(June 10): Nirmala Sitharaman was reappointed India’s finance minister in Prime Minister Narendra Modi’s new coalition government, providing policy continuity in one of the world’s fastest-growing economies.

Sitharaman will also hold the corporate affairs ministry, according to a statement from the President’s office Monday.

Sitharaman will need to balance fiscal demands in a new coalition government after Modi’s Bharatiya Janata Party (BJP) failed to win a majority in the elections. Economists say the new government may be pressured to boost spending to shore up support, shifting away from its fiscally conservative path.

The minister’s immediate task will be to present the government’s budget, likely in July, which will provide insight into the Modi coalition’s priorities going forward.

A boost to government coffers recently means there’s fiscal space to spend more. Tax revenue has soared and the central bank recently announced it will pay a record dividend of about US$25 billion (RM118 billion) to the government.

S&P Global Ratings recently signalled a possible credit rating upgrade in coming months, citing the improved fiscal position.

India’s economy grew more than 8% in the fiscal year that ended in March, making it one of the fastest growing major economies. The central bank predicts growth will reach 7.2% in the current fiscal year. Even so, India’s joblessness and rising cost of living emerged as major concerns for voters, contributing to the BJP’s drop in support at the polls. Consumer spending in rural areas also continues to lag urban demand, resulting in lopsided growth.

Modi’s BJP will face a series of crucial state elections in the coming months including Maharashtra, Haryana and Delhi. That may require the government to double down on measures to woo poor, women and youth.

Sitharaman’s rise in Modi’s government has been swift. She’s seen as a senior and trusted member of Modi’s administration, and has previously helmed the trade, defence and finance portfolios in the cabinet.

As finance minister, Sitharaman boosted spending on infrastructure, trimmed the fiscal deficit from more than 9% of gross domestic product during the pandemic and pushed for transparency in the government’s accounts.