Medium Term Outlook: A Growth Strategy for New India (2023-24) | Indian Economy for UPSC CSE PDF Download

 Page 1


CHAPTER
05
MEDIUM TERM OUTLOOK: 
A GROWTH VISION FOR 
NEW INDIA
The direct benefit of a ‘Viksit Bharat’ is the dignity of our citizens and the improvement 
in their quality of life.”
- Extracted from Hon’ble Prime Minister’s reply to the Motion of Thanks on the 
President's Address in the Lok Sabha on July 2, 2024
The Indian growth story over the last decade has been one of resilience. The structural 
reforms undertaken by the Government of India since 2014 have put the economy 
firmly on a growth path, and India is soon set to become the third-largest economy in 
the world. In the medium term, the Indian economy can grow at a rate of 7 per cent 
plus on a sustained basis if we can build on the structural reforms undertaken over the 
last decade. Against this backdrop, the chapter identifies the areas of key policy focus 
as well as presents a six-pronged growth strategy to achieve this goal. The strategy 
elucidated in the chapter is premised on the understanding that the structural reforms 
of the last decade, focused on the supply side of the economy, have to give way to next-
gen reforms that are bottom-up in nature to yield strong, sustainable, balanced, and 
inclusive growth. 
SETTING THE CONTEXT 
5.1. In 1993, the Indian economy was valued at less than USD300 billion in dollar terms at 
current prices. Fast forward to 2024, and it is estimated to have reached a staggering USD 3.6 
trillion. This represents a remarkable 12-fold increase despite the Indian rupee depreciating by 
around 3 per cent annually between 1993 and 2024. Moreover, this has been achieved without 
a big rise in the country’s overall indebtedness, indicating an efficient utilisation of capital. 
India’s per capita current dollar GDP has increased from 301.5 in 1993 to 2,484.8 in 2023,
1
 
which indicates a substantial improvement in the standard of living. 
5.2. India is a historical and long civilisation. It provided answers to many questions that 
humankind faced and still faces. It is a country with a big land mass and a huge population. It 
rightly aspires to be reckoned with as a great power in economic and other terms. China, India’s 
neighbour to the Northeast and a nation of comparable size and population and antiquity of 
civilisation as India, has grown to become a major global economic and political power in less 
than a generation. India, too, has now set for itself the goal of becoming a developed nation 
within a generation by 2047, the hundredth year of independence. 
1  World Bank, 2023 (https://tinyurl.com/yeksmbde)
Page 2


CHAPTER
05
MEDIUM TERM OUTLOOK: 
A GROWTH VISION FOR 
NEW INDIA
The direct benefit of a ‘Viksit Bharat’ is the dignity of our citizens and the improvement 
in their quality of life.”
- Extracted from Hon’ble Prime Minister’s reply to the Motion of Thanks on the 
President's Address in the Lok Sabha on July 2, 2024
The Indian growth story over the last decade has been one of resilience. The structural 
reforms undertaken by the Government of India since 2014 have put the economy 
firmly on a growth path, and India is soon set to become the third-largest economy in 
the world. In the medium term, the Indian economy can grow at a rate of 7 per cent 
plus on a sustained basis if we can build on the structural reforms undertaken over the 
last decade. Against this backdrop, the chapter identifies the areas of key policy focus 
as well as presents a six-pronged growth strategy to achieve this goal. The strategy 
elucidated in the chapter is premised on the understanding that the structural reforms 
of the last decade, focused on the supply side of the economy, have to give way to next-
gen reforms that are bottom-up in nature to yield strong, sustainable, balanced, and 
inclusive growth. 
SETTING THE CONTEXT 
5.1. In 1993, the Indian economy was valued at less than USD300 billion in dollar terms at 
current prices. Fast forward to 2024, and it is estimated to have reached a staggering USD 3.6 
trillion. This represents a remarkable 12-fold increase despite the Indian rupee depreciating by 
around 3 per cent annually between 1993 and 2024. Moreover, this has been achieved without 
a big rise in the country’s overall indebtedness, indicating an efficient utilisation of capital. 
India’s per capita current dollar GDP has increased from 301.5 in 1993 to 2,484.8 in 2023,
1
 
which indicates a substantial improvement in the standard of living. 
5.2. India is a historical and long civilisation. It provided answers to many questions that 
humankind faced and still faces. It is a country with a big land mass and a huge population. It 
rightly aspires to be reckoned with as a great power in economic and other terms. China, India’s 
neighbour to the Northeast and a nation of comparable size and population and antiquity of 
civilisation as India, has grown to become a major global economic and political power in less 
than a generation. India, too, has now set for itself the goal of becoming a developed nation 
within a generation by 2047, the hundredth year of independence. 
1  World Bank, 2023 (https://tinyurl.com/yeksmbde)
Economic Survey 2023-24
156
5.3. Today, the world faces several major fault lines. We have arrived at a multipolar world. 
It is more difficult than the bipolar world that we were used to for nearly five decades after 
the War ended. Therefore, mini and significant geopolitical conflicts are likely in the coming 
decades. 
