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Why financial literacy is gaining importance as a new academic domain

The National Centre of Financial Education in collaboration with the National Council of Educational Research and Training aims to introduce financial literacy into school curriculum.

The economic literacy rate for females is 21% which is 8% less than male literacy rate, shows NCFE data.
The economic literacy rate for females is 21% which is 8% less than male literacy rate, shows NCFE data.

How to become a millionaire? -This is a topic which often trends online, however there are many who still are not aware of how to manage their money. Thus, financial literacy among the youth still remains a challenge. Financial literacy rate of young Indian adults is only  27% as per 2019 SEBI report. The National Centre of Financial Education (NCFE) Financial Literacy and Inclusion Survey 2019 data states that only 24% rural respondents are found financially literate, whereas the rate in urban population is 33%. The economic literacy rate for females is  21% which is 8% less than male literacy rate.  “The survey serves as a pointer to show where the rouserces need to be focused. The key gaps in rural and urban divide as well as gender have been identified on national as well as state level. With a collaborative utilisation of effort and resources with other organisations, we can bridge the gap,” Satyajit Dwivedi, chief executive officer, NCFE, said.  

It is believed that the government along with financial sectors, ed-tech and fin-tech industries have begun to focus on the need of financial literacy. “Over the past two-three years the growth and accessibility of financial services has increased  through the various fintech industries that have mushroomed. In situations where young adults do not fully understand certain terminologies, the risk factors in financial investment increase and they tend to start making mistakes,” Mukund Rao, co-founder of Muvin, a pocket money app for teenagers, said. 

Emphasising the need for financial education and strategies to implement the same, the National Strategy for Financial Education (NSFE)  2020-2025 has recommended the adaptation of 5C’s approach, which includes financial education based curriculum in schools, colleges and training organisations. The NSFE has also called for integration of financial literacy as a part of  academic curriculum through various professional and vocational courses. According to Dwivedi, NSFE in collaboration with National Council of Educational Research and Training (NCERT) aims to introduce financial literacy into school curriculum. “Our main objective is to implement financial education through the Central Board of Secondary Education (CBSE) syllabus. We are working with NCERT, once the process is done, it will automatically be included in all CBSE based schools who are following the NCERT syllabus. We are also in dialogue with the Ministry of Education. As the National Education Policy 2020 develops the National Curriculum Framework, the textbooks will be formulated. Some of the state boards have already adopted that into their textbooks. We are also in talks with Indian Certificate of Secondary Education (ICSE) boards,” he further added. 

It is believed that financial literacy at a young age will help rising investors to understand the risk factors. The contribution of Micro, Small and Medium Enterprises (MSME) in India’s GDP during 2020-21 is around 30% as per the Central Statistics Office report, which has been reduced by 0.5% as compared to the value of 2019-20.  “Learning about money is perhaps one of the most important skills that should be taught at a young age. We have talked in advance with a few schools regarding financial contents,” Shankar Nath, co-founder, Junio, said. He also added that while talking to the principals, many educational institutions  have shown a keen interest in implementing the courses for financial education for the youngsters.

According to Dwivedi, primarily NCFE has prepared a workbook series from sixth grade to 10 which includes banking, insurance, pension system among others. It is upto the institutions how much they want to adopt. He also said that the courses have been prescribed as horizontal integration instead of financial education as a separate subject. “Financial education is a life skill. Personal finance knowledge is utmost important. Majority of youth do not know about the ten principles of financial literacy. We know theory but not the practice when it comes to personal finance,” Diwvedi further added.

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