The big challenges before India’s new finance minister

The task before the new finance minister is tough against the backdrop of a challenging geopolitical landscape. Sustaining growth, ensuring price stability and creating jobs by getting the private sector to invest are immediate priorities. Then there is the mammoth task of energy transition for Asia’s third largest economy that stares the new administration as climate challenges mount.The theme of sustaining growth and getting private investment going again is expected to run through the Budget, that is likely to be presented next month, as well as the 100-days agenda of the new government and Narendra Modi’s third term as PM.While India remains on course to grow at over 7%, inflation has moderated. RBI governor Shaktikanta Das has cautioned that lowering it to 4% will not be so easy. Weatherproofing the farm sector against heatwaves and other weather shocks is a priority to keep the supply chain steady.Investment a key focusThe key focus is going to be investment, especially by the private sector. Following the interim Budget, Nirmala Sitharaman had suggested that investment should not be measured in the traditional sectors alone but also in newer areas such as global capability centres, space and artificial intelligence. However, economists and industry players still believe that there is no alternative to creating jobs in factories and manufacturing plants, especially at a time when a lack of adequate employment seems to have emerged as a major issue in the general elections. That may require the government to offer some incentives, which Indian industry is never averse to. medium110879744Jobs and skilling are seen to be crucial, including in services such as tourism and hospitality. The government will also need to address the issue of two-paced growth which economists and companies often talk about in the post-Covid period.While the government has been focusing on areas such as production-linked incentives, the FM will need to ensure that the schemes see actual payouts and the private sector is not left chasing officials and the administrative ministries to get the promised funds.Political concerns and salary revisionsUnlike the last two times, when BJP enjoyed absolute majority, this time the new FM will also have to be conscious of the political compulsions, which will include addressing demands of special category states from its two key allies. It will also need to set up the eighth pay commission to decide on a salary revision for government employees. Pay hikes for central govt staff are due in 2026, the year which will also see the implementation of the award of the 16th Finance Commission. Besides, there is the pending demand of assuring that the pension under NPS (new pension system) is at least half the last pay drawn. While Sitharaman had set up a committee headed by expenditure secretary TV Somanathan, the recommendations are yet to be submitted.Some of the recommendations will also require the Centre to mobilise resources, while sticking to the fiscal glide path that it has charted for itself. That may mean the government will have to revive its asset monetisation and disinvestment drives, something that was suspended ahead of general elections. This will have to be done while ensuring that its allies are on board.Also on the agenda is the revamp of the seven-year-old GST regime which has multiple slabs, often creating classification issues.Meanwhile, industry leaders turn up to back Modi The country’s top industrialists Mukesh Ambani, Gautam Adani, Kumar Mangalam Birla and Ashok Hinduja attended the swearing-in ceremony of PM Narendra Modi and his Cabinet at Rashtrapati Bhavan in Delhi. Banker Uday Kotak and Piramal Group chairman Ajay Piramal were also present at the event. Next-generation leaders like Anant Ambani and Karan Adani too attended the ceremony.Several business leaders also took to X to congratulate Modi for becoming the PM for the third time. दुनिया के सबसे बड़े लोकतंत्र में इतिहास के सबसे बड़े चुनाव होना और बिना किसी बाधा के नए सरकार का गठन होना गर्व की बात है।

भारतीय मतदाताओं को अपने महत्वपूर्ण लोकतांत्रिक अधिकार का प्रयोग करने के लिए बधाई।

नरेंद्र मोदी जी को तीसरी बार प्रधानमंत्री बनने पर शुभकामनाएं। आशा है कि… pic.twitter.com/t6ylld6FNM

— anand mahindra (@anandmahindra) June 9, 2024 Congratulations to @narendramodi on winning a third term as Prime Minister. You have strengthened India's position as a source of innovation for global progress in sectors like health, agriculture, women-led development, and digital transformation. Look forward to a continued…

— Bill Gates (@BillGates) June 9, 2024 ऐतिहासिक तीसरे कार्यकाल की शपथ लेने पर प्रधानमंत्री श्री @narendramodi जी को बधाई।

आपके कुशल नेतृत्व में पिछले 10 वर्षों में देश ने प्रगति की नई ऊंचाइयों को छुआ है।

और हमें विश्वास है कि आगामी वर्षों में आपका ‘विकसित भारत’ अभियान दुगनी रफ्तार से आगे बढ़ेगा। #JaiHind pic.twitter.com/7taIyKYgN7

— Priti Adani (@AdaniPriti) June 9, 2024 Congratulations @narendramodi ji on assuming office as Prime Minister for the third time, a feat last achieved by Nehru ji. With new cabinet, I am optimistic about the continued progress & development of our nation. Together, let's build a stronger & more resilient economy.…

— Sajjan Jindal (@sajjanjindal) June 9, 2024 Modi 3.0!

Heartiest congratulations, Shri @narendramodi ji, on your historic victory and becoming the Prime Minister of India for a third term.

Looking forward to continued transformation and growth under your leadership to realise the vision of #ViksitBharat2047 . @PMOIndia https://t.co/jAm8ruzlYA

— Prashant Ruia (@prashantruia) June 9, 2024 Congratulations to @narendramodi ji on being elected Prime Minister of India for the third consecutive time. Bharat has crossed many milestones under your visionary leadership. We are confident that the country will continue on its remarkable growth trajectory!

Best wishes to… pic.twitter.com/hXKeTgf3Ys

— Anil Agarwal (@AnilAgarwal_Ved) June 9, 2024 PwC India chairperson Sanjeev Krishan said he expects the government to prioritise the allocation of resources on research and development to bolster India’s innovation landscape. He said he expects the government to collaborate with industry and academia to build regulatory frameworks to transform technologies and will move sustainability from a risk-protocol to a strategic opportunity. Industry body Ficci said it is looking forward to progressive policies that will foster economic and social development.Modi govt 3.0: The economic agenda medium110879672 medium110879678 medium110879679 medium110879683 medium110879687 medium110879694 medium110879697 medium110879711 medium110879714 medium110879719 medium110879724