Home International With an eye on economy and defense, India’s Modi expands cabinet

With an eye on economy and defense, India’s Modi expands cabinet

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With an eye on economy and defense, India's Modi expands cabinet

NEW DELHI, November 10 2014: India’s Prime Minister Narendra Modi beefed up his cabinet on Sunday, adding four ministers in a move likely to free Finance Minister Arun Jaitley from the defense portfolio to focus on the budget and reforms to revive the economy.

The larger cabinet was welcomed by business groups impatient for the Modi government to fulfill campaign pledges to get the economy out of a long slowdown by fixing India’s power crisis and overloaded infrastructure.

“The cabinet expansion sends out a strong signal that the government under Prime Minister Modi is serious about accelerating the reforms process,” said Ajay Shriram, president of the Confederation of Indian Industry.

Including junior ministers, Modi added a total of 21 new names into his team. There was no official confirmation of which posts were filled, but former Goa chief minister Manohar Parrikar was tipped to become defense minister.

One post went to Jayant Sinha, a Harvard Business School graduate and investment fund manager who is the son of a former finance minister. The list combined first-timers and veterans, and included a popular singer and an Olympic sportsman.

Details were expected later on Sunday or early Monday of which portfolios would go to which of the new ministers. The newcomers are from a wider range of India’s states, increasing regional representation ahead of state elections.

Jaitley has been running both defense and finance since Modi took office six months ago, leading to criticism that neither of the key departments could be properly led.

He has a new bench of officials in the finance ministry including one of the world’s leading economists, Arvind Subramanian, as an adviser. Together they must revive investment, growth and job creation in a country that adds some 10 million people to the workforce every year.

The next budget is due in February and investors are hoping for bold decisions on the economy.

“Some reforms are easily possible, some are possible with a consensus, and some are more challenging. I have clearly prioritized most of them… and for the next few months we have our plates reasonably full,” Jaitley said at a seminar on Sunday.

The government has so far taken a series of steps to make life easier for businesses and has reduced subsidies on fuel, spurring a rally in stocks and bond markets after the longest period of low growth since the 1980s. But investment in the economy has not picked up, and industrial output is flat.

India’s outdated armed forces face shortages of everything from ammunition to fighter jets and submarines as it seeks to catch up with newly assertive neighbor China, which is arming itself quickly.

A long stalled deal to buy at a fleet of Rafale fighter jets from France’s Dassault Aviation will be high on the next defense minister’s to-do list.

Delays in negotiations have raised speculation the deal might fall through, although Dassault Aviation Chief Executive Eric Trappier on Wednesday predicted the deal would be wrapped up by March.

Modi wants India to rely less on imported hardware for a multi-billion dollar modernization plan.

Source: Reuters

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