UNION BUDGET 2022: IMPROVING ACCESS TO FINANCE

The Finance Minister of India, Ms. Nirmala Sitharaman presented the Union Budget 2022-23 ("Budget") on 1st February 2022.

- Ankit Sinha, Teza Jose, Dhwani Bansdawala, Gopi Naik

Amid concerns of rising inflation and the uncertainties surrounding COVID-19, the Budget aims to revive the economy, interalia through innovative financing, financial inclusion and adoption of technology in finance.

While various measures were announced in the Budget, the key focus of this article is the banking and finance space.

Financial Inclusion

In 2022, 100% of 150,000 post offices are proposed to be brought under the core banking system. This is expected to enable financial inclusion and access to accounts through net banking, mobile banking, automated teller machines ('ATMs') and facilitate online transfer of funds between post office accounts and bank accounts. This change is expected to be helpful, especially for farmers and senior citizens in rural areas, enabling inter-operability and financial inclusion.

This will enable access to the financial system of the country to the remotest and most excluded parts of the country. Setting up 75 digital banking units ('DBUs') in 75 districts of the country by scheduled commercial banks has also been proposed. This is intended to encourage further adoption of digital payments. Specific focus has also been promised to promote use of payment platforms that are economical and user friendly.

The Aspirational Districts Programme which was introduced to improve the quality of life of citizens in the most backward districts of the country will be continued in financial year 2022-23 as Aspirational Blocks Programme, inter alia to remove blocks in financial inclusion.

Infrastructure Financing