5.4. At a cultural level, the rise of what is called the ‘Far Right’ by mainstream media in 
advanced nations is, in effect, a clash of priorities between globalist elites and others whose 
fortunes are bound by and tied to their national geographies. This clash of priorities transcends 
economics. It includes cultural and social preferences and values. Therefore, along with 
economic stagnation and geopolitical conflicts, societies in advanced nations are fracturing 
from within, too. The literature analysing long political, social, and civilisational cycles has 
warned us of a fairly to severely turbulent three decades until the middle of the century.
5.5. The idea of economic globalisation has run its course. It may not be reversed fully, but 
it has peaked. It will continue to face obstacles as economic policies worldwide pivot to the 
promotion of national champions for reasons too well-known to bear repetition here. Along 
with the peaking of globalisation, there is also a rethinking of the role of government in national 
economic strategy as inequality, poverty, and indebtedness have become pressing issues 
in the aftermath of the Covid pandemic. The clamour for easy answers to these global and 
generational challenges has provided an excuse for interventionist policies despite their poor 
empirical record in achieving prosperous or more equal societies.
5.6. Lastly, there is the crisis posed by climate change and global warming. Developed 
countries are pushing for a reduction in the emission of greenhouse gases into the atmosphere. 
With their policies having questionable effectiveness in achieving emission reduction in their 
own countries, they are ramping up pressure on developing nations. Developing nations are 
struggling to restore economic growth and reduce poverty and debt in their countries, all of 
which have been amplified by the COVID-19 pandemic. They lack both technology and financial 
resources to undertake the necessary transition to cleaner fuels. Developed nations are generous 
with pledges and parsimonious in delivering on them. Further, there are huge uncertainties as 
to the efficacy of drastic measures to combat climate change and their economic impact over 
the next half to a full decade. Slower growth, stagnation, or outright contraction might trigger 
social unrest and exodus of people to the West.
5.7. This is the global backdrop to India’s growth, prosperity, and superpower aspirations for 
the next quarter century. In contrast, during its rise, China did not face many of these challenges, 
and even the ones they faced were fairly milder, in comparison. For realising India’s aspirations, 
despite the changed circumstances, a good place to start is to acknowledge and recognise that 
the terrain has changed to be able to traverse through it and reach the destination.
5.8. India has to sustain its economic growth rate over a quarter century and do it sustainably, 
keeping the environment and climate in mind. Water stress looms large, as does air pollution. 
Life expectancy, much higher now than in the past, has stagnated in recent years. It has to 
educate and skill its youth to stay ahead of the curve so that they can work with emerging 
technologies while overcoming the accumulated education and skill deficits, accentuated by the 
pandemic, that make it harder to raise productivity even with the current state of technological 
Page 3


CHAPTER
05
MEDIUM TERM OUTLOOK: 
A GROWTH VISION FOR 
NEW INDIA
The direct benefit of a ‘Viksit Bharat’ is the dignity of our citizens and the improvement 
in their quality of life.”
- Extracted from Hon’ble Prime Minister’s reply to the Motion of Thanks on the 
President's Address in the Lok Sabha on July 2, 2024
The Indian growth story over the last decade has been one of resilience. The structural 
reforms undertaken by the Government of India since 2014 have put the economy 
firmly on a growth path, and India is soon set to become the third-largest economy in 
the world. In the medium term, the Indian economy can grow at a rate of 7 per cent 
plus on a sustained basis if we can build on the structural reforms undertaken over the 
last decade. Against this backdrop, the chapter identifies the areas of key policy focus 
as well as presents a six-pronged growth strategy to achieve this goal. The strategy 
elucidated in the chapter is premised on the understanding that the structural reforms 
of the last decade, focused on the supply side of the economy, have to give way to next-
gen reforms that are bottom-up in nature to yield strong, sustainable, balanced, and 
inclusive growth. 
SETTING THE CONTEXT 
5.1. In 1993, the Indian economy was valued at less than USD300 billion in dollar terms at 
current prices. Fast forward to 2024, and it is estimated to have reached a staggering USD 3.6 
trillion. This represents a remarkable 12-fold increase despite the Indian rupee depreciating by 
around 3 per cent annually between 1993 and 2024. Moreover, this has been achieved without 
a big rise in the country’s overall indebtedness, indicating an efficient utilisation of capital. 
India’s per capita current dollar GDP has increased from 301.5 in 1993 to 2,484.8 in 2023,
1
 
which indicates a substantial improvement in the standard of living. 
5.2. India is a historical and long civilisation. It provided answers to many questions that 
humankind faced and still faces. It is a country with a big land mass and a huge population. It 
rightly aspires to be reckoned with as a great power in economic and other terms. China, India’s 
neighbour to the Northeast and a nation of comparable size and population and antiquity of 
civilisation as India, has grown to become a major global economic and political power in less 
than a generation. India, too, has now set for itself the goal of becoming a developed nation 
within a generation by 2047, the hundredth year of independence. 
1  World Bank, 2023 (https://tinyurl.com/yeksmbde)
Economic Survey 2023-24
156
5.3. Today, the world faces several major fault lines. We have arrived at a multipolar world. 
It is more difficult than the bipolar world that we were used to for nearly five decades after 
the War ended. Therefore, mini and significant geopolitical conflicts are likely in the coming 
decades. 
