Day 1 as PM: Modi meets Nawaz Sharif

Narendra Modi was sworn in as India's prime minister 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.

On day one, he met his Pakistani counterpart Nawaz Sharif for landmark talks in New Delhi on Tuesday in a bid to ease tensions between the nuclear-armed neighbours.

The leaders shook hands and smiled for the media on the steps of a former palace used by the government for receptions in the capital, before heading inside for talks on Modi's first full day in government.

It is the first time an Indian prime minister has hosted a Pakistani leader for official discussions in Delhi since the rupture in relations that followed the 2008 attacks in Mumbai, when 166 people were killed.

Sharif was one of six regional leaders who attended a lavish inauguration on Monday night for Hindu nationalist Modi, who has been elected leader of the world's largest democracy with the strongest mandate for 30 years.

Modi has an image as a hardliner, even within his own Hindu nationalist party, and is regarded with deep suspicion by many in Pakistan after deadly riots erupted in his western state of Gujarat a decade ago.

But in a surprise move that disarmed many of his critics, Modi decided last week to invite Sharif to his inauguration, in what was seen as a significant olive branch to India's Muslim neighbour.

The South Asian neighbours have fought three wars since independence in 1947, and remain bitterly divided over the disputed region of Kashmir.

Indian voters and foreign investors alike have high hopes for Modi, whose slick campaign presented him as a business-friendly leader who would jump-start investment. Yet his critics say he is an autocrat who harbours Hindu supremacist views.

Here are five of the biggest challenges he will face during his first months in power.

1. FOSTERING GOOD TIES ABROAD, ESPECIALLY IN SOUTH ASIA

The leaders of Pakistan and other neighbours attended Modi's swearing-in ceremony, a first in India's history that signalled his aspirations to be a regional leader who could improve relations with surrounding countries.

But Modi's position on whether to hold serious talks with Pakistan, India's nuclear-armed neighbour and rival, is not yet clear. The BJP has long advocated a tough stance on Pakistan and opposed the last prime minister's attempts at talks. He is expected to meet Pakistan prime minister Sharif on Tuesday.

India's new leader will also face challenges in Afghanistan, whose security forces are preparing to take over from departing foreign troops in the fight against a Taliban insurgency. India's consulate in the Afghan city of Herat was attacked by armed insurgents last week.

Further afield, Modi will need to reinvigorate India's relationship with China and the United States. Ties between the two largest democracies have cooled due to trade disputes and the arrest of an Indian diplomat in New York.

2. ECONOMY
Modi biggest challenge will be to revive an economy that is mired in its worst slowdown since the 1980s due to myriad issues such as strained public finances, persistently high inflation, high interest rates and rising bad loans at banks.

Public finances are in dire straits as government spending has outpaced revenues. The new administration will immediately need to take a decision on slashing subsidies spending, which is threatening a budget blow-out and a sovereign ratings downgrade.

Similarly, the new prime minister has his work cut out to  break Asia's third-largest economy out of chronic high inflation, which has forced the central bank to keep interest rates high even as growth sags.

Adding to inflationary worries are the prospects of below-average monsoon rains this summer, which could hit farm output and fuel inflation.
Modi will need to address the problem of rising bad loans at banks, which have stifled credit flows to corporations. Stressed loans in India - those categorised as bad and restructured - total $100 billion, or about 10 per cent of all loans.

3. REASSURING INDIA'S RELIGIOUS MINORITIES

In Modi's first speech as prime minister-elect, he vowed to work for all Indians. Yet there are still concerns that the Hindu nationalist could stir communal tensions.

Modi took a tough line in his campaign speeches on illegal immigrants from Bangladesh, saying they should have their "bags packed" in case he came to power.

4. INTERNAL SECURITY

India's main internal security threat is from Maoists. They have acquired guns, hand grenades and guerrilla war expertise over the years and routinely target security forces and other government officials in areas that contains the country's richest mineral deposits.

Top Indian iron ore miner NMDC Ltd and the world's top coal miner, Coal India Limited, spend growing amounts on security. Some small- and mid-sized mining companies are also forced to pay "protection" fees to the Maoists.

5. CENTRE-STATE RELATIONS

The new federal government will need to mend frayed ties with state governments, who often complain of New Delhi's big brother attitude.

A fear of losing fiscal powers forced some states to delay the rollout of a nationwide goods and services tax (GST), which economist estimate would have boosted India's economic growth by as much as 2 percentage points. Opposition from states blocked a plan of the previous government to counter terrorism.

Modi needs to act fast as states hold the key for a revival in capital investments, which barely grew last fiscal year as delays in clearances grounded many infrastructure projects.

States wield much of the power in approving projects as only a quarter of approvals come from the federal agencies.

 

EARLIER STORIES

Rajnath Singh has been sworn in as home minister while Arun Jaitley has been made finance minister with the additional charge of defence.Sushma Swaraj was sworn in as external affairs minister. She will be assisted by former Army Chief General VK Singh as Minister of State. The General will also have independent charge of North East Affairs.

