Why should financial literacy be a priority in the Union Budget 2025? What specific financial literacy initiatives should the government introduce in the budget? How can India learn from global best practices to improve financial literacy?
The Union Budget is more than just a financial statement; it is an economic vision that shapes the future of the nation. As India moves toward becoming a $5 trillion economy, one critical area that demands urgent attention in the 2025 budget is financial literacy. Despite rapid economic growth and digital financial advancements, a large portion of India's population remains financially illiterate, impacting their ability to make informed financial decisions.
The State of Financial Literacy in India
According to a study by the Securities and Exchange Board of India (SEBI), only 27% of India's population is financially literate. The situation is even more alarming in rural India and among marginalized groups, where financial education is virtually non-existent. Financial illiteracy results in poor investment decisions, lack of retirement planning, and vulnerability to fraudulent schemes. The absence of structured financial education in schools and colleges further worsens the situation, leaving young adults unprepared to navigate the complexities of modern finance.
Why Financial Literacy Should Be a Budget Priority
Financial literacy is not merely an individual concern; it has macro-economic implications. A financially aware population contributes to higher savings, responsible borrowing, and improved investment trends, ultimately strengthening the economy. In contrast, financial illiteracy leads to a rise in informal borrowing, debt traps, and inefficient wealth distribution.
The government has previously introduced initiatives to address financial literacy, such as the establishment of Financial Literacy and Credit Counselling Centres (FLCCs) by the RBI, SEBI's investor awareness campaigns, and various digital financial literacy programs. However, these efforts have not penetrated deeply enough into India's vast population. A comprehensive and structured approach, backed by substantial budget allocations, is needed to ensure financial education reaches every citizen.
What the Union Budget 2025 Should Announce
The Union Budget 2025 should introduce a comprehensive National Financial Literacy Mission (NFLM) to make financial education accessible at all levels. This mission can focus on embedding financial literacy into school and college curricula, ensuring that students are equipped with essential financial knowledge from an early age. Additionally, the government should incentivize edu-fintech partnerships to develop digital courses and mobile applications that provide interactive and engaging financial education. Special focus should be given to women, small business owners, and rural populations to bridge existing knowledge gaps.
A key expectation from the budget is the introduction of tax benefits for financial education programs, encouraging corporates and educational institutions to promote financial awareness initiatives. The government should also expand the Investor Awareness and Protection Fund (IAFP) to include large-scale financial literacy campaigns across Tier-2 and Tier-3 cities. The creation of financial literacy centers at district levels will provide in-person assistance to individuals seeking financial guidance. Additionally, integrating financial literacy modules within existing government schemes, such as MGNREGA and rural self-help groups, can effectively enhance grassroots awareness.
Lessons from Previous Budgets and Global Best Practices
In past budgets, the government has taken steps such as setting up 75 digital banking units (DBUs) and introducing financial literacy initiatives through SEBI and RBI. However, these efforts have been scattered and lack a centralized, large-scale approach.
Countries like Canada and Australia have successfully integrated financial education into their national curricula. The United Kingdom's Money and Pensions Service (MaPS) provides free financial guidance, while Singapore mandates financial literacy programs for working professionals. India can adopt a hybrid model, combining school education, workplace training, and digital learning to improve financial literacy comprehensively.
Conclusion: The Need for a National Financial Literacy Policy
The Union Budget 2025 must prioritize financial literacy as a national goal, with a structured policy that aligns with India's vision of becoming a developed economy by 2047. Financial literacy is the foundation of an economically empowered society. Without it, economic growth remains unequal and unsustainable. This budget presents an opportunity to build a financially aware nation-one where every citizen can make informed financial decisions and contribute meaningfully to India's economic success.
A financially literate India is not just an economic necessity; it is a social imperative.
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