Bhaskar Nath Biswal
The growing need for financial education for families to take prudent and rational investment decisions and to ensure their economic security has been widely recognised. The Covid-19 pandemic has exposed our financial weaknesses which necessitated some sort of economic security at the individual as well as organisational level. Sudden changes in the income flows shattered the lifestyles of many. Life went as it is for those who made better financial decisions for themselves and their families, increasing their economic security and wellbeing. Thus, being financially literate is not only important for the household, but also for communities and societies. (Hogarth, Jeanne M., 2006).
The Max New York-NCAER survey (NCAER, 2008) pointed out that majority of Indian households are good savers but they do not undertake financial planning and are financially at risk. Advocacy of insurance and risk issues is an important matter as it (i) heightens individual awareness and responsibility towards potential risks; (ii) enhances understanding of insurance mechanisms that can cover these risks; and (iii) enables the development of consumers’ knowledge and capacity in order to make informed decisions as regards insurance matters (OECD, 2006). There is every need to educate people about the benefits of life insurance for both financial protection and wellbeing as well as for long-term wealth creation.
The apex financial institutions of the country like RBI, IRDAI, SEBI and PFRDA introduced many programmes for enhancing financial literacy during the last decade which made an impact on financial awareness and decision making of the common man. The first National Strategy for Financial Education (NSFE) (2013-2018) was successfully implemented with an aim to provide financial education to the masses. The progress was reviewed keeping in view the various developments that have taken place like the Pradhan Mantri Jan-Dhan Yojana (PMJDY). The National Centre for Financial Education prepared the second National Strategy for Financial Education (NSFE) (2020-2025) with a vision of making a financially empowered India.
The objectives of the second NSFE is to inculcate financial literacy concepts among various sections of population, encouraging savings behaviour, use of safe and secure digital financial services, availing credit from formal sources, management of risk at various life stages, proper planning for old age, participation in financial markets, awareness about grievance redressal and chalking out methods for evaluation of progress of financial education.
To achieve the strategic objectives laid down, NSFE recommends a ‘5 C’ approach for achieving financial education through the development of relevant content including curriculum in schools and colleges, developing capacity among the intermediaries involved in providing financial services for a better code of conduct, leveraging on the positive effect of community-led model for sustainable financial literacy through appropriate communication strategy like social media, and lastly, enhancing collaboration among various stakeholders working in the area of financial education.
The strategic objectives are to be achieved through three dimensions – life stage of the target audience, geography with focus on vulnerable groups and sector-specific focus. The first dimension includes the stages of an individual like children, young adults, adults in the workforce and senior citizens with special focus on women. The second dimension covers rural and urban people with special focus on urban poor and migrants, aspirational districts, northeastern states, hilly states, Andaman and Nicobar Islands and Lakshadweep with focus on vulnerable social groups, migrants and persons with disabilities. Agriculture, manufacturing (skilled/unskilled labourers/artisans under MSME sector, members of SHGs), and self-employed/ unorganised sector are to be covered in the third dimension.
At the end of three years, a mid-term evaluation shall be undertaken (2022-2023) and a comprehensive national survey at the end of the strategy implementation period shall be undertaken in 2025. However, due to the Covid-19 pandemic there may be delay in the implementation of the strategy and we have to wait for some more time to reap the benefits of financial education.
The writer is Head, Department of Commerce, Nowrangpur College. Views are personal.