Putting rest to all speculation, the President of India on Friday released the portfolio details of new Cabinet, a day after Narendra Modi took oath as the country's 16th Prime Minister.
Contrary to expectation that Amit Shah, a seasoned stock broker and the chief architect of NDA's victory for the second consecutive time will be handed over reigns of the Finance Ministry, after Arun Jaitley expressed his desire to stay away from any role in the new government citing health reasons. Consequently, Nirmala Sitharaman has been given the charge of the Finance Ministry, while Amit Shah will handle the Home Ministry.
Here's what leading analysts have to say on the appointment of Nirmala Sitharaman as the new Finance Minister:
G Chokkalingam, founder and managing editor, Equinomics Research
It would have been better had they brought in some professional, say an economist. One, on the global front, trade war is going to offset a lot of equilibrium forces and on the domestic front, we have some structural issues that are impacting the information technology (IT), pharma and export sectors. All these are growing in poor single-digits. Capex plans and an economic revival is getting delayed. The consumption space, for example the automobile sector, is also going through a tough time. Demand has come down because of the structural issues. In such an environment, hard-core economist would have been a better choice.
Ambareesh Baliga, independent market analyst
I feel market has taken a sigh of relief after the announcement, as for the last few hours, there were speculations that Amit Shah would be the Finance Minister. The best choice for the position, however, would have been Piyush Goyal. In fact, that was what the market was expecting. However, Nirmala Sitharaman is still a better choice than Amit Shah. Had Shah been appointed as FM, the market would have reacted negatively.
Ajay Bodke, CEO, PMS at Prabhudas Lilladher
Ms Nirmala Sitharaman is eminently qualified to steer India's economy which is facing multiple headwinds of slowing consumption impulses, moribund private capex cycle and anemic exports. Unprecedented squeeze in liquidity due to crisis in NBFC sector and consequent spike in risk aversion has severely impacted aggregate demand. Sectors such as real estate, automobiles, consumer goods etc need an immediate respite.
With limited fiscal maneuverability it remains to be seen how she can inject a strong dose of fiscal stimulus to revive animal spirits. She will need to focus on strong & sustainable resource generation by increasing tax-to-GDP ratio and push for aggressive divestments. Resources thus generated will have to be funneled to finding structural solutions to address farm distress and double farmers income over the next five years as well as to create a conducive environment for strong employment generation.
She will need to strike a delicate balance between the re-distributive policies advocated by Mr. Modi towards the poor & downtrodden and yet ensure government's firm commitment to adhere to medium term fiscal consolidation.
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