Need for Financial Education

Recent economic survey shows that only 27 percent adults in India are financially literate compared to 67 percent in the United Kingdom and 59 percent in Singapore. Sixty percent school students in India do not understand the concept of investment, risk and reward, and 45 percent do not know how to make a budget. The little budgeting and saving that Nagas know is the inherent financial literacy that we inherited from our forefathers of stashing coins and fiat money in unseen saves without any multiplication and growth. This was evident during the demonetisation when people, especially the villagers, started panicking to exchange their savings.

Financial literacy is a set of skills needed by an individual to handle money wisely and effectively and is a lifelong process that helps an individual to plan for a secure and comfortable future. But this important subject, as of now, is limited to campaigns made by the banks and that too to their customers only. Whereas in Denmark, financial literacy is mandatory in schools, and financial management and personal financial management course is compulsory in many schools in the United States and the Scandinavian countries. In today’s economic driven world, students need to be taught about personal financial management skills at the school level itself as it has become an integral part in the healthy growth of a family, community, and the society at large.

Thomas Woodrow Wilson, the 28th President of the United States, who changed the nation’s economic policies and led the US into WW1, once said that “no one can worship God or love his neighbour on an empty stomach.” True to this, the first petition in the Lord’s Prayer is for provision of daily bread. In this era of economic liberalisation, there is no dearth of fund and resources but need for calculated knowledge on planning, management, and investment.

To this effect, financial literacy needs to be taught at the school level by subject matter specialists. Education being a state subject, the state can tailor the curricula as per the need of the situation. In the 1970s and 1980s, there was a subject on commercial geography which was supposed to be taught by a commerce graduate and still was helpful for those students who studied during those years. Tailoring the curricula may not entail that much burden to the government as many departments in Nagaland have obsolete posts created during the inception but, with the changing of times, have become inoperative. Artificial insemination in India started as a key village centre using liquid semen where breeding bulls were reared with bull attendants. With the transition from liquid semen to frozen semen technology, the KVCs were abandoned and now the sanctioned posts of bull attendants are used as multi tasking force. Likewise, avoiding the hassles of creating posts, inoperative and un-useful sanctioned posts can be converted into relevant subject matter posts where subject experts can be recruited.

The need for financial literacy also leads us to personal financial management gamut, where individual responsibility to the government and society is also entailed. On the pretext of Article 371(A), Nagas don’t want to pay any form of tax or charges whereas what is exempted is on land and its resources only. Other forms of levies like toll, tariff, duty, freight charges and tax on earnings, public amenities viz., sanitation, electricity, water, road, etc., citizens have to pay for better continuity and sustainability. In contrast, taxes are the lifeblood of a functional society where government compulsorily levies on individuals and businesses to finance a wide array of public services and societal needs. It is explicitly written in the Scripture that what is due to Caesar should be rendered to Caesar and what is due to God should be rendered to God. Here, Caesar represents the government, so offerings and tithing to God should go hand in hand with the obligations to the government.

The major chunk of the state’s budget goes for employees’ and pensioners’ salary and wages servicing, but the state in return gets only the professional tax, which is capped at INR 2500 per annum irrespective of one’s earnings, which is as per the provision of Article 276 of the Constitution. With the transition from Planning Commission to NITI Aayog, central budgeting is done corresponding to the tax collection by the states and thereby subsequent devolution. So, if the state is not getting desired returns from its major expenditure, the financial health of the state will not be healthy unless the tax regime in the state is revisited.

Another financial literacy that is to be learned is the unregulated money lending by individuals or groups going on in Nagaland which, in true sense, is money laundering and is punishable under the Prevention of Money Laundering Act, 2002, inviting rigorous imprisonment with financial penalty. For capital expenditure, everyone has to borrow, which is the normal way for investment and comes with a reasonable rate of annual interest that can catch up with the rising inflation. But what the private lenders are charging is unheard of monthly rate of interest which in many cases is equivalent to the annual rate of interest that the banks are charging. The issue here is many borrowers are debt-trapped and subsequently forced to part away even their landed assets. There may not be any objection for an individual or group Shylocking, but what is objectionable and needs to be regulated is the rate of interest and frequency, which should be capped at certain percent above the government lending rates and calculated annually.

A consumerist state like Nagaland needs a strict state-sponsored ways and means to protect the interest and welfare of the consumers because consumerism itself is the belief that increased consumption is beneficial for individual happiness and well-being and its economic growth. In a welfare state like ours, it is the bounded duty of the state to protect and safeguard the interest and welfare of its citizens, and this protection can happen only if the state can devise a robust production friendly vis-à-vis consumer friendly economic policy.

Dr. N Mhonchan Shitiri