From EMIs to mutual funds: Sanjeev Sanyal flags NCERT's new finance chapter

NCERT has added personal finance and entrepreneurship chapters to its Grade 9 Social Science textbook. The lessons aim to build practical skills around money, taxation, borrowing and business.

In Short

• Lessons connect pocket money decisions with budgeting, saving and financial planning
• Students will compare investment risks, potential returns and inflation's impact
• A refrigerator example demonstrates how monthly instalments increase overall purchase costs

What should a student do with the money received as pocket money? Spend it, save it for something they want to buy later or put it towards a longer-term financial goal? These are among the everyday questions that students will now encounter in their economics lessons.

The National Council of Educational Research and Training (NCERT) has introduced a dedicated chapter on personal finance in its recently released Social Science textbook, Understanding Society: India and Beyond, Grade 9, Part 2.

The chapter, titled 'Managing Your Personal Finances', introduces students to concepts such as savings, fixed deposits, mutual funds, taxes, loans and the relationship between risk and returns.

The development came into public attention after economist Sanjeev Sanyal, a member of the Prime Minister's Economic Advisory Council, highlighted the changes in a series of posts on X on November 3.

"The economics segment of the recently introduced NCERT textbooks for Social Science (Grade 9, Part 2) now has a chapter on personal finance," Sanyal wrote. He added that the aim was to provide students with useful life skills.

WHAT WILL STUDENTS LEARN ABOUT MONEY?

The chapter begins with familiar situations involving pocket money and money received from relatives during festivals. Students are encouraged to consider how they spend, save and plan their money.

It then introduces five areas of personal finance: income, budgeting, saving, investing, and protection and risk management.

The lessons move beyond basic savings. Students will learn about fixed deposits, government savings schemes, bonds, shares and mutual funds. The textbook also explains inflation, compound interest and how investment risks are related to potential returns.

For instance, students are introduced to the difference between investments carrying lower risks and those that may offer higher returns but also involve greater uncertainty.

Borrowing is another part of the chapter. Through practical examples, students learn about equated monthly instalments (EMIs) and the cost of purchasing goods on credit. One example explains how a refrigerator priced at Rs 30,000 could cost Rs 36,000 when purchased through 12 monthly instalments of Rs 3,000.

The chapter also covers insurance, responsible borrowing and the importance of avoiding excessive debt.

INCOME TAX AND GST FIND A PLACE IN SCHOOL LESSONS

Students will also be introduced to taxation, including the difference between direct and indirect taxes.

The textbook explains income tax and the Goods and Services Tax (GST), along with progressive taxation, under which tax rates increase across higher income brackets. It includes examples to explain how income tax is calculated under the new tax regime.

These lessons are intended to familiarise students with financial terms they are likely to encounter as they grow older, enter employment or begin managing their own earnings.

NCERT ALSO INTRODUCES ENTREPRENEURSHIP

Personal finance is not the only addition. The Grade 9 Social Science textbook also includes a chapter titled 'From Ideas to Startups'.

The chapter introduces students to business plans, profit and loss accounts, costs, pricing and the process of setting up a business.

One of its examples asks students to imagine running a lemonade stall at a school festival. They must work out the cost of ingredients, decide the selling price and calculate whether the activity generates a profit or loss.

The chapter also explains the four main functions of a business: management and operations, finance and accounting, human resources, and marketing and sales.

Sanyal said the new chapter presents entrepreneurship, innovation and risk-taking as positive activities, contrasting this with what he described as the earlier textbook emphasis on hoarding and black markets.

Understanding how interest accumulates on a loan, why savings lose purchasing power during inflation or how different investments carry different risks can help people make informed decisions.

The new chapters are part of the wider revision of school education under the National Education Policy (NEP) 2020 and the National Curriculum Framework for School Education (NCF-SE) 2023, which place emphasis on practical and vocational learning.

The inclusion of personal finance does not mean students are being trained to become investors at the age of 14 or 15. Rather, it introduces them to the language of money and the consequences of financial decisions.

- Ends