A thorough management professional, Prof. (Dr.) Daviender Narang is working as a Professor and Director at Jaipuria Institute of Management, Ghaziabad. He has a rich experience of 22 years in the field of academics and management, especially in the best business and management institutes of India and abroad. He has experience of establishing successful management business schools. He has worked on a World Bank-supported project on capacity-building in Ethiopia for two years. He holds two post graduate degrees in Business Economics and Finance & Control. He has a Ph.D in Economics and his contribution to research focuses on banking efficiency in India.
Economics has been the centre point of everything – be it livelihood, education or even healthcare. To educate a person in this area would mean to create a financial stability for a lifetime. Economic literacy is referred to as the art and skill of making informed decisions related to one’s financial resources like personal finance and the risks associated with it. According to Rivlin(1999), economic literacy is a rudimentary working knowledge of the concepts and language of economic policy, rather than the language of economics. Acknowledging oneself with basic financial concepts allows anyone to navigate through the financial system of a country. The reason that majority of the population do not have the relevant knowledge to understand basic financial products, and the world having faced a couple of recessions, in itself is a big motivation for schools and colleges to take the initiative of economic literacy. Being trained in financial literacy prepares one to manage money better than those who are untrained. The OECD (The Organization for Economic Co-operation and Development) started an inter-governmental project in 2003 with an aim of enhancing financial education and literacy standards through establishing common financial literacy principles. These principles aimed to facilitate the development of a nationally coordinated and tailored approaches to financial education. Though there is a no one-size-fits-all model for financial education strategies, it caters to the population’s need for economic literacy by organizing stakeholders’ actions towards stated goals and capitalizing available resources and expertise. To expedite this goal attainment, schools and colleges especially the management institutes can play the role of information-giver to contribute to this scenario.
Economic literacy of students allows students to read effectively and seek out information related to the economic environment. It prepares them to apply the concepts like scarcity, productive resources and economic incentives. Management colleges which are the bedrock of providing advanced level knowledge and skills to students are definitely taking a leap in this area. They function based on the philosophy that by giving more knowledge and confidence to students, they can bring a change in the diversity of our nation by engaging these young minds. Economic literacy can expedite the process of economic well-being by teaching students the value and efficiency concepts. That in turn can help in the rise of productivity and intellectual flexibility of the workforce. At the macro level, this initiative ensure that a country is competitive in the world market which is characterized by changing technologies and production methods.
The major problem with today’s students is that they find it complex to understand money matters, which leads to a struggle on everyday spending. Also, they face difficulties in dealing with bank accounts and debit cards or understanding interest rates on a loan. This lack of education and training can be given by management institutes by first assessing their existing level of learning. Just like any other assessment of a subject like mathematics or management, there is a dire need to evaluate the economic literacy of students. Since, the basic knowledge of finance and economics is taken by student of Commerce domain, it is necessary that the practicality of these subjects be also provided to them. Two major instruments that specifically measure economic literacy are the TEL (Test of Economic Literacy) and The Standards in Economic Survey, both of which have been used widely all over the world.
By evaluating the economic literacy of a student, the gap between the way student thinks and the way he is going to apply is being closed. Along with the technical aspects of economic literacy, what also needs to be covered is the cognitive and affective outcomes of this area. Management institutes carry the onus of enabling business managers in attaining effective organizational performance and compete in a global market. According to research by Koshal et al. (2008), in India, the overall average economic literacy score among MBA students was 64.1% which was lower than the overall average score of 70% in the National Council on Economic Education survey of 3,512 U.S. adults by Harris Associates. This puts an implication on the business schools of India, as without this knowledge the management graduates would be at a disadvantage.
To sum it up, with the growth of Indian economy, a better understanding of the foundations of economic principles and theories is important to upgrade the macro standards as well as micro. Educators can zero-in on the gap between the theoretical and practical aspects that is an extreme need-of-the-hour looking into the current global scenario.