Strategic Policymaking for Macro Goals and Micro Realities: Indian Perspective

1. Introduction: The balancing act of Policymaking

In today’s interconnected economic environment, Indian Government faces the dual challenge of sustaining high GDP growth while ensuring micro-level welfare benefits reach every citizen. The task is not just economic; it is deeply political, social, and structural. The recently announced ₹576 trillion fiscal spending plan for 2024–25 exemplifies this balancing act—combining capital investment to spur macroeconomic expansion with rural development initiatives aimed at microeconomic stability.

2. Macroeconomic Goals: Sustaining growth and investment

The 2024–25 budget projects nominal GDP growth of 10.5% with a fiscal deficit (FD) target of 4.9% of GDP. These numbers aren’t merely fiscal statements; they are policy signals aimed at both domestic investors and foreign stakeholders.

Reuters reports that the government’s investment-led approach is designed to stimulate long-term productivity, improve infrastructure, and create a conducive environment for private sector participation.

Key macroeconomic thrusts:

• Expanding capital expenditure in infrastructure to unlock multiplier effects on employment and productivity.
• Maintaining fiscal discipline to keep inflationary pressures under control.
• Encouraging rural development to bridge the urban-rural economic divide.

3. Microeconomic Priorities: Building Human Capital and Reducing Inequality

While the macro picture is important, the Indian Government has placed equal emphasis on grassroots welfare.

3.1 Poverty Alleviation – PMGKAY

The PMGKAY program has been central in shielding vulnerable populations from economic shocks. IMF data confirms that extreme poverty remained under 1% during the pandemic, largely due to consistent food grain distribution to over 750 million citizens.

3.2 Healthcare – PM-JAY

India’s flagship health insurance scheme, PM-JAY, offers up to ₹5 lakh coverage per family, benefiting nearly 500 million people. Lancet studies highlight improvements in early cancer detection (36% rise) and treatment timeliness (90% improvement).

3.3 Skill Development – SIB and PMKVY

The Skill Impact Bond (SIB) initiative trained 23,700 youth, with 72% women participation. Impressively, 75% secured jobs and 60% retained them beyond three months. However, under PMKVY, only 15% of 16 million trained individuals found employment, highlighting placement gaps.

 

4. Targeted Infrastructure and Training Investments

4.1 Industry-Aligned Education

Collaborations with 25 major firms, including Toyota and Mahindra, are modernizing ITIs with new courses in AI, solar technology, & other emerging fields.

In Uttar Pradesh, the upgrade of 3,400 ITIs, smartphone distribution, and youth loan schemes show how states can create enabling ecosystems.

4.2 Addressing Skill Gaps

According to PLFS 2023–24, 88% of India’s workforce holds low-competency jobs, with only 10–12% in high-competency roles. The India Skills Report 2025 warns that such gaps could hinder competitiveness unless governance and industry partnerships intensify.

 

5. Macros vs. Micros: The Dual Engine for Inclusive Growth

Evidence suggests that inclusive growth requires simultaneous macro expansion and micro-level welfare:

• Over the past 15 years, India’s GDP growth averaged above 7%, aiding poverty reduction.
• Sasmal et al. (2024) found that capital expenditure improves per capita income more effectively than revenue spending alone.

This dual engine—economic expansion paired with targeted welfare—has been key to India’s progress, but sustaining it demands constant policy refinement.

6. Loopholes in Policymaking

Despite notable achievements, several weaknesses hinder optimal outcomes:

• Implementation Gaps – Schemes like PMKVY show high training numbers but poor job placement rates due to mismatch between skills imparted and industry demand.
• Fragmented Policy Coordination – Lack of alignment between central and state programs reduces efficiency.
• Overemphasis on Announcements – Political cycles often prioritize visible announcements over sustained execution.
• Low Formalization of Employment – Majority of job growth remains in informal sectors, limiting wage security and tax base expansion.
• Weak Monitoring Mechanisms – Performance metrics for welfare schemes often focus on outreach numbers rather than impact quality.

7. Suggestions for Better Results

To strengthen the balance between macro goals and micro realities:

1. Policy-Industry Synchronization – Expand public-private partnerships to ensure training programs align with market needs.
2. Outcome-Oriented Budgeting – Allocate funds based on measurable outcomes rather than political timelines.
3. Integrated Welfare Platforms – Create unified digital systems linking health, employment, and education benefits for better tracking.
4. Boost Formal Employment – Offer tax incentives to companies hiring from skill programs like SIB and PMKVY graduates.
5. Independent Evaluation – Mandate annual third-party audits of flagship programs to ensure accountability and efficiency.

---

8. Concluding Insights

Policymaking in India must walk a fine line between macro stability and micro inclusion. The ₹576 trillion budget underscores the Indian Government’s commitment to both – investing in infrastructure and fostering human capital through food security, healthcare, and skill development.

However, without addressing loopholes – especially skill-job mismatches, fragmented execution, and overreliance on political optics—the vision of truly inclusive growth may remain elusive.

The road ahead lies in strategic, evidence-based policymaking where GDP growth and human welfare progress hand-in-hand, ensuring that India’s development story is as much about empowered citizens as it is about rising economic charts.

Abbreviations

• AI – Artificial Intelligence
• FD – Fiscal Deficit
• GDP – Gross Domestic Product
• IMF – International Monetary Fund
• ITI – Industrial Training Institute
• PLFS – Periodic Labour Force Survey
• PM-JAY – Pradhan Mantri Jan Arogya Yojana (Ayushman Bharat)
• PMGKAY – Pradhan Mantri Garib Kalyan Anna Yojana
• PMKVY – Pradhan Mantri Kaushal Vikas Yojana
• SIB – Skill Impact Bond