The Union Budget for FY 16-17 is certainly the best budget of this government so far. It is replete with big ideas in social security, edu- cation and land management, but has misses on the banking sector, GST and formalisation of the economy.

The decision to give statutory status to Aadhaar is wonderful and timely! With almost a billion Aadhaar holders, this will settle any ambiguity once and for all. Aadhaar is the centre of JAM (Jan Dhan, Aadhaar and Mobile) and DBT (Direct Benefit Transfer) reforms. After the success of DBT in LPG, a pilot project for DBT in fertilisers has been announced.

The proposal to further target LPG connections to 5 crore poor households in 3 years will ensure universal coverage of cooking gas, reduce pollution, improve health, reduce deforestation and create employment. The automation of 3 lakh PDS outlets will also be based on Aadhaar. A nationwide deployment of micro-ATMs in post offices, a digital depository for degree certificates, and food procurement by FCI from farmers will all leverage Aadhaar.

The announcement of 10 public and 10 private institutions to emerge as world class teaching and research institutions is a tremendous move. It is now up to public spirited individuals to set up world class universities in the tradition of an ancient Takshila or a modern Yale. Full autonomy is the key to the success of such institutions.

The National Land Record Modern-isation Programme starts today under the Digital India Initiative. Modernised land records through dematerialisation and leveraging JAM will bring prosperity to villages, while reducing litigation and conflict. It is the first step in mobilising land for housing and inclusive development in cities.

Banking reforms are under- whelming. Public sector banks face an existential crisis. Beyond NPAs and the Basel 3 capital requirement, they confront a number of other challenges – a rapidly retiring workforce, stranded assets in the form of branches, intense competition, and inadequate credit appraisal skills for a globalised, technology intensive world. They have the burden of implementing unprofitable social goals and are encountering technological disruption which is bewildering even to the best banks. Getting them out of government owner-ship is the only viable option and this was the last chance to say so.

Rather than spinning wheels on the GST Bill, can we not focus on getting many of the benefits of GST that are possible through executive decision? For example, the excise and service tax arms of the CBEC in the finance ministry can be merged immediately to align the two taxes. The GSTN company is in place and it can offer a state of the art VAT system with automated invoice matching to all states. At least 15-20 states will come on board.

The design can be made future proof for the switch to GST. A common gateway for payment of both central and state taxes can be provided by GSTN immediately. The combination of invoice matching and data sharing will give a huge boost to tax collection at both states and the Centre, and show the power of cooperation. After all the real battle is not between the Centre and states for tax rates, which products to tax, and autonomy; it is to fight tax evasion.

This budget also missed the oppor- tunity to bring a majority of Indians into the formal sector as legitimate participants. This requires adherence to two principles – ensuring that the benefit of entry into the formal sector outweighs the cost, and that compliance is simple while evasion is difficult. Building on JAM is the opportunity to use what iSPIRT calls the ‘India Stack’, a set of electronic services that enable paperless, presence-less and cashless transactions.

The pieces are already in place, and leveraging them can lead to dramatic reduction in costs while achieving expansion of the market. If buying a mutual fund was as easy as buying a gold ornament, suddenly 100 million households will participate in the capital markets as opposed to a few million. For the first time, the government’s goal of inclusion and the market’s goal of expanding the customer base are coming together through technology.

As India goes from being data poor to data rich due to smartphones, digital identity, digital payments and social media, data becomes the new currency. Thus for both consumers and small businesses, the currency of their digital footprint can be exchanged for credit scoring in new and innovative ways. The kirana store owner may not have a bank account, but clearly is credit-worthy on account of her inventory and business. Bringing this information online will enable her to access credit.

Perhaps the most important miss is that the budget completely does not get this coming ‘great disruption’. It is going to come at speed and scale and threaten many industries and institutions. It can also be used as state policy.

The Chinese get this. At the January 2015 launch of Webank, China’s first online bank set up by the internet giant Tencent, Prime Minister Li Keqiang said, “We will lower costs for and deliver practical benefits to small clients, while forcing traditional financial institutions to accelerate reforms.”

The brilliant Economic Survey talks about the chakravyuha challenge. Even as the government grapples with it, leveraging disruptive technology is a great option!