Nearly 90% of young people lack ability to calculate loan repayments

Nine out of ten young people between the ages of 14 to 18 years are unable to do simple financial calculations on loan repayment.

The exercise involved calculating the total amount to be repaid after a year if one is given the loan amount and the interest applicable, and deciding which loan is most favourable to the borrower. It was part of the questions asked as part of the recently released Annual Status of Education Report (ASER) 2023 'Beyond Basics'.

The data in the report showed that more than 40 per cent were unable to calculate how much they would spend after a discount to purchase a product. More than a third of them were unable to manage a budget (chart 1).

Chart1
 

The numbers further revealed a gender divide in the training in financial skills. Female respondents had lower scores than male respondents (chart 2).  

Chart2

 

The subject of study after class XI had a bearing on financial abilities. Arts and humanities students lagged behind the most (chart 3).        

Chart3

 

 

The ASER study looked at reading, maths and other skills among a total of 34,745 youth surveyed in 28 districts across 26 states.  Overall, 13.1 per cent of males and 13.3 per cent of females are not enrolled in India. 'Not enrolled' are those who either have never been to a school/college, or have dropped out.

Notable among districts surveyed with low enrollment is Jabalpur in Madhya Pradesh (MP) with 36.5 per cent of students between ages 14-18 not enrolled in an educational institution. Others include Gariaband in Chhattisgarh (31.5 per cent) and Khammam in Telangana (30.1 per cent).

Perambalur District in Tamil Nadu, in comparison, had only 2.8 per cent of youth not enrolled.

More than half struggle with division problems (3-digits by 1-digit). It was 45 per cent for males and 41.8 per cent for females. “This skill is usually expected in Std III/IV,” according to the report.

In more than a dozen districts, less than 40 per cent of youth could divide. Around 27 per cent of youth could not read standard II level text in their regional language. Among the youth surveyed, over 42 per cent couldn’t read sentences in English.

“The basic ASER reports from 2005 onwards have pointed that even at Std VIII, there are some students who are not able to read simple text fluently and have difficulty with basic arithmetic operations,” said Rukmini Banerji, CEO Pratham Education Foundation.

The main reason is that once students fall behind grade level, there is not much help available to help them to “catch up” on basics. Since the new National Education Policy 2020 was announced, foundational literacy and numeracy (FLN) programmes have become common in early grades in primary school. A push for FLN is also needed in higher grades, she added.

Around 16 out of the 28 districts had less than a tenth of students being able to calculate loan repayments. It was 0.8 per cent in East Khasi Hills in Meghalaya The highest among districts surveyed was Ernakulam in Kerala with 23 per cent, followed by Sirsa in Haryana (19.4 per cent), Mahesana in Gujarat (16.1 per cent), Varanasi in Uttar Pradesh (13.7 per cent) and Anantnag in Jammu and Kashmir (13.6 per cent).