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Financial literacy is currently integrated into the mathematics curriculum. This approach has limitations, as it may not adequately cover topics such as financial planning, budgeting, and understanding financial products
In today’s era, the necessity for widespread financial literacy in India has never been more evident. Shockingly, recent studies reveal that only 27 per cent of the country’s population is financially literate, with an even bleaker picture in rural areas and among women. Many individuals lack familiarity with essential financial concepts such as budgeting, saving, and investing, leaving them vulnerable to misleading advertisements, fraudulent schemes, and uninformed investment choices. This results in high debt levels, insufficient retirement savings, and inadequate insurance coverage.
This problem spans across socio-economic strata, including high-earning individuals and earning women, who often rely on others to handle personal finances and investments.
In India, traditional business and personal finance knowledge, often passed down through generations, has long been valued as source of wisdom and guidance. However, in today’s rapidly changing world, the effectiveness of this traditional knowledge is increasingly called into question.
Further, in many cases, this age-old wisdom has been limited to specific demographics such as tightly-knit business communities. Whereas, other sections of society, despite making strides in prosperity, may not have access to such age-old wisdom. As a result, individuals are flocking towards social media influencers, who are disseminating misleading financial advice without adequate transparency or consideration for the audience’s financial literacy. The magnitude of problem has forced regulators such as SEBI to initiate a crackdown on misleading investment advice and undisclosed promotions by influencers.
Root of the problem
As the battle against the menace of influencers remains ongoing, there is also an urgent need to address the root of the problem. We need to start at the schools. In India’s education system, financial literacy is currently integrated into the mathematics curriculum, primarily focusing on mathematical aspects of financial concepts. This approach has limitations, as it may not adequately cover topics such as financial planning, budgeting, and understanding financial products or understanding the psychological and behavioural aspects of managing money — the importance of saving and investing or the dangers of debt.
The primary focus of mathematics teachers is often on teaching mathematical concepts and ensuring students understand these concepts. As a result, the delivery of financial education, which is just one application of these concepts, may not be their main priority or skillset. Further, not all students enjoy mathematics or excel in it. These students might struggle with the mathematical aspects of financial education, which could hinder their understanding of the financial concepts being taught.
Contrastingly, in developed countries like Australia, Germany, and the US, financial literacy is a cornerstone of education, well-integrated into subjects like social studies and economics. These countries have implemented national strategies to promote financial literacy across various age groups. This structured approach allows students to develop a deep understanding of fundamental financial concepts beyond mathematical calculations.
India’s evolving financial landscape underscores the importance of enhancing financial literacy. With 50 crore individuals brought into the formal banking system through Jan Dhan accounts, of which 55.5 per cent Jan Dhan account-holders are women and 67 per cent of such accounts are opened in rural and semi urban areas, prioritising financial literacy, particularly at the high school level, becomes crucial. Amid the news of rising household debt in India, by making financial literacy compulsory and implementing standardised curriculum guidelines, India can empower future generations to make informed financial decisions and contribute to economic development.
To incorporate financial literacy into school education in India, there is a need for concerted efforts from policymakers, educators, and relevant stakeholders. This includes developing standardised curriculum guidelines, providing training and support for teachers, leveraging technology to deliver interactive and engaging learning materials, and fostering partnerships between government agencies, private organisations, and civil society groups to ensure comprehensive coverage and impact.
Milind is Professor at MBM University, Jodhpur; Sharad is Senior Associate Director at KPMG, Gurgaon. Views are personal
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