JOIN USAplan proposed by the Reserve Bank of India and the Securities and Exchange Board of India to hold a nation-wide survey on financial inclusion and literacy and launch a programme of education is very welcome. A concept paper, National Strategy for Financial Education, has been thrown open for public debate and the ideas it generates may be incorporated in the plan. India is poor both in terms of financial inclusion and education.
Though the savings rate is rather impressive, the investment rate does not keep pace with it because of inadequate awareness about the various methods and instruments of savings. Banking and financial tools like stocks and securities have expanded over the years but they are nowhere near realising the potential they have in the country. The investor education programmes held by the SEBI have had only a limited reach and there is need to make the plan wider, continuous, long-term and part of general education.
The plan will involve imparting education to students about the values and methods of investments at the school level and awareness and training to general public. It aims to impart financial literacy to about 500 million people. Most people do not know how to best use the money and resources at their command. If investment consciousness and knowledge become part of general education at the school level, children will develop the necessary inclination and skills necessary for investment in later life. There are various types of financial services and products available in the market. Most people are not aware of them and many are misled by false claims and misrepresentation. Education and training will help people to become good investors aware of their rights and responsibilities. They will also help people to take wise financial decisions, and avoid falling victim to exploitation by middle men, money-lenders and other unscrupulous people.
The stock market culture has not taken deep roots in the country. An aware and investing public can deepen the markets and reduce the dependence on foreign financial institutions. This will help the market to remain stable even in difficult times and help protect investor interests. More people can participate in the country’s growth story and the government will be under less strain to find resources for development. The financial regulators should pursue the plan seriously and sustain it, appealing to different sections of people in different and appropriate ways. The media can be employed effectively for the purpose.