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India election

Modi taps new finance minister in move to revitalize India's economy

Nirmala Sitharaman is surprise pick; close aide Shah to head Home Affairs

Nirmala Sitharaman is India's first full-time female finance minister. Indira Gandhi held the additional portfolio of finance briefly in the early 1970s when she served as prime minister.   © Reuters

NEW DELHI -- Indian Prime Minister Narendra Modi on May 31 tapped Nirmala Sitharaman as finance minister as he began his second term in office after his Bharatiya Janata Party swept the country's general election that ended earlier in May.

Her appointment came as a surprise, as local media had speculated the finance minister post would go to Amit Shah, the BJP chief and Modi's most trusted lieutenant, who is considered the architect of the party's victory in a seven-phase general election from April 11 to May 19.

Sitharaman, 59, one of the key women leaders of Modi's Hindu nationalist BJP, was defense minister during Modi's first term. Before taking up defense, she headed the Ministry of Commerce and Industry. Sitharaman is the first full-time female finance minister. Indira Gandhi held the additional portfolio of finance briefly in the early 1970s when she served as prime minister.

Sitharaman is now tasked with solving challenges facing India's economy, which is growing at an annual rate of roughly 7%. Among the country's pressing issues are crises in the agrarian and banking sectors, along with the need to revive private investment and create jobs in a country of 1.3 billion people, in which about 12 million of them enter the workforce every year.

Sitharaman, a postgraduate in economics, will present the administration's full-year budget, which is expected in July. In February, an interim budget was presented ahead of elections to let the outgoing government continue with obligatory spending until a new administration took over.

Sunil Kumar Sinha, principal economist at Fitch Group's India Ratings and Research, said the government needed someone who could "efficiently handle [the ministry] and deliver."

In Sitharaman's previous roles as ministers of defense and commerce and industry, "she has shown her administrative acumen, and I think that's what resulted in her being elevated to the position of the finance minister," Sinha told the Nikkei Asian Review.

Sinha noted that implementing economic policy was the most crucial role of the finance minister. "The issue is once you are able to frame and quickly zero in on the policy parameters, how [swiftly] can you implement those or drive them into the real economy so the benefits are visible," he said, pointing out that Sitharaman should be able to do that.

Sitharaman will also take the helm of the Ministry of Corporate Affairs, which deals with various laws regulating corporate behavior.

Shah has been given the Ministry of Home Affairs, while former Foreign Secretary S. Jaishankar was given the crucial portfolio of Ministry of External Affairs. Shah was widely expected to be rewarded with a cabinet seat for the BJP's stunning performance in the polls, while the choice of Jaishankar, a non-politician, also came as a surprise.

Jaishankar, a career diplomat, also served as ambassador to the U.S. and China, and is credited with advancing India's relations with both countries. After his retirement as India's foreign secretary last year, he joined conglomerate Tata Sons as president for global corporate affairs. His induction into Modi's cabinet is expected to help the government shape foreign policy in the second term.

Arun Jaitley, the finance minister in Modi's first term, opted out of any position in the new government ahead of the new cabinet's swearing-in ceremony on the evening of May 30, citing health reasons. Jaitley, 66, a diabetic, has faced serious health issues for more than a year and also underwent a kidney transplant in May 2018.

Among other crucial portfolios, former Home Minister Rajnath Singh was appointed head of defense, while the ministries of railways and commerce and industry went to Piyush Goyal.

Smriti Irani, who is dubbed by local media as a "giant slayer" for defeating in the elections the main opposition Indian National Congress chief Rahul Gandhi in his stronghold of Amethi in India's north, received ministries of women and child development, and textiles.

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