5.4. At a cultural level, the rise of what is called the ‘Far Right’ by mainstream media in 
advanced nations is, in effect, a clash of priorities between globalist elites and others whose 
fortunes are bound by and tied to their national geographies. This clash of priorities transcends 
economics. It includes cultural and social preferences and values. Therefore, along with 
economic stagnation and geopolitical conflicts, societies in advanced nations are fracturing 
from within, too. The literature analysing long political, social, and civilisational cycles has 
warned us of a fairly to severely turbulent three decades until the middle of the century.
5.5. The idea of economic globalisation has run its course. It may not be reversed fully, but 
it has peaked. It will continue to face obstacles as economic policies worldwide pivot to the 
promotion of national champions for reasons too well-known to bear repetition here. Along 
with the peaking of globalisation, there is also a rethinking of the role of government in national 
economic strategy as inequality, poverty, and indebtedness have become pressing issues 
in the aftermath of the Covid pandemic. The clamour for easy answers to these global and 
generational challenges has provided an excuse for interventionist policies despite their poor 
empirical record in achieving prosperous or more equal societies.
5.6. Lastly, there is the crisis posed by climate change and global warming. Developed 
countries are pushing for a reduction in the emission of greenhouse gases into the atmosphere. 
With their policies having questionable effectiveness in achieving emission reduction in their 
own countries, they are ramping up pressure on developing nations. Developing nations are 
struggling to restore economic growth and reduce poverty and debt in their countries, all of 
which have been amplified by the COVID-19 pandemic. They lack both technology and financial 
resources to undertake the necessary transition to cleaner fuels. Developed nations are generous 
with pledges and parsimonious in delivering on them. Further, there are huge uncertainties as 
to the efficacy of drastic measures to combat climate change and their economic impact over 
the next half to a full decade. Slower growth, stagnation, or outright contraction might trigger 
social unrest and exodus of people to the West.
5.7. This is the global backdrop to India’s growth, prosperity, and superpower aspirations for 
the next quarter century. In contrast, during its rise, China did not face many of these challenges, 
and even the ones they faced were fairly milder, in comparison. For realising India’s aspirations, 
despite the changed circumstances, a good place to start is to acknowledge and recognise that 
the terrain has changed to be able to traverse through it and reach the destination.
5.8. India has to sustain its economic growth rate over a quarter century and do it sustainably, 
keeping the environment and climate in mind. Water stress looms large, as does air pollution. 
Life expectancy, much higher now than in the past, has stagnated in recent years. It has to 
educate and skill its youth to stay ahead of the curve so that they can work with emerging 
technologies while overcoming the accumulated education and skill deficits, accentuated by the 
pandemic, that make it harder to raise productivity even with the current state of technological 
Medium Term Outlook
157
progress. It is required to maintain a constant vigil on its borders both in the Northwest and 
in the Northeast. With the digitalisation of the Indian economy, cybersecurity assumes a much 
higher degree of importance and urgency. Therefore, providing financial resources for national 
security is imperative. Fiscal resources have to increase without compromising on economic 
growth. 
5.9. The capacity in terms of numbers and the capability of the State in terms of competence, 
skills, and attitude are additional factors that would determine the outcomes of India’s 
economic and social goals. Economic policies have to be crafted in such a manner that they 
do not address issues narrowly or incompletely while rendering problems in other areas more 
intractable. Goals for a higher share of renewable power with its implications for land usage 
and dependence on inimical powers for resources are one example. The impact of farm sector 
policies on water security is another example. 
5.10. With the global backdrop described earlier likely to come in the way of India boosting its 
exports at the same pace and level as East Asian countries and national security considerations 
likely to make foreign direct investment flows volatile year-to-year, India has to generate 
domestic resources mostly for its own investment and growth priorities. Geopolitics imposes 
its ceiling on external deficit and, consequently, external financing.
5.11. Against this background, the medium-term growth outlook for the Indian economy, 
which will be detailed in this chapter, is premised on the following key tenets:
? First, increasing geoeconomic fragmentation and the consequent resource 
nationalism have significant growth-limiting impacts on countries. It has given 
rise to a trade-off between efficiency and resilience that did not exist a decade earlier. 
Ensuring the security of supply through building buffers and slack has replaced the ability 
to operate at the frontiers of efficiency. ‘Just in case’ has replaced ‘Just in time’. 
? Second, a global trust deficit is driving countries to pursue policies focused 
on enabling them to become self-reliant and protect them from external shocks, 
especially in sectors of strategic importance. Therefore, the balance between inward-looking 
policies versus outward-looking policies needs to become more nuanced going forward;
? Third, the integration of climate change strategies into national development 
policy and planning is not merely an environmental imperative but more, as 
it impacts socio-economic stability, public health, banking, and public finances. Climate 
change imposes costs and requires policymakers to balance adaptation to climate change 
and emission mitigation. It also necessitates a trade-off between energy security and 
economic development on the one hand and energy transition on the other.
