India PM Modi to name Shah as finance minister

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Modi was expected to announce his cabinet within hours, after being sworn in on Thursday evening.

Prime Minister Narendra Modi on Thursday pressed the refresh button and inducted 20 new faces in his council of ministers rewarding giant killers in the Lok Sabha election and dropping some of the most visible faces of his team.

The tallest among the first-time ministers is Bharatiya Janata Party president Amit Shah who was seated third in the row of seniority after the PM and Rajnath Singh during the swearingin ceremony here. He was followed by Nitin Gadkari and Sadanand Gowda.

Modi is set to name Shah as his new finance minister, according to several Indian media reports.

As Modi’s right-hand man and long-time strategist, Shah showed his acumen as a strategist by masterminding the BJP’s landslide spring election victory.

But there are questions about his lack of central government experience and financial background, especially at a time when growing signs of weakness in Asia’s third-largest economy mean a trusted hand is needed at the finance policy helm.

Modi was expected to announce his cabinet within hours, after being sworn in on Thursday evening at an open-air ceremony outside the colonial-era presidential palace with some 8,000 guests including Bollywood stars and leaders of neighbours Bangladesh and Sri Lanka.

The BJP swept to victory in the national election, held over 39 days in April and May, and increased its majority in the lower house of parliament.

If the media reports are correct, Shah would replace Arun Jaitley, who wrote to Modi on Wednesday asking not to be considered for a ministerial position because of health problems.

Shah would be taking over the finance portfolio at a sensitive time. He will probably need to move quickly to stimulate an economy beset by weak farm incomes, slow jobs growth and falling sales of key consumer goods including cars and motorbikes.

This week, two major industrial bodies called on the new government to take steps to bolster a growth rate that slowed to 6.6 per cent in the three months to December – the lowest in five quarters – and is expected to have dropped further to 6.3 per cent between January and March.

Several investors and traders said they did not expect Indian markets to react much if Shan’s appointment was confirmed as they believed his ability to get things done would offset his lack of financial experience.

“The hallmark of this government is that there’s more PMO (Prime Minister’s Office)-driven strategy and guidance. So, to that extent, you don’t need a proper technocrat to run the finance ministry – you need someone who can get things done,” said Jayesh Shroff, co-founder of investment advisory firm Cask Capital.

Others were more wary. “We have no clue of what this guy knows or his financial knowledge. The market will take some time to understand his views,” said a trader at a private bank, who declined to be identified.

A senior debt manager said Shah could be a big asset in the job given his experience across many Indian states and the importance of revenue from the goods and services tax that was brought in in 2017. “That is all built on state-centre coordination,” he said.

India will also have a new foreign minister, with incumbent Sushma Swaraj, who has had health issues, sitting among the audience but not on the dais with Modi’s new ministerial team.

In the federal Indian system of appointments, ministers are sworn in before their specific positions are announced. A potential replacement for Swaraj could be former foreign secretary, S. Jaishankar, who was on the dais.

A former ambassador to the United States and China, Jaishankar led India’s diplomatic corps during Modi’s first term before retiring in early 2018 and subsequently joining the Tata Group conglomerate. Shah and Jaishankar were not immediately available for comment.

The BJP controls 303 of the 545 seats in the lower house, which might tempt Modi to push for controversial land and labour reforms to help stimulate the economy.

Modi enacted reforms such as a goods and services tax and a bankruptcy law in his first five-year term, but faced criticism for failing to create enough jobs for people entering the job market, weak farm prices and tepid growth.

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