Socio-Economic Inequality and Financial Literacy: Implications for Personal Finance Planning in Vidarbha

Abstract

There is still the issue of social economic inequality in India, more so in a fairly poorly developed region such as Vidarbha in Maharashtra. Financial literacy is a critical element that is characterizing the ability of respective participants to make good personal finance decisions that dictate saving behaviours, investment preferences, credit usage and or long-term financial stability. This paper assesses the relationship between the financial literacy and socio-economic disparity and determines the financial literacy in households in the Vidarbha region, and its relationship to individual financial planning. The paper, the research that is conducted on the basis of the primary data that will be gathered with the help of the means of the structured questionnaires and which will be supported by the secondary data, by the governmental reports, and prior studies define the variation in financial literacy, based on the income, educational level, occupation, and the dependence between the rural population and the urban population. The findings have shown that the levels of financial literacy have significant disparities whereby, low-income and less-educated individuals demonstrate poor awareness of simple financial knowledge, formal banking products, insurance, and investment instruments. These gaps have an adverse effect on the financial planning of individuals, which leads to the low level of savings, a high degree of non-formal credit utilization, and poor retirement and risk planning. The paper introduces certain financial education, inclusive financial policies and digital financial services as the solution of bridging the literacy divide and reducing socio-economic disparity to contribute. The paper will conclude by giving policy recommendations on improving the financial literacy programs to achieve equitable financial inclusion and sustainable economic growth in Vidarbha.