? Fourth, for better and worse, technology is emerging as the biggest strategic 
differentiator determining the economic prosperity of nations. Its productivity-
enhancing potential is beyond doubt, but the social impact of emerging technologies such 
as Artificial Intelligence (AI) via labour market disruptions and labour displacement is 
barely understood. It also has the potential to skew the capital and labour shares of income 
in favour of the former.
Page 4


CHAPTER
05
MEDIUM TERM OUTLOOK: 
A GROWTH VISION FOR 
NEW INDIA
The direct benefit of a ‘Viksit Bharat’ is the dignity of our citizens and the improvement 
in their quality of life.”
- Extracted from Hon’ble Prime Minister’s reply to the Motion of Thanks on the 
President's Address in the Lok Sabha on July 2, 2024
The Indian growth story over the last decade has been one of resilience. The structural 
reforms undertaken by the Government of India since 2014 have put the economy 
firmly on a growth path, and India is soon set to become the third-largest economy in 
the world. In the medium term, the Indian economy can grow at a rate of 7 per cent 
plus on a sustained basis if we can build on the structural reforms undertaken over the 
last decade. Against this backdrop, the chapter identifies the areas of key policy focus 
as well as presents a six-pronged growth strategy to achieve this goal. The strategy 
elucidated in the chapter is premised on the understanding that the structural reforms 
of the last decade, focused on the supply side of the economy, have to give way to next-
gen reforms that are bottom-up in nature to yield strong, sustainable, balanced, and 
inclusive growth. 
SETTING THE CONTEXT 
5.1. In 1993, the Indian economy was valued at less than USD300 billion in dollar terms at 
current prices. Fast forward to 2024, and it is estimated to have reached a staggering USD 3.6 
trillion. This represents a remarkable 12-fold increase despite the Indian rupee depreciating by 
around 3 per cent annually between 1993 and 2024. Moreover, this has been achieved without 
a big rise in the country’s overall indebtedness, indicating an efficient utilisation of capital. 
India’s per capita current dollar GDP has increased from 301.5 in 1993 to 2,484.8 in 2023,
1
 
which indicates a substantial improvement in the standard of living. 
5.2. India is a historical and long civilisation. It provided answers to many questions that 
humankind faced and still faces. It is a country with a big land mass and a huge population. It 
rightly aspires to be reckoned with as a great power in economic and other terms. China, India’s 
neighbour to the Northeast and a nation of comparable size and population and antiquity of 
civilisation as India, has grown to become a major global economic and political power in less 
than a generation. India, too, has now set for itself the goal of becoming a developed nation 
within a generation by 2047, the hundredth year of independence. 
1  World Bank, 2023 (https://tinyurl.com/yeksmbde)
Economic Survey 2023-24
156
5.3. Today, the world faces several major fault lines. We have arrived at a multipolar world. 
It is more difficult than the bipolar world that we were used to for nearly five decades after 
the War ended. Therefore, mini and significant geopolitical conflicts are likely in the coming 
decades. 
5.4. At a cultural level, the rise of what is called the ‘Far Right’ by mainstream media in 
advanced nations is, in effect, a clash of priorities between globalist elites and others whose 
fortunes are bound by and tied to their national geographies. This clash of priorities transcends 
economics. It includes cultural and social preferences and values. Therefore, along with 
economic stagnation and geopolitical conflicts, societies in advanced nations are fracturing 
from within, too. The literature analysing long political, social, and civilisational cycles has 
warned us of a fairly to severely turbulent three decades until the middle of the century.
5.5. The idea of economic globalisation has run its course. It may not be reversed fully, but 
it has peaked. It will continue to face obstacles as economic policies worldwide pivot to the 
promotion of national champions for reasons too well-known to bear repetition here. Along 
with the peaking of globalisation, there is also a rethinking of the role of government in national 
economic strategy as inequality, poverty, and indebtedness have become pressing issues 
in the aftermath of the Covid pandemic. The clamour for easy answers to these global and 
generational challenges has provided an excuse for interventionist policies despite their poor 
empirical record in achieving prosperous or more equal societies.
5.6. Lastly, there is the crisis posed by climate change and global warming. Developed 
countries are pushing for a reduction in the emission of greenhouse gases into the atmosphere. 
With their policies having questionable effectiveness in achieving emission reduction in their 
own countries, they are ramping up pressure on developing nations. Developing nations are 
struggling to restore economic growth and reduce poverty and debt in their countries, all of 
which have been amplified by the COVID-19 pandemic. They lack both technology and financial 
resources to undertake the necessary transition to cleaner fuels. Developed nations are generous 
with pledges and parsimonious in delivering on them. Further, there are huge uncertainties as 
to the efficacy of drastic measures to combat climate change and their economic impact over 
the next half to a full decade. Slower growth, stagnation, or outright contraction might trigger 
social unrest and exodus of people to the West.
5.7. This is the global backdrop to India’s growth, prosperity, and superpower aspirations for 
the next quarter century. In contrast, during its rise, China did not face many of these challenges, 
and even the ones they faced were fairly milder, in comparison. For realising India’s aspirations, 
despite the changed circumstances, a good place to start is to acknowledge and recognise that 
the terrain has changed to be able to traverse through it and reach the destination.
5.8. India has to sustain its economic growth rate over a quarter century and do it sustainably, 
keeping the environment and climate in mind. Water stress looms large, as does air pollution. 
