Nirmala Sitharaman to steer the economy as the next finance minister

Nirmala Sitharaman to steer the economy as the next finance minister

Nirmala Sitharaman previously served as the defence minister in the Modi administration (Mint file)

New Delhi: Nirmala Sitharaman, 59, a key woman member among the Bharatiya Janata Party (BJP) leadership, will serve in Prime Minister Narendra Modi’s Cabinet as the next finance minister, the President’s Office said in a communication on Friday.

Sitharaman, who previously served as the defence minister in the Modi administration, will bring her knowledge in economics, political acumen, organizational and administrative skills as well as insights into the needs of various sections of the industry to the job. Sitharaman had also served as the commerce and industry minister before she took up the defence portfolio. Sitharaman will also hold the corporate affairs ministry, which administers various laws regulating corporate behaviour.

Arun Jaitley, who held the finance and corporate affairs portfolios in the previous NDA government, opted out of formal responsibilities owing to health reasons.

For the new finance minister, the immediate challenge is to revitalize the slowing down economic growth rate, although external factors such as a slower global growth rate is a contributing factor. Soon after taking charge, the new finance minister will have to give shape to the full-year budget for FY20 amid concerns of slowing down revenue collection and surging welfare spending needs.

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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 is believed to have fallen short of the revised target of 12 trillion. This may require reworking the FY20 budget numbers.

Interim budget for FY20 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 finalised.

Further simplification of the Goods and Services Tax (GST), recapitalizing state-run banks and solving the liquidity crisis in the non-banking sector are among the key tasks before the new finance minister.