Prime Minister Narendra Modi’s penchant for surprises is alive and well, it seems, on the evidence of his choice of ministers for India’s new government. And this time, the exercise has the air of a reshuffle that ends with almost everyone in offices they’re well suited to occupy. Among the unexpected inclusions, former foreign secretary S. Jaishankar as external affairs minister has attracted special applause, not just because it’s rare for a career diplomat to get the honour, but also for his diplomatic credentials. If this signals that Modi is not averse to technocrats in key roles, his other picks suggest an emphasis on the domain expertise needed for high-pressure performance. Bharatiya Janata Party (BJP) president Amit Shah got the home affairs portfolio, Rajnath Singh moved to defence, and Nirmala Sitharaman has been appointed finance minister to succeed Arun Jaitley, who opted out on account of ill health. The party’s one-time treasurer Piyush Goyal, who was seen as Jaitley’s natural successor for his background in business and chartered accountancy, was given charge of commerce and industry, in addition to the railways ministry he earlier held.
Given the slump our economy is in, Sitharaman shall be in the spotlight as the cabinet gets to work. Her education in economics, the country hopes, will stand her in good stead as she goes about doing what’s needed for a revival. The first woman to be India’s full-time finance minister, she is a post-graduate in economics from Jawaharlal Nehru University and an M.Phil. As for experience in government, before she held the defence portfolio, she had been commerce minister of state with independent charge, and briefly also a junior minister in the finance ministry. Known for her no-nonsense approach, many consider her well-placed to take the kind of tough policy calls needed at a juncture like this. The NITI Aayog has put forth an agenda of “big bang" reforms to be achieved in the government’s first 100 days, and the team of reformers Sitharaman works with would also be critical. The last regime saw the exits of noted economists Arvind Subramanian and Arvind Panagariya. India’s new finance minister might find it worthwhile to use the policy guidance of advisors with similar academic stature.
Apart from a revival of investment, consumption and exports, the economy needs a series of immediate fixes. The credit scenario remains weak, a problem crying out for both quick action and close attention to details. Addressing this should be a priority, even as structural reforms are activated that would yield long-term results. The reformist legacy of Jaitley ought to be seen through to its conclusion for the associated benefits to be consolidated in the economy’s favour. The goods and services tax (GST), for instance, needs to be tweaked, simplified and eased for taxpayers. Similarly, the Insolvency and Bankruptcy Code needs a reboot for the swift reallocation of badly used resources. The central bank’s mandate to control inflation, meanwhile, must not get diluted by pressure from New Delhi. In general, it’s important to restore the credibility of all independent institutions, our data-crunching agencies included. National statistics should be transparent and trustworthy. This cabinet is one that Modi has formed after five years of experience at the top. He has had complete freedom to choose his ministers. The electorate may prove less forgiving of a floundering economy five years hence. This is Modi’s real chance as a reformer. He must make the most of it.