Life expectancy, much higher now than in the past, has stagnated in recent years. It has to 
educate and skill its youth to stay ahead of the curve so that they can work with emerging 
technologies while overcoming the accumulated education and skill deficits, accentuated by the 
pandemic, that make it harder to raise productivity even with the current state of technological 
Medium Term Outlook
157
progress. It is required to maintain a constant vigil on its borders both in the Northwest and 
in the Northeast. With the digitalisation of the Indian economy, cybersecurity assumes a much 
higher degree of importance and urgency. Therefore, providing financial resources for national 
security is imperative. Fiscal resources have to increase without compromising on economic 
growth. 
5.9. The capacity in terms of numbers and the capability of the State in terms of competence, 
skills, and attitude are additional factors that would determine the outcomes of India’s 
economic and social goals. Economic policies have to be crafted in such a manner that they 
do not address issues narrowly or incompletely while rendering problems in other areas more 
intractable. Goals for a higher share of renewable power with its implications for land usage 
and dependence on inimical powers for resources are one example. The impact of farm sector 
policies on water security is another example. 
5.10. With the global backdrop described earlier likely to come in the way of India boosting its 
exports at the same pace and level as East Asian countries and national security considerations 
likely to make foreign direct investment flows volatile year-to-year, India has to generate 
domestic resources mostly for its own investment and growth priorities. Geopolitics imposes 
its ceiling on external deficit and, consequently, external financing.
5.11. Against this background, the medium-term growth outlook for the Indian economy, 
which will be detailed in this chapter, is premised on the following key tenets:
? First, increasing geoeconomic fragmentation and the consequent resource 
nationalism have significant growth-limiting impacts on countries. It has given 
rise to a trade-off between efficiency and resilience that did not exist a decade earlier. 
Ensuring the security of supply through building buffers and slack has replaced the ability 
to operate at the frontiers of efficiency. ‘Just in case’ has replaced ‘Just in time’. 
? Second, a global trust deficit is driving countries to pursue policies focused 
on enabling them to become self-reliant and protect them from external shocks, 
especially in sectors of strategic importance. Therefore, the balance between inward-looking 
policies versus outward-looking policies needs to become more nuanced going forward;
? Third, the integration of climate change strategies into national development 
policy and planning is not merely an environmental imperative but more, as 
it impacts socio-economic stability, public health, banking, and public finances. Climate 
change imposes costs and requires policymakers to balance adaptation to climate change 
and emission mitigation. It also necessitates a trade-off between energy security and 
economic development on the one hand and energy transition on the other.
? Fourth, for better and worse, technology is emerging as the biggest strategic 
differentiator determining the economic prosperity of nations. Its productivity-
enhancing potential is beyond doubt, but the social impact of emerging technologies such 
as Artificial Intelligence (AI) via labour market disruptions and labour displacement is 
barely understood. It also has the potential to skew the capital and labour shares of income 
in favour of the former.
Economic Survey 2023-24
158
? Fifth, countries across the board have limited policy space to manoeuvre, given 
the multiple crises confronting the global economy. Therefore, recognition and acceptance 
of trade-offs have become more necessary than before for policymakers. 
? Sixth, in the last decade (2014-2024), the Government of India has pursued big-ticket 
reforms focused on restoring the health of the economy, elevating the potential growth 
by relieving supply-side constraints and strengthening its capabilities, capable of fulfilling 
the growth aspirations of the people in the present and the Amrit Kaal. The next stage 
is to ensure that these reforms are implemented correctly and this will require intense 
engagement with state governments, the private sector, and civil society. Going forward, 
the Government’s focus must turn to bottom-up reform and the strengthening 
of the plumbing of governance so that the structural reforms of the last decade 
yield strong, sustainable, balanced, and inclusive growth.  
KEY AREAS OF POLICY FOCUS IN THE SHORT TO MEDIUM 
TERM
5.12. Based on the state of the play of the Indian economy, both at a macro level and sectoral 
level, that has been elaborated in the rest of the chapters of this Survey, the present section draws 
out some of the key areas of policy focus to ensure that India’s growth continues unimpeded, 
crossing the milestone of becoming the third largest economy of the world in short order, on its 
way to scaling greater heights. 
5.13. Generating productive employment: Productive jobs are vital for growth and 
inclusion. India’s workforce is estimated to be nearly 56.5 Crore, of which more than 45 per 
cent are employed in agriculture, 11.4 per cent in manufacturing, 28.9 per cent in services, 
and 13.0 per cent in construction
2
. While the services sector remains a major job creator, the 
construction sector has been rising in prominence lately, driven by the government’s push 
for infrastructure. However, since construction jobs are largely informal and low-paid, there 
is a need for avenues for the labour force leaving agriculture. Meanwhile, the manufacturing 
sector employment creation has been subdued in the past decade due to the legacy of bad 
loans and appears to have rebounded since 2021-22. According to UN population projections, 
India’s working-age population (15-59 years) will continue to grow until 2044. The chapter on 
Employment (chapter 8) estimates that the Indian economy needs to generate nearly 78.51 lakh 
jobs annually in the non-farm sector to cater to the rising workforce. However, to create these 
many jobs, there is a need to create the conditions for faster growth of productive jobs outside 
of agriculture, especially in organized manufacturing and services, even while improving 
productivity in agriculture. 
