In rural India where the livelihood of large number of people has always been remained vulnerable due to erratic earning, higher interest rates, constant indebtedness, and lack of reliable alternatives. Apart from unprofitable agriculture, poor financial literacy is also a cause of great concern that should be addressed quickly to ensure financial inclusion of these masses. So, let’s see the role of financial literacy in rural India…
Financial literacy meaning and definition
Financial literacy means learning to make proper choices and decisions about theirs earning, expenditure, investment, and debt management. Besides, financial maneuvering of crisis management is also a part of financial literacy.
The percentage of financial literacy in western and other developed nations, is somehow at par; but in countries like India, especially, in rural India, the nature of financial literacy is unthinkable.
Even in the age of economic inclusion and empowerment, destiny driven rural people are still suffering form grossly mismanagement of financial resources. This is one of reasons why they are unable to break the shackles of indebtedness, exploitation, and financial exclusion even after the seven decades of political liberation.
Components of financial literacy
In the layman’s terms, managing regular earning, expenditure, saving for further investment, borrowing with lower interest rates, and allocation for untimely crisis, are some of the essential components of financial literacy, that one needs to learn and make part of daily life.
Mismatch between earning and expenditure
It is widely noticed among the Indian people in general and rural in particular that people are hardly ensure balance between income and expenses especially on the eve of festivals or family events like marriages. It is well advised that one needs to be more rationale dealing with emotional choices and decisions.
Many a time, people used to burn entire saving on the name of social status or to celebrate any family events. And, finally, they left themselves on the mercy of lofty interest rates of moneylenders. Then, the question of investment and crisis management becomes totally redundant.
Claims of Jan Dhan Yojana
The success of Jan Dhan Yojana, in terms of financial literacy has been widely propagated by the people in power. As per the RBI reports, the rate of financial literacy has reached at 27 percent with this initiative, but failed to explain in detail.
Mere opening free bank account doesn’t mean that these masses have lot of resources in theirs account to manage prudenly. The study shows that majority of Jan Dhan Yojana accounts are unused due to lack of regular earning means.
Here, the idea of financial literacy is beyond doubt. It is the need of hour. But, at the same time, people in power need to ensure a regular means of income in the form of employment of any occupation for this aspiring masses. Then, only this idea will bear fruits in the nation where apart from money management, earning money is a huge challenge. After all, only financial literacy can’t enough to empower people in rural India to ensure financial inclusion..