Budget 2022: Financial Inclusion

The Government of India announced the budget for 2022-23 on Tuesday, February 1, 2022. The budget was presented by India’s Finance Minister Nirmala Sitharaman. Displaying a focus on increasing India’s financial inclusion, the following announcements were made:

1.    Digital payments and digital banking to be promoted. All post offices (1.5 lakhs) to are to be included in the banking system.

2.    75 new digital banks to be setup.

3.    Launch of thematic funds to finance sunrise opportunities. Financing of these funds shall be blended with 20 per cent government bonds and will be managed by private fund managers. 

4.    Expert committee to be setup to advice on scaling up Venture Capital (VC) and Private Equity (PE) funds. 

5.    Surcharge on long-term capital gains (LTCG) will be rationalized and capped at 15 per cent for all assets. 

6.    Provisions related to bonus and dividend stripping to be made applicable to securities and units. This includes Infrastructure Investment Funds (InvITs), Real Estate Investment Trusts (REITS) and Alternative Investment Funds (AIFs). 

The government through the budget announcements has shown a strong resolve towards further developing ease of payments through digital payments and digital banking. This will also aid in boosting financial inclusion in the country, specifically in the rural areas.  Further, linking post offices to the core banking system will be beneficial in increasing penetration. 


Scaling and promotion of PE and VC funds shall prove to be a healthy step for a positive investment climate in the country as well as for the underlying startups they invest in. The tax announcements also show a move towards smoothening out any disparities which may existed in the past. The rule on capping surcharge on LTCG tax will help in bringing parity and put all investment options on a level playing field. Additionally, the government has also been able to successfully plug in the loophole for InvITs, AIFs and REITs which were earlier allowed to strip dividends and bonus shares to reduce tax liabilities. The rule was earlier only applicable to mutual funds and listed stocks.