Road ahead appears full of twists and turns for Prime Minister Modi
Narendra Modi was sworn in as 15th PM 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.india Updated: Jun 24, 2014 16:59 IST
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:
# 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
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
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
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
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
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
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
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
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