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
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