5.14. Skill gap challenge: Sixty-five per cent of India’s fast-growing population is under 35, 
and many lack the skills needed by a modern economy
3
. Estimates show that about 51.25 per 
cent of the youth is deemed employable. In other words, about one in two are not yet readily 
employable, straight out of college. However, it must be noted that the percentage has improved 
from around 34 per cent to 51.3 per cent in the last decade
4
. The 2022-23 Annual Report of 
2   Ministry of Health and Family Welfare
3 Helping India build a skilled, inclusive, workforce for the future, World Bank, 2023 (https://tinyurl.com/2tp4xpab)
4   Bardhan, A and Routh, V. (2024). Tackling India’s unemployment problem: Services, skills and symmetry, 
Observer Research Foundation, (https://tinyurl.com/3uudbkms)
Page 5


CHAPTER
05
MEDIUM TERM OUTLOOK: 
A GROWTH VISION FOR 
NEW INDIA
The direct benefit of a ‘Viksit Bharat’ is the dignity of our citizens and the improvement 
in their quality of life.”
- Extracted from Hon’ble Prime Minister’s reply to the Motion of Thanks on the 
President's Address in the Lok Sabha on July 2, 2024
The Indian growth story over the last decade has been one of resilience. The structural 
reforms undertaken by the Government of India since 2014 have put the economy 
firmly on a growth path, and India is soon set to become the third-largest economy in 
the world. In the medium term, the Indian economy can grow at a rate of 7 per cent 
plus on a sustained basis if we can build on the structural reforms undertaken over the 
last decade. Against this backdrop, the chapter identifies the areas of key policy focus 
as well as presents a six-pronged growth strategy to achieve this goal. The strategy 
elucidated in the chapter is premised on the understanding that the structural reforms 
of the last decade, focused on the supply side of the economy, have to give way to next-
gen reforms that are bottom-up in nature to yield strong, sustainable, balanced, and 
inclusive growth. 
SETTING THE CONTEXT 
5.1. In 1993, the Indian economy was valued at less than USD300 billion in dollar terms at 
current prices. Fast forward to 2024, and it is estimated to have reached a staggering USD 3.6 
trillion. This represents a remarkable 12-fold increase despite the Indian rupee depreciating by 
around 3 per cent annually between 1993 and 2024. Moreover, this has been achieved without 
a big rise in the country’s overall indebtedness, indicating an efficient utilisation of capital. 
India’s per capita current dollar GDP has increased from 301.5 in 1993 to 2,484.8 in 2023,
1
 
which indicates a substantial improvement in the standard of living. 
5.2. India is a historical and long civilisation. It provided answers to many questions that 
humankind faced and still faces. It is a country with a big land mass and a huge population. It 
rightly aspires to be reckoned with as a great power in economic and other terms. China, India’s 
neighbour to the Northeast and a nation of comparable size and population and antiquity of 
civilisation as India, has grown to become a major global economic and political power in less 
than a generation. India, too, has now set for itself the goal of becoming a developed nation 
within a generation by 2047, the hundredth year of independence. 
1  World Bank, 2023 (https://tinyurl.com/yeksmbde)
Economic Survey 2023-24
156
5.3. Today, the world faces several major fault lines. We have arrived at a multipolar world. 
It is more difficult than the bipolar world that we were used to for nearly five decades after 
the War ended. Therefore, mini and significant geopolitical conflicts are likely in the coming 
decades. 
5.4. At a cultural level, the rise of what is called the ‘Far Right’ by mainstream media in 
advanced nations is, in effect, a clash of priorities between globalist elites and others whose 
fortunes are bound by and tied to their national geographies. This clash of priorities transcends 
economics. It includes cultural and social preferences and values. Therefore, along with 
economic stagnation and geopolitical conflicts, societies in advanced nations are fracturing 
from within, too. The literature analysing long political, social, and civilisational cycles has 
warned us of a fairly to severely turbulent three decades until the middle of the century.
5.5. The idea of economic globalisation has run its course. It may not be reversed fully, but 
it has peaked. It will continue to face obstacles as economic policies worldwide pivot to the 
promotion of national champions for reasons too well-known to bear repetition here. Along 
with the peaking of globalisation, there is also a rethinking of the role of government in national 
economic strategy as inequality, poverty, and indebtedness have become pressing issues 
in the aftermath of the Covid pandemic. The clamour for easy answers to these global and 
generational challenges has provided an excuse for interventionist policies despite their poor 
empirical record in achieving prosperous or more equal societies.
5.6. Lastly, there is the crisis posed by climate change and global warming. Developed 
countries are pushing for a reduction in the emission of greenhouse gases into the atmosphere. 
