India recently kicked off a modest revamp of the country’s underperforming economy by unveiling a $300bn federal budget, the first by the new government led by Narendra Modi, which aims to simplify the tax system, make subsidy programmes more efficient and raise the limit on foreign investment in some industries.Presenting the first national budget in Lok Sabha, India’s lower house of parliament, the country’s Finance Minister Arun Jaitley said the cap on foreign holdings in Indian defence and insurance firms will rise to 49% from 26%. But Jaitely gave mixed signals on the retroactive taxation that has affected some major foreign firms and painted an image that India is hostile to do business sometimes.Reports from India suggest that the huge base of the middle-class people found something to cheer for in the budget, with many consumables set to become cheaper.Also, an upbeat mood prevails in India following the change of guard in New Delhi in May with stock markets rallying up and foreign investors slowly returning to the country. World leaders are in the country’s capital regularly to meet with the new government and strike business deals - the latest being Britain’s George Osborne and William Hague.While all these are good news for India, the fact remains the country needs to do a lot more to fast track growth and provide the much-needed jobs to millions of young Indians graduating from universities across the vast nation.On paper, there is no reason why India shouldn’t see a period of rapid growth. Certainly, it has room to grow, having missed out on the economic boom its Asian neighbours long enjoyed.A recent report suggested that just a generation ago, the average Indian was better off than his Chinese counterpart. In 1990, per capita income in China lagged that of India’s by 15%. Just 20 years later, Chinese income per person was three times that of India’s. Clearly, India missed the bus when there were prospects for an onward journey.According to World Bank data, in 1981, about 60% of Indians were impoverished. Today, that ratio has dropped to 32%. This means, millions of Indians have crossed the so-called “poverty line”, although some dispute this and argue that in reality, the actual number of Indians living in poverty has barely changed, staying at around 400mn for the past three decades. They claim that the fall relies on India’s rapid population growth, from 700mn in the 1980s, to around 1.2bn today.Whatever that is, the fact remains India’s vast population – nearly four times that of the US — is its big opportunity as well as major challenge.The median age in India is just 28. What this means is that nearly 600mn young Indians could form the backbone of the next few decades of global productivity.But a big challenge for policymakers in New Delhi is that this vast pool of young Indians will soon demand better education, jobs, healthcare, access to food, clean water and basic infrastructure.Hence Modi and his new team have their work cut out. They need to cut red tape, tackle corruption and choose a major revamp of the economy over incremental changes, if India is to be the new frontier of global growth.