NEW DELHI (BLOOMBERG) - Nirmala Sitharaman was appointed India's first woman finance minister in almost five decades to steer the economy through a rocky patch of weak growth and mounting global risks.
In a surprise move, Prime Minister Narendra Modi on Friday (May 31) picked Ms Sitharaman to succeed Arun Jaitley, who chose not to take an active role in the new government because of health reasons.
A former defence and trade minister, Ms Sitharaman becomes the first woman to hold the position after Indira Gandhi, who had the post concurrently when she was Prime Minister.
The new finance minister inherits an economy facing a number of risks.
She will also need to find the money to fund Mr Modi's populist campaign pledges without undermining the budget deficit target of 3.4 per cent of gross domestic product for the year through March 2020.
Data due later Friday will probably show growth in the year ended March cooled to 6.9 per cent, the slowest pace in five years.
Her first opportunity to help propel the economy is when she prepares the government's annual budget for this year, which is due in July.
"There are tough challenges ahead especially given fiscal targets have been missed for three years," said Shilan Shah, senior India economist at Capital Economics, Singapore. "Another weak GDP reading and pressure will rise from within the government to loosen fiscal policy."
Ms Sitharaman, 59, was a prominent spokeswoman for the ruling BJP prior to becoming a minister in Mr Modi's cabinet in 2014. During her helm of the trade ministry, she was also assigned the role of a junior minister in the finance ministry under Mr Jaitley.
While she doesn't have the political heft of her predecessors including Mr Jaitley and Palaniappan Chidambaram, she is known as a hardworking member of Mr Modi's team and shares a good rapport with the Prime Minister.
Ms Sitharaman didn't contest the recent general elections and is a lawmaker in the parliament's upper house, representing the southern Indian state of Karnataka. She was, however, a key campaigner during the polls.
"Her earlier handling of ministries was impressive," said Shubhada Rao, chief economist with Yes Bank Ltd in Mumbai "She brings a lot of technical, professional knowledge. So there are positives in store."
As defence minister since 2017, Ms Sitharaman oversaw Mr Modi's goal of spending as much as US$250 billion (S$344 billion) by 2025 on defence hardware, including jet planes, naval ships and drones, to counter China's growing military strength in the region.
She also had oversight of Mr Modi's flagship "Make in India" programme aimed at boosting domestic manufacturing, an initiative that included a significant defence focus.
Ms Sitharaman has also worked as a research manager for audit firm PricewaterhouseCoopers LLP in London and has a Masters degree in economics from New Delhi's Jawaharlal Nehru University.