-graduate courses, educational institutions will have to introduce subjects like corporate governance, capital market, and banking and financial institutions as compulsory subjects.
Educational institutions have a system of summer internship and dissertation where students go to industry to get a feel of the corporate culture. But are students aware of the ground realities, changing behaviour in rural areas and how companies have to reorient themselves to equip themselves to face future challenges? Students in their summer internship or dissertation should visit semi-urban and rural areas to educate people there about wealth creation and diversion of their saving in to more productive areas. Later, they should submit a report about the shift that has taken place.
This way, students will be able to get insights into the changing India and will be more productive in their corporate profession. With the effort of the students, a large chunk of the population will be able to take better decisions about wealth creation by way of participation in the banking system and capital market and diversify their savings not only in nation building, but also create useful assets for their future generation.
n The writer is professor and head of department, F&A, ABS, Amity University. These are his personal views