Sitharaman, 59, who served as defence minister in the previous Modi administration, is the first full-time woman union minister for finance and corporate affairs. Her rise in the party is an example of a woman breaking the glass ceiling to be in the driver’s seat of Asia’s third-largest economy.
According one person close to Sitharaman, on the first day in office, she was overwhelmed by the prospect of occupying the role of former finance minister Arun Jaitley.
Like Jaitley, Sitharaman will also have to build consensus on matters of indirect taxes, which are decided by the GST Council. After assuming office, Sitharaman was briefed by senior bureaucrats in the ministry on the challenges facing the economy.
An alumna of Jawaharlal Nehru University, Sitharaman joined the cabinet in May 2014 as the minister of state for commerce. In that capacity, she soon built up a reputation for being a tough negotiator and successfully put across India’s point of view in international fora such as the World Trade Organization. She was promoted to the cabinet minister rank with the defence portfolio in September 2017. One of the things she can credit herself with, in her role as the defence minister, is pushing through long-pending defence acquisitions.
Sitharaman brings to the table her knowledge in economics, political acumen, organizational and administrative skills, as well as insights into the needs of various sections of the industry. She will also be in charge of the corporate affairs ministry. Jaitley, who also held both portfolios in the previous NDA government, opted out citing health reasons.
For the new finance minister, the immediate challenge is to revive the slowing economy, although external factors such as slower global growth are contributing factors.
Sitharaman will have to give shape to the full-year budget for fiscal year (FY) 2020, amid slowing revenue collection and surging welfare spending needs.
The income support scheme for small and marginal farmers rolled out in the interim budget in February—Pradhan Mantri Kisan Samman Nidhi—will cost the exchequer ₹75,000 crore in FY20. At the same time, receipts from direct tax revenue in FY19 are believed to have fallen short of the revised target of ₹12 trillion. This may require reworking the FY20 budget numbers.
The interim budget announced in February had estimated a 3.4% fiscal deficit for the current fiscal year, same as the upwardly revised estimate for FY19 from the earlier projected 3.3%. According to experts, the final fiscal deficit figure for FY19 could, however, be higher when government accounts are finalized.
Further simplification of the goods and services tax, recapitalizing state-run banks and solving the liquidity crisis in the non-bank sector are among the key tasks before her.
Political observers said Sitharaman’s meteoric rise sends several signals. “Besides Modi’s commitment towards inclusiveness, gender equality and empowerment, which is visible in state policies, reposing faith in Sitharaman also signals that performers will have a future in the government," said A.K. Verma, a Kanpur-based political analyst.
Elizabeth Roche contributed to this story.