FINANCIAL LITERACY

A GUIDE TO THE MOST BASIC INITIATIVES INTRODUCED BY THE GOVERNMENT OF INDIA TO GUARANTEE FINANCIAL SECURITY

Financial literacy is the ability to use skills and knowledge to take effective and informed money-management decisions. For India, this plays a bigger role as it is considered essential to financial inclusion and ultimately financial stability, moreover improving the standard of society and economy of the nation.

Since a large chunk of India’s population is still illiterate, financial literacy becomes exceedingly important as they do not have easy access to formal financial set up and lack knowledge about financial planning measures and government policies. As per recent statistics only 1% of the Indian population is an active investor in capital market. Now what does this mean? Active investing refers to an investment strategy that involves ongoing buying and selling activity by the investor. Active investors purchase investments and continuously monitor their activity to exploit profitable conditions.This means that only 1% of the vast Indian population has the education and risk taking ability to indulge in short term run ups and other such opportunities. The other 99%, remain unaware of the various government financial schemes, that have been introduced over the years. This 99% not only constitutes uneducated, poverty stricken citizens but also the vast majority of the so called “educated” class.

This article is an attempt to educate the common man about the 7 most basic initiatives introduced by the government, to improve the financial situation of its citizens, guaranteeing financial security and economic prosperity in the country.

1.Pradhan Mantri Jan Dhan Yojna (PMJDY) - Pradhan Mantri Jan Dhan Yojna, introduced by Prime Minister Narendra Modi in 2014 with the goal of financial inclusion aims to make financial services such as savings and deposit accounts, remittance, credit, insurance, pension, etc easily accessible at rates affordable to the common man. Under this scheme, over 29 crore bank accounts have been opened, holding over 65 crore worth balance in them. This scheme if utilised effectively by the Indian Population, can transform the state of the financial disparity in the nation. This scheme provides 1 lakh accident insurance cover, and Rs 30,000 life insurance cover for those who opened such bank accounts before the 26th January, along with a 4% interest per annum on money deposits and has no criteria for minimum balance, ensuring safe and secure means to making savings.

2.Sukanya Samriddhi Yojna (SSY) - Launched by Prime Minister Narendra Modi in 2015, under the Beti Padhao, Beti Bachao campaign, seeing the inequality experienced by majority of women and girls in India, Sukanya Samriddhi Yojna, aims to meet the marriage and education expenses of a girl child to ensure for them a secure future.This scheme permits a family to open 2 accounts, one per girl child, with a minimum deposit of 1000Rs and a maximum deposit of 1.5 lakhs during one year.The account can be opened as the girl child turns 10, and only be closed down, as the girl turns 21. The benefit lies where 50% of the deposited money can be withdrawn to meet the educational expenses of the girl.

3.Rajiv Gandhi Jeevandayee Arogya Yojana - Launched in 2012, this scheme was introduced in Maharashtra for the economically weaker sections, so that their financial status does not hinder their health. Under this scheme, any citizen of Maharashtra, holding one of the four cards issued by the government has access to free health treatment for over 971 diseases in over 488 government hospitals. It guarantees a family free treatment worth 1.5 lakhs per year. Since the commencement of this scheme, statistics show that there have been over 8 lakh beneficiary families, receiving over 11.81 lakh procedures and 7.27 lakh surgeries with all expenses being borne by the government.

4.Pradhan Mantri Jeevan Jyoti Bima Yojna (PMJJBY) - Announced by Finance Minister Arun Jaitely in the budget speech of 2015, this scheme is a renewable insurance scheme that offers life insurance coverage of Rs 2 lakh on death, to nominee only. This scheme can be availed by any savings bank account holder aged 18-50, and can be renewed each year at only Rs 330n per annum, thus being seemingly affordable for all.Approximately 3.11 crore Indian have applied for this scheme and around 65000 claims have been made.

5.Rashtriya Swasthiya Bima Yojna (RSBY) - Introduced in 2008, this scheme aims to provide health insurance to all citizens belonging to the BPL - below the poverty line, mainly unorganised sectors such as construction, that are registered under Welfare boards, Street Vendors, Auto drivers, etc. In addition to ensuring coverage of Rs 30,000 for families, consisting of up to 5 members, it offers transportation coverage of Rs 100 for every visit to the hospital, at a premium of just Rs 30 per annum.

6.National Social Assistance Scheme - This is a financial support, sponsored scheme pertaining to the elderly ( above 60years) citizens coming in the bracket of BPL, BPL widows aged 40-64, and BPL citizens with disabilities above the age of 18, by ensuring them social pensions to meet their expenses, and providing them with a decent standard of living.

7.Pradhan Mantri Mudra Yojana - Announced by Finance Minister Arun Jaitely, in the budget speech of 2016, this scheme revolves around MUDRA - Micro Units Development and Refinance Agency Ltd, a new initiative that meets the credit needs of non corporate, non form sector, micro and small enterprises, lying below 10 lakhs. It comprises of lons of 3 kinds: Shishu( loans up to 50,000), Kishore ( loans up to 5,00,000) and Tarun( loans up to 10,00,000). The benefits of this scheme lie where these loans can be availed for vehicles, and the repayment time period is as high as 7 years. Moreover, these loans can be availed as either BIL ( Business Installment Loan) - which cater to working capital requirements buying plants and machinery, renovating offices etc, or BLG ( Business Loans Groups Loans) - which cater to dropline overdraft facility and working capital loans.

Apart from, the government is implementing various other schemes, with a similar framework to cater to the financial requirements of different sections of society, providing a secure future for its citizens, where expenses for a decent standard of living are concerned.