Unleashing the power of financial literacy

Financial literacy is an invaluable life skill which should be ingrained in an individual right from the start

Published: 05, Jun 2018

Maya Ramchandran is a Partner Advisory Services at EY India.

Image: Shutterstock
Image: Shutterstock

Everyone has been talking about women’s empowerment. Multiple initiatives are being taken by governments, civil societies and private organisations at all levels to ensure full participation of women in economic life to build stronger economies. The recently released Economic Survey document in India was in a pink cover in order to show the government's commitment and solidarity to women empowerment and equal rights. So are all of the efforts working? Let’s consider some statistics:

As per the Economic Survey, India has 21 million notionally unwanted girls. The literacy level of women is 15 percent below that of men. India slipped 21 places, to 108 in World Economic Forum’s (WEF) Global gender gap Index.

True equality of rights and opportunities comes with financial empowerment. However, numerous social, economic and cultural barriers including the patriarchal legacy come in the way of financial empowerment of women in India. Not just rural women, but women in urban economically well-off situations display lower financial literacy levels than men. With only 20 percent of women being financially literate, 77 percent women depend on their spouse or father for investment decisions. Rising income levels and stability in families are de-incentivising women from joining the labour force, as reported by the World Bank, which analysed government data from 2004-05 to 2011-12.

As many as 19.6 million women – equivalent to the population of Romania – dropped out of the workforce during this period. In advocating for equality, financial empowerment is a crucial factor in ensuring equal rights and opportunities for women as those given to men.

EY and ASSOCHAM recently collaborated to develop a report titled, ‘Educate to empower: Embracing financial literacy for women’. This reports talks about challenges to financial literacy, initiatives towards enhancing financial literacy and also includes case studies and programs that have been successful in empowering women financially.

Financial literacy is an invaluable life skill which should be ingrained in an individual right from the start. According to all India Survey on Higher Education 2015-16, also mentioned in our report, the total enrolment in higher education was estimated to be 3.5 crore with 1.9 crore boys and 1.6 crore girls. Girls constituted 46.2 percent of the total enrolment. The total enrolment in schools (classes I to XII) was estimated to be 25.9 crore with 13.5 crore boys and 12.5 crore girls during 2014-15. Such a large pool of students will eventually have to take charge of their own financial future at some point of time. This is why I strongly believe that it is important to include financial education in the curriculum at both school and colleges as this will instil an understanding of money management in the young generation.

An effective financial education curriculum can entail:
- Imparting financial literacy as a standalone subject or integrated into subjects including Mathematics and Economics.
- Building a strong fraternity of teachers to explain concepts to students. Trainings, mentorships and workshops on financial concepts will make the teachers competent enough make younger generations financially prudent.

- Deploying productive pedagogic tools such as case studies, role play and discussions for an interactive and engaging session. For instance, at the Mann Deshi Foundation, women are educated on savings, investing, insurance and loans through modules that include games such as Monopoly.

- Evaluating the effectiveness of financial education programs by reaching out to students.

Although the pace of the multiple financial literacy and inclusion initiatives may vary in India, the direction is resolutely set towards the empowerment of women. For instance, our report highlights that Diksha is a financial literacy program of Parinaam Foundation that educates women on cash-flow, income and expenditure budgeting, savings options and debt management. As of 2015-16, 1,07,000 women were trained in this program. Also, Jnana Jyothi Financial Literacy and Credit Counselling Trust, jointly sponsored by Syndicate Bank and Vijaya Bank, offers financial literacy and credit counselling services. During 2016-17, the Trust conducted 21,750 campaigns through its 75 centers, out of which 4,324 campaigns covered over 2.6 lakh persons belonging to groups including women.

In conclusion, we must understand that financially educating women generates a multiplier effect in having a substantial impact in disseminating financial literacy to the future generations. Thus, a conducive financial landscape with a blend of a favorable regulatory regime, innovative women-centric products/schemes, enhanced mobility, robust customer protection framework and reformed attitudes towards women will increasingly stimulate women to be well equipped with financial skills. This will, in turn, encourage a rise in women’s foray into the workforce and yield success for the Indian economy.

The author is a Partner Advisory Services at EY India.

The views expressed in the article are personal.

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