Road ahead appears full of twists and turns for Prime Minister Modi | india | Hindustan Times
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Road ahead appears full of twists and turns for Prime Minister Modi

india Updated: Jun 24, 2014 16:59 IST
Gaurav Choudhury
Gaurav Choudhury
Hindustan Times
Narendra Modi

Narendra Modi was sworn in as 15th Prime Minister of India on Monday, taking charge of the world's largest democracy as it struggles with an economic slowdown and a severe shortage of jobs for its booming young population.

Now, the Modi-led NDA government will have to negotiate through a maze of thorny issues and the road ahead appears full of twists and turns.

Read: Narendra Modi sworn in as 15th Prime Minister, calls for 'strong and inclusive India'

HT connects the dots on the challenges and dilemmas:

Newly-appointed Prime Minister Narendra Modi at his swearing-in ceremony at the Rashtrapati Bhawan in New Delhi (HT Photo/Ajay Aggarwal)

# Budget gaps

Challenge: Policy uncertainties loom ahead of the budget, which can upset plans to rein in the fiscal deficit

Dilemma: Roll-back of tax cuts given in Interim Budget will raise revenues, but push up prices

#Rupee swings

Challenge: The rupee's rebound can be short-lived as money can flow out quickly if policy paralysis persists

Dilemma: Lifting curbs on gold imports can trigger dollar outflow, hurting the rupee's value

#High prices

Challenge: Rising prices hit family budgets hard. The same amount of money now buys fewer goods. Clothing, medical care, education, eating out and most services have turned dearer

Dilemma: There is not much the government can do as weather-induced supply disruptions can push up prices of food products further


Challenge: About 12 million people join the queue of young hopefuls every year. Finding jobs from them is a key challenge

Dilemma: Job creation follows real investment with a time lag. Speeding up projects on highways and ports will need early approvals

#Costly borrowing

Challenge: High inflation has prompted RBI to raise interest rates. In the last three years, EMIs have steadily gone up.

Dilemma: Inflation has shown sign of rising further; the RBI may be prompted to hike lending cost even more to curtail demand

#Industrial deceleration

Challenge: Higher prices and need to find additional money for EMIs force cuts on purchases of televisions and cars

Dilemma: With limited room to give tax breaks, govt has to decide on whether to continue with the excise duty cut on cars after June

#Inclusive growth

Challenge: Innovative schemes and policy decisions are required to reach out to the poor and cater to rising rural aspirations

Dilemma: Overhauling existing policy would not be prudent and the fiscal scope for raising the budget for current schemes is limited

#Policy standstill

Challenge: There have been no major policy decisions in recent months because policy-makers cannot agree on critical issues. Parliamentary logjam has hurt governance

Dilemma: The policy gridlock has dampened investor sentiment. Other emerging nations are competing with India to attract FDI

#Weak spending

Challenge: Raising peoples' spending ability on goods is critical to push demand and investment

Dilemma: In a year of flat income, it becomes difficult to raise spending without tax breaks

#Slow growth

Challenge: From being an engine of global growth India is now struggling to claw out of a decade low growth

Dilemma: Weak revenues may force the government to borrow more to fund welfare schemes