With their policies having questionable effectiveness in achieving emission reduction in their 
own countries, they are ramping up pressure on developing nations. Developing nations are 
struggling to restore economic growth and reduce poverty and debt in their countries, all of 
which have been amplified by the COVID-19 pandemic. They lack both technology and financial 
resources to undertake the necessary transition to cleaner fuels. Developed nations are generous 
with pledges and parsimonious in delivering on them. Further, there are huge uncertainties as 
to the efficacy of drastic measures to combat climate change and their economic impact over 
the next half to a full decade. Slower growth, stagnation, or outright contraction might trigger 
social unrest and exodus of people to the West.
5.7. This is the global backdrop to India’s growth, prosperity, and superpower aspirations for 
the next quarter century. In contrast, during its rise, China did not face many of these challenges, 
and even the ones they faced were fairly milder, in comparison. For realising India’s aspirations, 
despite the changed circumstances, a good place to start is to acknowledge and recognise that 
the terrain has changed to be able to traverse through it and reach the destination.
5.8. India has to sustain its economic growth rate over a quarter century and do it sustainably, 
keeping the environment and climate in mind. Water stress looms large, as does air pollution. 
Life expectancy, much higher now than in the past, has stagnated in recent years. It has to 
educate and skill its youth to stay ahead of the curve so that they can work with emerging 
technologies while overcoming the accumulated education and skill deficits, accentuated by the 
pandemic, that make it harder to raise productivity even with the current state of technological 
Medium Term Outlook
157
progress. It is required to maintain a constant vigil on its borders both in the Northwest and 
in the Northeast. With the digitalisation of the Indian economy, cybersecurity assumes a much 
higher degree of importance and urgency. Therefore, providing financial resources for national 
security is imperative. Fiscal resources have to increase without compromising on economic 
growth. 
5.9. The capacity in terms of numbers and the capability of the State in terms of competence, 
skills, and attitude are additional factors that would determine the outcomes of India’s 
economic and social goals. Economic policies have to be crafted in such a manner that they 
do not address issues narrowly or incompletely while rendering problems in other areas more 
intractable. Goals for a higher share of renewable power with its implications for land usage 
and dependence on inimical powers for resources are one example. The impact of farm sector 
policies on water security is another example. 
5.10. With the global backdrop described earlier likely to come in the way of India boosting its 
exports at the same pace and level as East Asian countries and national security considerations 
likely to make foreign direct investment flows volatile year-to-year, India has to generate 
domestic resources mostly for its own investment and growth priorities. Geopolitics imposes 
its ceiling on external deficit and, consequently, external financing.
5.11. Against this background, the medium-term growth outlook for the Indian economy, 
which will be detailed in this chapter, is premised on the following key tenets:
? First, increasing geoeconomic fragmentation and the consequent resource 
nationalism have significant growth-limiting impacts on countries. It has given 
rise to a trade-off between efficiency and resilience that did not exist a decade earlier. 
Ensuring the security of supply through building buffers and slack has replaced the ability 
to operate at the frontiers of efficiency. ‘Just in case’ has replaced ‘Just in time’. 
? Second, a global trust deficit is driving countries to pursue policies focused 
on enabling them to become self-reliant and protect them from external shocks, 
especially in sectors of strategic importance. Therefore, the balance between inward-looking 
policies versus outward-looking policies needs to become more nuanced going forward;
? Third, the integration of climate change strategies into national development 
policy and planning is not merely an environmental imperative but more, as 
it impacts socio-economic stability, public health, banking, and public finances. Climate 
change imposes costs and requires policymakers to balance adaptation to climate change 
and emission mitigation. It also necessitates a trade-off between energy security and 
economic development on the one hand and energy transition on the other.
? Fourth, for better and worse, technology is emerging as the biggest strategic 
differentiator determining the economic prosperity of nations. Its productivity-
enhancing potential is beyond doubt, but the social impact of emerging technologies such 
as Artificial Intelligence (AI) via labour market disruptions and labour displacement is 
barely understood. It also has the potential to skew the capital and labour shares of income 
in favour of the former.
Economic Survey 2023-24
158
? Fifth, countries across the board have limited policy space to manoeuvre, given 
the multiple crises confronting the global economy. Therefore, recognition and acceptance 
of trade-offs have become more necessary than before for policymakers. 
? Sixth, in the last decade (2014-2024), the Government of India has pursued big-ticket 
reforms focused on restoring the health of the economy, elevating the potential growth 
by relieving supply-side constraints and strengthening its capabilities, capable of fulfilling 
the growth aspirations of the people in the present and the Amrit Kaal. The next stage 
is to ensure that these reforms are implemented correctly and this will require intense 
engagement with state governments, the private sector, and civil society. Going forward, 
the Government’s focus must turn to bottom-up reform and the strengthening 
of the plumbing of governance so that the structural reforms of the last decade 
yield strong, sustainable, balanced, and inclusive growth.  
KEY AREAS OF POLICY FOCUS IN THE SHORT TO MEDIUM 
TERM
5.12. Based on the state of the play of the Indian economy, both at a macro level and sectoral 
level, that has been elaborated in the rest of the chapters of this Survey, the present section draws 
out some of the key areas of policy focus to ensure that India’s growth continues unimpeded, 
crossing the milestone of becoming the third largest economy of the world in short order, on its 
way to scaling greater heights. 
