Empowering India through Skill Education and Financial Literacy: Insights from the 2024 Union Budget

India's journey towards becoming a developed nation hinges significantly on its ability to empower its citizens with relevant skills and financial knowledge. With a median age of 28 and 65% of people under 35, many lack the skills required in a contemporary economy, with only about 51.25 percent of young people employable (Wheebox ISR Report 2024). The Union Budget of 2024 underscores the importance of skill education and financial literacy, which is critical for empowering citizens to make informed financial decisions. Despite improvements, financial literacy in India remains relatively low, with significant disparities across regions, genders, and socioeconomic groups (Jangili et al., 2022). The budget's initiatives aim to address these gaps and promote financial inclusion.

Skill Development in the 2024 Budget

The budget for skill development has seen a significant increase, with allocations rising from ₹3,260.18 crore in 2023-24 to ₹4,409.63 crore in 2024-25. This includes funding for the Skill India Program (₹2,685.64 crore), Vocational Education and Training (₹17.56 crore), and the SANKALP program (₹380 crore). Additionally, ₹1,000 crore has been allocated for the upgradation of Industrial Training Institutes.

Major initiatives focused on with the enhanced budgets include:

• Revised Model Skill Loan Scheme: Now offers loans up to ₹7.5 lakh, backed by a government-promoted Fund, aiming to benefit 25,000 students annually to increase employability and economic growth.
• Centre of Excellence for Artificial Intelligence: ₹255 crore allocated to establish a CoE for AI to equip youth with necessary skills and address the talent gap.
• Paid Internships in Top Companies: Aims to provide internships at 500 top companies to one crore youngsters over a five-year period. Participating organizations will cover 10% of internship fees from CSR funds and training costs. Interns will get a monthly stipend of ₹5,000 and one-time assistance of ₹6,000.
• Critical Mineral Mission: Aims to enhance skill development in sectors related to the extraction and processing of critical minerals.
• Mandatory Financial Literacy Courses: Introduced as a prerequisite for claiming the second instalment of the subsidy provided to newly entering workforce members earning ₹1 lakh per month.

Financial Literacy

Having a thorough understanding of a range of personal finance subjects is a prerequisite for financial literacy, which allows clients to weather difficult times (Lusardi & Mitchell, 2014). Globally, interest in financial literacy has increased (OECD, 2020), as it supports economic growth in emerging countries like India (Ribaj and Mexhuani, 2021) and has favorable macroeconomic impacts (OECD, 2015).

Financial Literacy across India

The financial literacy rate across India varies significantly. The 77th round of the 'All India Debt & Investment Survey (2019)' indicates that 33% of the rural population and 29% of the urban population do not possess basic financial instruments. A survey by Dash and Ranjan across India highlighted several disparities:

• Regional Disparities: The North-East region's population has lower levels of financial literacy compared to the East, West, Central, and South zones.
• Gender Disparities: Women tend to be less knowledgeable than men. Regularly employed households show a positive relationship with financial literacy, while casually employed households exhibit a negative relationship.
• Socioeconomic Disparities: Financial literacy and all income quintiles show a positive correlation. Urban areas tend to have higher financial literacy levels.

Initiatives to Promote Financial Literacy and Reduce Disparities in India

Several campaigns have been launched in India, including:

• SIDBI's Financial Literacy and Women Empowerment Program (FLWE).
• The RBI's Financial Literacy Week, Financial Awareness Messages (FAME), and Financial Literacy Ideation.
• SEBI's Investor Awareness Programs.
• The "Niveshak Didi" initiative by India Post Payment Banks.
• The Institute of Chartered Accountants of India's Financial Tax Literacy Drive.

Conclusion

The 2024 Union Budget in India has made significant strides in enhancing skill education and financial literacy through increased allocations for various programs. Mandatory financial literacy courses and the revision of the Model Skill Loan Scheme are crucial in making financial education accessible to all. Building on these developments will require effective implementation, continuous monitoring, and partnerships. The budget's focus is a promising step towards achieving a Viksit Bharat, unlocking India's demographic dividend, and paving the way for sustained socio-economic growth and development.