Narendra Modi begins second term with India's economy a top priority

Prime minister's new government must present a budget in July that addresses slowing growth

Narendra Modi was sworn in for a second term as India's prime minister on Thursday at a ceremony attended by several heads of state and 8,000 other guests.

His first innings began with hopes that he would cleanse the government of corruption; this time he faces the immediate challenge of repairing an economy that malfunctioned during his five years in office.

President Ram Nath Kovind also administered the oath of office to Mr Modi's new cabinet of 24 ministers at Rashtrapati Bhavan, the president's official residence.

Among the heads of state present were the leaders of Mauritius, Kyrgyzstan, Bangladesh, Sri Lanka and Nepal. A notable absence was Pakistan's prime minister, Imran Khan, who was not invited. In 2014, when Mr Modi first took office, Nawaz Sharif, the then-Pakistani prime minister, attended the ceremony.

An extraordinary gesture!

UAE government lit up the iconic ADNOC building in #AbuDhabi on the occasion of the swearing-in ceremony of PM @narendramodi and Council of Ministers.@IndembAbuDhabi @navdeepsuri pic.twitter.com/Aev6j8mYE7

— Arindam Bagchi (@MEAIndia) May 30, 2019

The audience included athletes, industrialists and film stars. Mr Modi's Bharatiya Janata Party (BJP) also invited the families of 54 party workers who were allegedly killed in election-related violence in West Bengal.

The chief ministers of West Bengal and Punjab, from parties that have opposed Mr Modi tooth and nail, refused to attend.

Mamata Banerjee, the West Bengal chief minister, objected to the statement the BJP was making by inviting the families of its slain party workers.

“There have been no political murders in Bengal. These deaths may have occurred due to personal enmity, family quarrels and other disputes, nothing related to politics,” Ms Banerjee said on Twitter. “The ceremony is an august occasion to celebrate democracy, not one that should be devalued by any political party which uses it as an opportunity to score political points.”

Mr Modi began his day by visiting Mahatma Gandhi’s memorial in Delhi; he also visited the memorial of Atal Bihari Vajpayee, the only other BJP prime minister to have governed India. He then held meetings through the day with BJP leaders and ministers.

The first big task for the government will be to draft and present a budget in July, said John Samuel Raja, the co-founder of How India Lives, a New Delhi-based firm that analyses public data.

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Economic growth has faltered, jobs are scarce, state-owned banks are suffering crushing volumes of bad debt, and private investment has slowed. “The main challenge will be to clean up the balance sheets of these banks and create an enabling environment for private investment to return,” Mr Raja said. “This is going to be tough.”

Mr Modi was expected to be an economic reformer during his first term. But instead of initiating deep changes in regulation and stimulating the private sector, the government “resorted to incremental changes”, Mr Raja said. “So it’s difficult to predict what will happen now in his second term.”

When he distributes portfolios over the next few days, Mr Modi will have to find a new finance minister to address these economic concerns after Arun Jaitley, who held the post since 2014, declined to continue because of poor health.

The BJP’s emphatic return to power under Mr Modi has spurred concerns that Hindu nationalism – the party’s pet project – will be strengthened further still.

Mr Modi’s first term witnessed numerous incidents of religious and communal violence, including at least 122 attacks by Hindu zealots against people who were suspected of killing cows or eating beef, according to IndiaSpend, a data journalism initiative.

Whether such attacks will rise in Mr Modi’s new term “is the million rupee question”, said James Crabtree, a senior fellow at the Lee Kuan Yew School of Public Policy in Singapore.

The BJP rode to power, in large part, by stoking nationalist fervour and appealing to Hindu voters. The party’s manifesto promised, for example, that it will build a temple to the Hindu deity Ram on the site of a demolished mosque in the town of Ayodhya, in Uttar Pradesh.

Now that Mr Modi has returned to power, his Hindu base will expect him to keep these promises – and given the majority that the BJP enjoys, he is well placed to fulfil them. “Modi has few constraints on what he might do,” Mr Crabtree said.

“He will face huge pressure from his extreme Hindu base to deliver manifesto pledges on temple building” and other Hindu nationalist demands, he said. “The question is: Will he want to spend his political capital on divisive cultural measures or economic reforms?”