How to improve outcomes for India’s next generation through financial literacy

India’s young population, often regarded as its most valuable asset, is a key factor expected to drive economic growth.

While some analyses show an 80% plus literacy rate and a digitally savvy population with rising internet penetration, India still faces a deficit in financial literacy.

For India to truly achieve “aatm nirbhar” or self-reliant status, investing in improving the financial literacy of its youth and equipping them with the skills to manage their finances is an essential piece of the puzzle that should not be ignored.

India continues to face a significant financial literacy gap, with only 27% of Indian adults being financially literate, which is far below the average of 52% in advanced economies.

This deficit in financial skills poses major risks for young people, especially those from underserved communities, as it contributes to poor decision-making and lifelong financial insecurity.

Additionally, in India, despite high enrollment rates, substantial learning deficits persist, with a significant portion of students lacking foundational literacy and numeracy skills. According to the Annual Status of Education (ASER) survey – an annual household survey in India and Pakistan to measure basic learning and education indicators – approximately 80% of Grade 3 students in rural India were unable to read a Grade 2 text and 74% could not do basic subtraction.

While India’s Generation Z (approximately 377 million individuals between ages 12 and 27) already account for around 43% of India’s consumer spending, many are growing up without the essential skills needed to manage money and build financial security.

This has resulted in a systemic shortfall in financial education, where new ways to spend outpace efforts to teach young people how to manage money, contributing to debt traps.

In fact, the World Economic Forum’s Global Retail Investor Outlook Survey revealed that 51% of Indian individuals declare to be struggling to meet their debts and liabilities, far exceeding the global average of 32%.

If India’s next generation is to thrive economically, we must go beyond looking at financial literacy as an isolated concern and instead acknowledge it as a foundation for better financial outcomes at scale.

Without equipping young people with the skills to manage money, credit and investments, India risks raising a generation vulnerable to debt traps and limited upward mobility.

One pathway to improving financial outcomes for India’s next generation is to start early i.e. embedding financial literacy as a life skill, rather than treating it as an afterthought.

Global experience demonstrates that classroom-based interventions, digital tools and community-based peer learning models can all play a crucial role in equipping young people with the confidence and skills necessary to make informed financial decisions.

For instance, gamified learning platforms are emerging as powerful tools to engage students in interactive decision-making. At the same time, policy-led efforts, such as integrating financial literacy into school curricula, have proven effective in Brazil and Australia. India too has an opportunity to adopt a multi-pronged approach where:

A compelling example comes from Project Nivesh, an initiative by the Global Shapers Gurugram hub, which demonstrates how grassroots interventions can have a significant impact.

The project, inspired by the Lisbon Hub’s Mary and the Secret of Savings, is grounded in the belief that financial literacy at an early age leads to financial inclusion and combines storytelling, interactive learning and digital tools to make financial concepts relatable and engaging.

Project Nivesh’s impact has already been visible in behavioural change and increased confidence among students. Some noteworthy insights include:

Project Nivesh demonstrates that even modest, well-designed interventions, when delivered with the aid of age-appropriate and context-specific content, can alter how young people think about money, shifting their focus from short-term consumption to structured planning and long-term priorities, such as education.

What stands out is not just the change in students’ responses but also the spill-over effect, as financial conversations are moving into households, where families begin to engage in savings and planning together.

The wider lesson is evident: improving financial inclusion should not be delivered top-down through accounts and digital platforms alone. It must be built bottom-up, through literacy and confidence that empower people to use those tools effectively.

Embedding financial literacy into India’s education system, scaling proven community interventions and leveraging digital innovations can together create a generation that supports society-wide economic empowerment and shapes it on financially strong and more resilient terms.