NEW DELHI (AFP) - India's new finance minister Arun Jaitley said restoring growth and containing inflation are the key challenges facing the country's government, shortly after being handed the critical portfolio on Tuesday.

Mr Jaitley, a top corporate lawyer, said the government was given a strong mandate for reforming the slumping economy, which has been growing at below five per cent, its slowest pace in a decade.

"I am conscious of the fact that I am taking over at a challenging time, particularly when there is a need to restore confidence in the Indian economy," the 61-year-old told reporters in New Delhi.

"The challenges are very obvious. We have to restore back the pace of growth, contain inflation, and obviously concentrate on fiscal consolidation itself," he said in his first comments since taking the job.

Prime Minister Narendra Modi announced his new cabinet earlier on Tuesday after winning the biggest mandate for 30 years at the general election on a promise of bringing back investment and reviving the economy.

Mr Jaitley, who has emerged as one of Mr Modi's chief lieutenants and was given defence as well as finance, said the decision-making process would be quickened as the government worked to restore confidence in the economy.

"The mandate that our government has received has an inbuilt hope in it. I am sure that a political change itself sends a strong signal to the global community itself but also domestic investors," he said. "I think over the next few months by expediting the decision-making processes, I am sure that we will be able to build on that."

Mr Jaitley, commerce minister in a previous BJP government, said new policies would be announced in coming days, but stressed a balancing act was needed on interest rates and containing inflation.

Mr Modi's right-wing Hindu nationalist Bharatiya Janata Party (BJP) ousted the left-leaning Congress, riding a tide of public anger over tepid growth, high inflation, rampant graft and a paralysed political system. The economy has been growing at 4.9 per cent - half the level notched up as recently as 2011. Consumer inflation is running at 8.6 per cent.

India's finances have improved since last year, when worries about the widening current account deficit and ballooning fiscal deficit led to concern the country would face a full-blown crisis.

The stock markets have hit record highs in recent weeks on optimism that Mr Modi will turn the economy around. But analysts warn long-term policies are needed to reform the economy, including an overhaul of dire infrastructure to boost productivity, simplify the tax system and reform a cumbersome land acquisition process for industrial projects.