National Council of Applied Economic Research
Opinion: CS Mohapatra and Depannita Ghosh .
In India, where only 33% of women have an active bank account compared with 45% of men, the consequences for financial inclusion and economic growth are significant.
By gaining greater control over their finances, women can lift themselves and their families financially and reduce their vulnerability to economic hardship.
A financially literate and economically empowered female population means more informed financial decisions at the household level, increased savings and investment, and ultimately, a more robust and inclusive economy. In an era of complex financial landscapes, the persistent gender gap in financial literacy remains a significant barrier to women’s economic empowerment.
This disparity, evident both globally and in India, demands urgent attention. Recent data from the 2023 OECD/INFE International Survey reveals that women globally score less than men in financial well-being and resilience.
The S&P Global FinLit Survey states that worldwide, 35% of men and 30% of women are financially literate. In India, the situation is even more pronounced, with only 21% of women deemed financially literate compared with 27% of men, according to a 2020-21 National Centre for Financial Education (NCFE) survey.
The gender gap in labour force participation directly impacts women’s financial independence and literacy. By gaining greater control over their finances, women can lift themselves and their families financially, reduce their vulnerability to economic hardship, protect themselves from exploitation in the informal sector, and enhance their capacity to participate fully in productive, measurable economic activities.
The International Labour Organization’sWorld Employment and Social Outlook: Trends 2023 report sheds further light on the gender disparities in the global labour market. The report highlights that the global gender gap in labour force participation remained stagnant in 2022, with 47.4% of women participating in the labour force compared with 72.3% of men.
The gender wage gap further exacerbates the financial literacy divide. The ILO report emphasises that women are more likely to be in informal employment, particularly in lowand lower-middle-income countries.
Government initiatives
In India, over 90% of women in the workforce are in informal employment and such prevalence of informal work often correlates with lower wages, job insecurity, and limited access to financial services and education. The Global Wage Report of 2022-23 cites women’s average pay across the world is at about 20% less than men.
In India, it is even worse, with women earning, on an average, 34% less than men for performing the same job. This disparity affects women’s current financial situation as well as their long-term financial planning and security.
India requires an effective, well monitored multi-pronged strategy that integrates financial education into school curricula nationwide
To meet the challenge, the Indian government has launched several initiatives. The Pradhan Mantri Jan Dhan Yojana has made strides in financial inclusion, with women holding about 55% of the 460 million accounts opened.
The National Strategy for Financial Education and the financial literacy efforts of the government and regulators aim to promote financial knowledge, especially among women and the rural population. The Digital Sakhi Programme of the Reserve Bank of India provides training for rural women in digital financial literacy, aiming to bridge both gender and digital divides.
Women with lower financial literacy are less likely to participate in the financial markets, more prone to debt, and less prepared for retirement. In India, where only 33% of women have an active bank account compared with 45% of men, the consequences for financial inclusion and economic growth are significant.
To truly close the gap, we need to look beyond to learn from global innovative approaches. Sweden’s financial literacy programme, integrated into the national curriculum from an early age, offers a model for early intervention
Australia’s Women’s Money Toolkit provides tailored financial advice for women at different life stages. The UK’s Money Advice Service uses behavioural insights to design more effective financial education programmes. Japan’s “Financial Park” concept offers interactive financial education experiences.
India can draw learnings from Rwanda’s success in integrating financial literacy with microfinance programmes. By coupling access to financial services with education, Rwanda has seen significant improvements in women’s financial behaviour and outcomes.
To make a quantum jump forward, India requires an effective, well monitored multi-pronged strategy that integrates financial education into school curricula nationwide, with a special focus on empowering girls. Financial literacy and education for women can be greatly enhanced through accessible and easy-to-understand modules.
Process, concept literacy
Programmes should use audio-visual booklets to effectively communicate complex topics, ensuring that women fully grasp the products and processes involved. Moreover, according to the National Strategy for Financial Inclusion (NSFI), a balanced focus on both process literacy—understanding how financial systems work—and concept literacy will empower women with practical skills, ensuring manifestation of financially prudent behaviour.
Employers should be encouraged to provide financial education programmes for female employees to help them understand and negotiate fair wages. Technology can be leveraged to develop mobile apps and digital platforms to make financial education more accessible, especially in rural areas with women focus.
Promoting successful women in finance as role models and establishing mentorship programmes is crucial, alongside the implementation of policies to close the gender wage gap and incentivise financial institutions to create products tailored to women’s needs. A gender-disaggregated research may be prioritised to address specific barriers women face in achieving effective financial literacy and equity.
In India, only 21% of women are deemed financially literate compared with 27% of men
Public-private partnerships involving government agencies, regulators, financial institutions, NGOs and tech companies can foster innovative solutions. Targeted programmes for women in the informal sector can help improve their financial literacy and access to formal financial services.
Addressing cultural barriers through awareness campaigns is essential to challenge societal norms that hinder women’s financial independence and literacy. Specific programmes for long-term financial planning and retirement savings should be calibrated to account for women’s longer life expectancy and often interrupted career paths.
Over the years, financial inclusion has evolved from a bank-driven model to a multi-stakeholder approach, with telecom service providers and fintech companies now playing key roles in advancing inclusive growth. The path to closing the gender gap in financial literacy and economic equality is clear, though challenging.
It requires sustained effort, innovation, and collaboration across sectors. By empowering women with financial knowledge and skills, and addressing systemic inequalities like the wage gap, India can not only advance gender equality but also unlock significant economic potential.
It’s time to realise that gender equality should not rest on women’s reservation or better employment opportunities but should continue to achieve sustained financial education and empowerment of women. As we work towards the goal of improving female financial literacy, we’re not just bridging knowledge and wage gaps, ensuring dignity, confidence and well-being as also paving the way for a more equitable society, stronger and more resilient society.
The time to act is now. Every step taken towards improving female financial literacy and economic equality is a step towards the Viksit Bharat.
Dr CS Mohapatra is the chair professor – IEPF, and Depannita Ghosh a research analyst -IEPF, at the National Council of Applied Economic Research