Why Indian Students Should Learn How Government Policies Impact Their Hard-Earned Money.

In India, where the economy is rapidly evolving and the population is predominantly young, financial literacy is a critical skill for the next generation. However, one area that is often neglected in education is how government policies and systems can significantly impact individuals’ finances. Indian students, as future taxpayers, entrepreneurs, and professionals, must understand how the government can—directly or indirectly—affect their hard-earned money. This knowledge is not about fostering distrust in the system but about empowering young Indians to navigate the financial realities of life with awareness and confidence.

The Burden of Taxation

Taxation is one of the most direct ways the government impacts personal finances. In India, the tax system includes income tax, Goods and Services Tax (GST), customs duties, and more. Many students enter the workforce unaware of how much of their income goes toward taxes or how the tax slabs work. For instance, the GST on everyday items can significantly increase the cost of living, while income tax can take a substantial portion of their earnings. By teaching students about the tax system, they can learn to plan their finances better, understand the importance of saving, and take advantage of tax-saving instruments like Public Provident Fund (PPF), National Pension System (NPS), or tax-free bonds.

Education Loans and Debt Traps

With the rising cost of higher education in India, many students rely on education loans to fund their studies. Government-backed schemes like the Vidya Lakshmi Portal provide access to loans, but students often sign up without fully understanding the long-term implications. High interest rates, rigid repayment schedules, and the lack of financial literacy can lead to a debt trap, burdening young professionals for years. Educating students about the pros and cons of education loans, as well as alternatives like scholarships, grants, or skill-based courses, can help them make informed decisions about their education and career paths.

Inflation and Its Silent Erosion of Savings

Inflation is a silent killer of savings, and in India, where inflation rates can be volatile, its impact is even more pronounced. Government policies, such as changes in interest rates or fiscal deficits, can lead to inflation, reducing the purchasing power of money over time. Many students are unaware of how inflation can erode their savings or how to combat it through investments in assets like mutual funds, gold, or real estate. Teaching students about inflation and financial planning can help them protect their hard-earned money and build wealth over time.

Subsidies and Their Hidden Costs

The Indian government provides various subsidies on essentials like fuel, food, and electricity through schemes like the Public Distribution System (PDS) or LPG subsidies. While these subsidies are designed to help the poor, they often come at a cost to the economy, such as increased fiscal deficits or higher taxes elsewhere. Students should understand how subsidies work, who benefits from them, and the broader economic implications. This knowledge can help them critically evaluate government policies and advocate for more efficient and equitable systems.

Retirement Planning in a Welfare State

Many young Indians assume that government schemes like the Employees' Provident Fund (EPF) or the Atal Pension Yojana (APY) will be sufficient for their retirement. However, with an aging population and the challenges of funding these schemes, relying solely on government programs may not be enough. Students should be taught the importance of personal retirement planning, such as investing in mutual funds, stocks, or fixed deposits, to ensure financial security in their later years.

The Influence of Corruption and Bureaucracy

Corruption and bureaucratic inefficiencies are unfortunate realities in India, and they can have a direct impact on individuals’ finances. For example, delays in government services, red tape, or demands for bribes can increase the cost of doing business or accessing public services. By educating students about these challenges, they can become more aware of their rights, demand accountability, and contribute to building a more transparent and efficient system.

Empowering the Next Generation

Teaching Indian students about how government policies impact their finances is not about creating disillusionment but about fostering informed citizenship. Financial literacy programs in schools and colleges should include lessons on taxation, inflation, subsidies, and retirement planning. By understanding these dynamics, students can make better financial decisions, advocate for policies that promote economic equity, and hold their leaders accountable.

Educating Indian students about the financial implications of government policies is a crucial step toward building a financially literate and empowered generation. By shedding light on these often-overlooked aspects of personal finance, we can help young Indians navigate the complexities of the economy, secure their financial future, and contribute to the nation’s growth. After all, an informed citizenry is the foundation of a thriving democracy.