India’s New Finance Minister Nirmala Sitharaman Has Her Work Cut Out

Nirmala Sitharaman will be India’s new finance minister, the second woman to hold the portfolio and a surprise choice by Prime Minister Narendra Modi. She will also be the minister for corporate affairs.

Sitharaman was minister of state for finance and corporate affairs and the minister for commerce and industry with independent charge before being named the defence minister in Modi’s first cabinet. She is a Bharatiya Janata Party’s member of the Rajya Sabha from Karnataka. She is member of the party’s national executive since 2008 and was a national Spokesperson from 2010-2014.

She holds a master’s in economics from Seethalakshmi Ramaswamy College, Tiruchirapalli, Tamil Nadu and M.Phil in the subject form Jawaharlal Nehru University, New Delhi.

Sitharaman will be taking charge of the economy at a time of agrarian distress, falling investments and consumption, and a slowdown in the economy. In the third quarter of financial year 2018-19, India’s GDP expanded by 6.6 percent, compared with 8 and 7 percent in the first two quarters respectively. The fourth quarter print is expected at 6.3 percent, according to a Bloomberg poll of 30 economists.

The decline in economic growth is “emanating largely from agriculture, and more modestly, from industrial activity, offsetting a slight rise in services,” said Saugata Bhattacharya, chief economist at Axis Bank Ltd., in this story reported earlier.

The country’s financial sector has also witnessed stress, first on account of record non performing assets at banks and more recently due to the financial failure of the IL&FS Group and liquidity as well as asset quality issues in non banking financial companies.

Among other challenges are slowing exports, unemployment and the need for deep reforms to raise productivity and incomes for India’s farmers.

Arun Jaitley was the finance minister in the first term of the Modi government (2014-2019) but recent illness has incapacitated him. Earlier this week he requested Modi to permit him to opt out of an official role in the government.