Prime Minister Narendra Modi's council of ministers will include the following: Nitin Gadkari as minister for surface transport and shipping; Venkaiah Naidu as minister of urban development; Maneka Gandhi as minister for women's and children's welfare; Anantha Kumar as parliamentary affairs minister; Sadananda Gowda as railways minister; Nirmala Seetharaman as minister of state for commerce; Najma Heptullah as minority affairs minister.

Former Madhya Pradesh chief minister Uma Bharati will be Union Minister for Water Resources. Nirmala Sitharaman, the BJP's spokesperson, will take over as Minister with Independent Charge of Commerce. Dr Harsh Vardhan becomes health minister.

Smriti Irani has become the youngest cabinet minister.

Other ministers sworn in on Monday included Ram Vilas Paswan, Gopinath Munde, Kalraj Mishra, Ravi Shankar Prasad, Ashok Gajapathi Raju, Anant Geete, Harsimrat Kaur Badal, Narendra Singh Tomar, Jual Oram, Thawarchand Gehlot, Radha Mohan Singh, Santosh Gangwar, Sarbananda Sonowal, Jitendra Singh, Rao Inderjit Singh,G M Siddeshwara, Manoj Sinha, Upendra Kushwaha, Pon Radhakrishnan, Kiren Rijiju, Krishan Pal Gurjar, Sanjeev Kumar Balyan, Mansukhbhai Vasava, Raosaheb Dadarao Danve, Vishnu Dev Sai, Sudarshan Bhagat and Nihalchand Chauhan

EARLIER REPORT

Narendra Modi was sworn in as India's prime minister in an elaborate ceremony at New Delhi's resplendent presidential palace on Monday, after a sweeping election victory that ended two terms of rule by the Nehru-Gandhi dynasty.

Millions of Indians watched the inauguration live on television as the 63-year-old leader took his oath along with his cabinet members in the palace's forecourt.

Son of a tea stall-owner, Modi has given India its first parliamentary majority after 25 years of coalition governments.

"A GLORIOUS FUTURE"
Modi invited leaders from across South Asia to his swearing-in ceremony, including Prime Minister Nawaz Sharif from Pakistan, an unprecedented gesture that was as much a show of his determination to be a key player on the global stage as a celebration of his stunning election victory.

Even before his inauguration, Modi made waves on the global stage. He has spoken with the presidents of the United States and Russia, and he has become one of only three people that Japanese Prime Minister Shinzo Abe follows on Twitter.

In a message released to fellow Indians and citizens of the world, Modi said the election had delivered a mandate for "development, good governance and stability".

"Together we will script a glorious future for India. Let us together dream of a strong, developed and inclusive India that actively engages with the global community to strengthen the cause of world peace and development," he said.
The pomp and ceremony unfolded as the summer evening closed in at Rashtrapati Bhavan, a colonial-era sandstone mansion with 340 rooms in the heart of New Delhi. Looking on were some 4,000 guests, ranging from members of the defeated Nehru-Gandhi family  to top industrialists, Bollywood actors, Hindu holy men and the leaders of several neighbouring countries.

Modi supporters exploded fireworks in celebration a few blocks away at the headquarters of his Bharatiya Janata Party (BJP) after the new prime minister was sworn in.

The BJP and its allies swept elections this month, ousting the Nehru-Gandhi's Congress party in a seismic political shift that has given his party a mandate for sweeping economic reform.

Modi kicked things off on Sunday with an announcement that he would streamline the cabinet, a move to a more centralised system of governing aimed at breaking decision-making bottlenecks widely blamed for dragging down economic growth.

Modi said he would appoint super ministers in charge of several departments to make ministries coordinate better.

Arun Jaitley, 61, is the front runner to be named finance minister, party sources said. One of the top corporate lawyers in the country and a close Modi aide, Jaitley served in a previous BJP administration as commerce minister.

DIPLOMATIC GESTURE

Modi's decision to invite Sharif for his inauguration and bilateral talks on Tuesday came as a surprise.

Vikram Sood, former head of India's external intelligence agency, the Research and Analysis Wing, told Reuters that inviting all the leaders of the South Asian Association for Regional Cooperation (SAARC) was "an astute" diplomatic gesture.

"This augurs well for the region, and an improvement of relations all over the region is possible if these moves are followed by other steps, bilaterally and multilaterally," he said.

As a gesture of goodwill following their invitations, Pakistan and Sri Lanka released hundreds of Indian fishermen jailed for straying into their neighbours' territorial waters.

"Modi has appreciated the much-neglected fact that foreign policy begins at the nation's borders," wrote foreign policy analyst C. Raja Mohan in the Indian Express. "As a realist, however, Modi should be aware that major breakthroughs are unlikely amid the current flux within Pakistan.”

Reuters

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