Q. Household finance in India is unique.
We have a tendency to invest heavily in physical assets such as gold and property. Steps to encourage the financialization of savings are critical. A populace accustomed to traditional processes will not simply jump into financialization. Hurdles to change include onerous bureaucracy, a scepticism of organized financial institutions, a lack of basic information about which of the myriad services and providers is best for each family, and how (and even if) one can make the transition between them if necessary.
Q. Regarding the financialization of household savings, which of the following statements best reflect the solutions that are implied by the passage?
1. A flexible environment is needed to develop solutions.
2. Households need customised solutions.
3. Innovations in financial technology are required.
Select the correct answer using the code given below:
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
Question from UPSC Prelims 2023 CSAT
Model Answer:
Q1: Correct Answer – (d) 1, 2 and 3
Explanation –
The passage highlights several hurdles to the financialization of household savings in India, including:
Onerous bureaucracy
Skepticism of organized financial institutions
Lack of basic information about the best services and providers for each family
Difficulty in transitioning between services and providers
Now, let’s consider each of the given statements:
“A flexible environment is needed to develop solutions.”
This statement aligns with the idea that the current bureaucracy is onerous and hinders the adoption of financial savings. A more flexible environment could help address this issue.
“Households need customised solutions.”
The passage mentions that there is a lack of information about which services and providers are best for each family, implying that households have unique needs and require customized solutions.
“Innovations in financial technology are required.”
While the passage doesn’t explicitly mention financial technology, it does highlight the need for solutions to address the hurdles in transitioning between services and providers. Innovations in financial technology could potentially help in this regard.