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Financial literacy in India very low, says survey

While we have become marginally better at saving and planning for the unexpected and retirement, basic money management still remains a weak point, shows a recent survey. Saurabh Kumar reports.

business Updated: Aug 03, 2013 01:05 IST
Saurabh Kumar
Saurabh Kumar
Hindustan Times
Hindustantimes

While we have become marginally better at saving and planning for the unexpected and retirement, basic money management still remains a weak point, shows a recent survey. In terms of overall financial literacy, India is at the bottom among 16 countries in the Asia-pacific region with 59 index points, according to the annual MasterCard’s index for financial literacy. Only Japan fared worse with 57 points.

The index is based on a survey conducted between April 2013 and May 2013 with 7,756 respondents aged 18-64 years.

The survey polled consumers on three aspects — basic money management (50% weight), financial planning (30% weight) and investment (20% weight) — to arrive at the overall financial literacy index. On individual parameters, India scored 50 index points in basic money management, which was lowest among 16 countries. With respect to financial planning, which involves savings and planning for the unexpected and retirement, India showed improvement from the last round of survey and scored 76 index points and for investments it scored 58, one index point lower compared with last year.

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The report states that for Indians, “the lack of ability to keep up with bills, set money aside for big item purchases and to pay off credit cards fully could be due to a lack of surplus cash, resulting from the fact that income levels are not high enough to cover expenses”. Interestingly, the financial literacy scores for Indians aged 30 and above was 59 compared with 61 for those under 30 years of age.