5.13. Generating productive employment: Productive jobs are vital for growth and 
inclusion. India’s workforce is estimated to be nearly 56.5 Crore, of which more than 45 per 
cent are employed in agriculture, 11.4 per cent in manufacturing, 28.9 per cent in services, 
and 13.0 per cent in construction
2
. While the services sector remains a major job creator, the 
construction sector has been rising in prominence lately, driven by the government’s push 
for infrastructure. However, since construction jobs are largely informal and low-paid, there 
is a need for avenues for the labour force leaving agriculture. Meanwhile, the manufacturing 
sector employment creation has been subdued in the past decade due to the legacy of bad 
loans and appears to have rebounded since 2021-22. According to UN population projections, 
India’s working-age population (15-59 years) will continue to grow until 2044. The chapter on 
Employment (chapter 8) estimates that the Indian economy needs to generate nearly 78.51 lakh 
jobs annually in the non-farm sector to cater to the rising workforce. However, to create these 
many jobs, there is a need to create the conditions for faster growth of productive jobs outside 
of agriculture, especially in organized manufacturing and services, even while improving 
productivity in agriculture. 
5.14. Skill gap challenge: Sixty-five per cent of India’s fast-growing population is under 35, 
and many lack the skills needed by a modern economy
3
. Estimates show that about 51.25 per 
cent of the youth is deemed employable. In other words, about one in two are not yet readily 
employable, straight out of college. However, it must be noted that the percentage has improved 
from around 34 per cent to 51.3 per cent in the last decade
4
. The 2022-23 Annual Report of 
2   Ministry of Health and Family Welfare
3 Helping India build a skilled, inclusive, workforce for the future, World Bank, 2023 (https://tinyurl.com/2tp4xpab)
4   Bardhan, A and Routh, V. (2024). Tackling India’s unemployment problem: Services, skills and symmetry, 
Observer Research Foundation, (https://tinyurl.com/3uudbkms)
Medium Term Outlook
159
the Ministry of Skill Development & Entrepreneurship (MSDE) highlights that “as per NSSO, 
2011-12 (68th round) report on Status of Education and Vocational Training in India, among 
persons of age 15-59 years, about 2.2 per cent reported to have received formal vocational 
training and 8.6 per cent reported to have received non-formal vocational training”. The 
Annual Report further goes on enumerate the challenges in the skilling and entrepreneurship 
landscape in the country, such as “: (i) Public perception that views skilling as the last option 
meant for those who have not been able to progress/have opted out of the formal academic 
system. (ii) Skill development programmes of the Central Government are spread across more 
than 20 Ministries/Departments without any robust coordination and monitoring mechanism 
to ensure convergence. (iii) Multiplicity in assessment and certification systems that leads to 
inconsistent outcomes and causes confusion among the employers. (iv) Paucity of trainers, 
inability to attract practitioners from industry as faculty. (v) Mismatch between demand and 
supply at the sectoral and spatial levels. (vi) Limited mobility between skill and higher education 
programmes and vocational education. (vii) Very low coverage of apprenticeship programmes. 
(viii) Narrow and often obsolete skill curricula. (ix) Declining labour force participation rate of 
women. (x) Pre-dominant non-farm, unorganized sector employment with low productivity but 
no premium for skilling. (xi) Non- inclusion of entrepreneurship in formal education system. 
(xii) Lack of mentorship and adequate access to finance for start-ups. (xiii) Inadequate impetus 
to innovation driven entrepreneurship. (xiv) Lack of assured wage premium for skilled people”. 
The Chapter on employment (chapter 8)  provides a detailed analysis of the skill gap challenge 
and the efforts underway to address the same.
5.15. Tapping the full potential of the agriculture sector: Despite its centrality in 
India’s growth trajectory, the agriculture sector continues to face structural issues that have 
implications for India’s economic growth. The foremost concern confronting the sector pertains 
to sustaining agriculture growth without letting food price inflation rise beyond acceptable limits 
while incentivising farmers to raise production.
5
 There is also a need to improve price discovery 
mechanisms for agriculture products, increase efficiency, reduce disguised unemployment, 
address the fragmentation of landholding, and increase crop diversification, among a host of 
other issues. All of these call for the upgradation of agricultural technology, the application of 
modern skills in farm practices, enhancing agricultural marketing avenues, price stabilisation, 
the adoption of innovation in farming, lowering wastages in the use of fertiliser, water, and 
other inputs, and improving the agriculture-industry linkages. The chapter on agriculture 
(Chapter 9) discusses the policies being pursued by the Government to enable agriculture to 
tap its full potential.
5.16. Easing the compliance requirements and financing bottlenecks confronting 
MSMEs: MSMEs have played a key role in defining the economic trajectory of some of the 
major economies, such as Germany, Switzerland, Canada, China, etc. In India, the Government 
has been paying focused attention to enabling the MSME sector to occupy the centre stage 
in India’s economic story. However, the sector continues to face extensive regulation and 
compliance requirements and faces significant bottlenecks with access to affordable and timely 
funding being one of the core concerns. Licensing, Inspection, and Compliance requirements 
5    Chand, R. (2019). Transforming Agriculture for the challenges of the 21st Century, 102 Annual Conference Indian 
Economic Association (IEA) (https://tinyurl.com/4dpu7f9e)