Paper Title
Financial Awareness Index- An Empirical Analysis

Abstract
Financial Awareness acts as the precursor to financial literacy.In order to make the financial inclusion programmes of the Government of India a success, the need of the hour is to analyse the status of financial awareness among the general masses and further utilise it for policy implementation.An individual with a good analytical ability can easily process the available information about the financial products and make smart decisions regarding the same.A model is proposed for the financial awareness index based on Financial Position, Adequate Protection, Tax Planning, Investment & Accumulation Goals, Retirement Plans, Estate Planning as the Financial Constructs and ICT Related Skills, Financial Skills, Basic Analytical Skills as the construct for Skills. owing to the binary nature of our data Nonlinear Principal Component Analysis(NLPCA) methodology (Ferrari and Saline, 2011), which leads to optimal synthesis of observed variables in reduced space preserving measurement levels of ordinal data, was used.Financial awareness index composes of the linear regression model where the awareness in the dependent variable and the structure of the regressors can be seen. Non Linear principal component Analysis, NLPCA was applied with sole intention to reduce the set of variables to a smaller number of principal components because it takes into account nominal/ordinal measurement levels and possibility of nonlinearity between them. In NLPCA, vector model was applied as it can be generalised to ordinal and nominal variables, hence variables with different measurement levels can be effectively analysed in one analysis by using optimal scaling.Amongst the first dimension of the financial construct, highest weight was of awareness of fiscal year, Tax reforms and demonetisation with values of PCA as 0.884, 0.881 and 0.876. For the second dimension high-test weights were of the variable real estate as the type of investment, insurance and fixed deposits with companies as investments with PCA values 0.847, 0.835 and 0.830 respectively. For the fourth dimension, highest weights were of the variables mobile banking, internet banking and point of sales with PCA values 0.848, 0.838 and 0.757 respectively. For the fourth dimension variables daily expenditure, household expenditure and loans from family/friends has maximum weights with values 0.864, 0.826 and 0.824 respectively.In the skill constructs, two dimensions emerged with Eigen values more than one namely ICT skills and financial & basic analytical skill. In financial & basic analytical skill dimension, variables with the, calculation of SI and calculation of instalments had the respective PCA weights as 0.887, 0.759 and 0.869; and ICT skill had maximum weight for ability to download computer /mobile application, internet usage on computer/mobile and know/how of email with corresponding PCA weights as 0.918, 0.917 and 0.898 respectively.Both the factors combined, lead to the formation of the composite score with values ranging from 42 to 80 and above. An individual having a value of the composite score between 42-61 is ranked low, 61-80 score as medium and 80 and above as high on the financial awareness index. Keywords - Financial Awareness, Financial Awareness Index, NLPCA