In a significant move, Prime Minister Narendra Modi's government has reappointed Nirmala Sitharaman as the Finance Minister. The official announcement came on June 10, a day after the ministers took the oath alongside Modi. This marks Sitharaman's third term in the Modi-led administration, having previously served as a union minister in 2014 and 2019.
Sitharaman's return to the finance ministry ends speculation about potential changes in her portfolio. Notably, she is India's first full-time female finance minister, a position she first assumed on May 31, 2019, after stints as the commerce and defence minister. Her leadership has been pivotal during the COVID-19 pandemic, steering the Indian economy towards recovery and setting it on a path to becoming the fastest-growing major economy globally.
Under her tenure, India has emerged as the world's 5th largest economy, maintaining robust growth even as developed nations face economic slowdowns. In the January-March 2024 quarter, while the US GDP growth slowed to 1.6% and Germany and Japan experienced contractions, India recorded a remarkable 7.8% GDP growth. The full-year growth forecast for FY24 stands at 8.2%.
Sitharaman is now preparing for her seventh Budget, expected next month. Her interim Budget presented on February 1 avoided major announcements despite the election year, focusing on fiscal prudence. The upcoming full Budget for 2024-25 will be closely watched, with expectations that she will balance fiscal consolidation and address weaker rural growth and consumption.
The government's fiscal deficit target is set at 5.1% of GDP, with a record allocation of Rs 11.1 lakh crore for capital expenditure in FY25. Analysts will observe whether the government uses the central bank's Rs 2.11 lakh crore dividend for aggressive fiscal consolidation or for measures to boost consumption.
Sitharaman's reappointment signals continuity in policy but also brings anticipation about potential new strategies to sustain India's economic momentum. As she gears up for the upcoming Budget, the focus will be on her ability to drive growth while managing fiscal challenges and stimulating private consumption and rural development.
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