IMPACT OF FINANCIAL LITERACY ON RURAL ECONOMY

Abstract

Governments and academics from all around the world are paying growing attention to financial literacy as a method to combat poverty in disadvantaged rural areas and promote inclusive economic growth. Taking into consideration a vast majority of 64.13% of Indian population belongs to rural areas and the socio economic condition of the population, this paper evaluates the potential and growing impact of financial literacy on the people. It was evident that people exposed to the essential components of financial literacy were more likely to get out of the generational vicious cycle of poverty as opposed to others who aren't exposed to the same and are more likely to take poor financial decisions .Financial literacy is also vital in generating and sustaining small businesses and other income generating activities as they are mainly dependant on basic knowledge of spending, saving, borrowing and protecting(basic components of financial literacy). The study concludes that financial literacy is a viable and definite instrument for poverty alleviation. It is thus encouraged that financial literacy be promoted in various forms by including financial education in the core curriculum at formal and informal levels of education communicated at home and through other educational tools.