A day after the swearing-in of PM Narendra Modi and his new council of ministers, speculation is rife about who will be the next finance minister. Will Nirmala Sitharaman retain her position in the finance ministry for a consecutive second term, or will she move to a different ministry this time?
No matter who gets the ministry, the task at hand remains the same: To bolster the economy and manoeuvre through challenges amid global uncertainty.
Amid a challenging geopolitical landscape, India’s key priorities may include sustaining economic growth, ensuring price stability, and generating jobs by boosting private sector investment, reported TOI. Additionally, managing India’s energy transition, a critical issue for Asia’s third-largest economy amid escalating climate challenges, looms large.
The TOI report also stated that economic growth and private investment are expected to be central themes in the upcoming Budget and the initial 100-day agenda of PM Modi’s third term.
Despite India’s projected growth rate of over 7%, inflation remains a concern. RBI Governor Shaktikanta Das has warned that reducing inflation to 4% will be difficult. Stabilising the agricultural sector against climate-induced disruptions is essential for maintaining a steady supply chain.
From tax to pension: key demands
Unlike previous terms where the BJP held an absolute majority, the new Finance Minister will need to consider political alliances. This includes addressing special category states’ demands and setting up the eighth pay commission for government salary revisions due in 2026.
There is also a pending demand to ensure that the pension under the National Pension System (NPS) is at least half of the last salary drawn. Sitharaman had set up a committee led by Expenditure Secretary T.V. Somanathan to address this, but recommendations are still awaited.
Resource mobilization while adhering to the fiscal glide path will be essential. The government may need to revive asset monetization and disinvestment efforts paused before the elections, ensuring ally support.
Additionally, revising the seven-year-old GST regime with its multiple slabs, which often lead to classification issues, remains on the agenda.
Private sector investment: A focal point
Investment, particularly from the private sector, will be a focal point. Following the interim Budget, Sitharaman emphasized the importance of investing not only in traditional sectors but also in emerging fields like global capability centers, space, and artificial intelligence. However, economists and industry leaders argue that manufacturing and factory jobs are irreplaceable, especially with employment emerging as a significant issue in the general elections. This might necessitate government incentives, which Indian industry typically welcomes.Job creation and skill development are critical, especially in sectors like tourism and hospitality. Addressing the post-Covid two-paced growth is another priority for the government.
While the government has introduced production-linked incentives (PLIs), ensuring these schemes lead to actual payouts is crucial. The private sector must not be burdened with bureaucratic hurdles to access promised funds.
(With inputs from TOI)
